7 red flags you’ve outgrown your accountant – and what to do about it

After more than 20 years of running contractor sites, the same two complaints about accountants keep arriving in our inbox at IT Contracting: missed deadlines and poor communication.

1. Deadlines keep getting missed (or only just met)

If you’ve ever had to chase your accountant about filing dates, or found yourself holding your breath as they submit things at the very last-minute, that’s not good enough.

Most contractor limited companies have a very simple calendar. Your statutory accounts are submitted to Companies House, while your Company Tax Return and supporting accounts are filed with HMRC. The company’s Corporation Tax is due nine months and one day after year-end. You need to submit VAT returns every quarter. And PAYE filings are made via RTI on or before payday.

A late confirmation statement might seem like a minor issue, but Companies House can impose a financial penalty if you don’t file it on time. Late accounts can also result in automatic penalties.

And if your accountant is to blame? You’re ultimately the one who pays the penalty.

These things shouldn’t be your problem – it’s your accountant’s job to stay on top of it. If you’ve had near-misses (or worse, actual fines), it’s a clear sign they’re not keeping pace.

2. You can never get hold of them (or you’re constantly explaining yourself)

I’ve dealt with more than a few accountancy firms – and if there’s one thing that always drives contractors up the wall, it’s poor communication.

Some firms take days to reply. Others bounce you around different staff, so you never know who’s handling your account. Even when they do get back to you, the answers might be vague, rushed, or make you feel like you’re asking too much.

A decent contractor accountant should have time for you. Some even guarantee same-day replies – or at least acknowledge your message quickly so you’re not left wondering.

Having a single main point of contact also makes a significant difference. You shouldn’t have to re-explain your setup every time you send an email.

(Most) contractors don’t always ask for much – just a bit of clarity, and someone reliable who responds in a timely way.

3. They don’t really understand contractors

This one’s more common than you’d think.

Some accountants treat you like a regular small business. That might not sound too bad – until they start giving you advice that doesn’t fit. They might not understand the nuances of being a contractor.

Maybe they suggest taking all your income as salary. Or they don’t mention IR35. Or they seem unsure about things like Flat Rate VAT, director’s loans, or dividend timing.

A contractor accountant should be across all of the following:

• How to balance salary and dividends tax-efficiently
• When section 455 tax might apply (especially if you’ve got a director’s loan hanging around)
• What you can and can’t claim when it comes to business expenses, especially anything with a dual purpose, like travel or home office use
• Whether Flat Rate VAT still makes sense (it doesn’t for most, unfortunately)
• How do you account for IR35, including the small company exception
• How Business Asset Disposal Relief (BADR) works if you plan to close your company via an MVL

If your accountant gives you general advice that doesn’t reflect your actual setup, they’re probably not the right fit.

4. The software is outdated or gets in the way

These days, most accountants offer software to help you manage your company’s finances. For contractors, this usually means a service like FreeAgent (widely used within the industry) or Xero – you can read our accounting software guide here.

Some firms use their own in-house tools instead, and to be fair, some of those systems are very good. The name doesn’t matter as much as how well it works.

You should be able to log in, check your bank feeds, raise invoices and see how much money is available to take from the company.

If basic tasks are a struggle – or you have to email your accountant every time you need a figure – the software isn’t doing its job.

Software should make things easier, not add friction.

5. They’re doing too much – and it could land you in trouble

There’s a fine line between helping and taking over. And when it comes to the Managed Service Company (MSC) rules, crossing that line can create serious tax issues.

The MSC rules look at the extent to which a provider is involved with your company. This can include influencing or controlling how your services are provided, how payments are made to you, or your company’s finances or activities. They also cover providers who give or promote an undertaking to make good a tax loss.

Accountants and lawyers aren’t caught by the MSC rules simply for providing normal professional advice. The risk arises if they start taking too much control over how the company is run.

If the MSC rules apply, payments to the worker may be subject to the deemed employment payment rules, resulting in PAYE and National Insurance liabilities.

Most leading accountants are very aware of the MSC rules, especially as HMRC has live investigations open related to two firms.

You, as a director, ought to be aware of the rules, and remember – accountants are there to advise, but any decisions are up to you.

6. They can’t help with anything outside the basics

Contractors often need more than just completed accounts and tax returns.

You might need a reference for a mortgage. Or you’re considering running a side project, purchasing equipment, or lending money between businesses.

Perhaps you want to know whether to take a dividend now or wait until after your year-end, or how a pension contribution will affect your tax bill.

These are all perfectly normal things to ask your accountant about.

If yours can’t help – or charges extra whenever you stray beyond the basics – it may be time to look elsewhere.

7. You’ve been thinking about leaving for a while, but haven’t done anything

Sometimes the biggest red flag is the fact you’ve been thinking about leaving for months.

The trouble is that thinking about moving accountants – and the practical steps involved – is stressful.

It’s easier to simply accept the status quo, assuming nothing terrible has happened.

However, if you haven’t been happy for a while, it is probably time to move on. Maybe you’re tired of slow replies. Perhaps you’ve lost confidence in the advice. Or maybe you’ve just outgrown them.

Has your once small, friendly firm grown too fast and become short-staffed, more like a ‘factory line’?

The good news? Switching is easier than you think. You don’t have to wait for your year-end. Most firms will contact your old accountant, handle the records transfer, and get everything set up without disrupting your day-to-day.

Here are some more of our practical guides which may help you if you’re considering making a change.

• How to judge if your accountant is doing a good job
• When’s the best time to move to a new accountant?
• How to switch contractor accountant

And if you’re looking for a fresh start, take a look at our partner accountants – we’ve been working with them for many years. We’ve also included links to dozens of other contractor specialists.