If you’ve reached the decision to say goodbye to the old hello to the new, where should you start when switching accountants? And how does the process of moving over your accounts work – aka professional clearance?
Here, Christian Hickmott, Managing Director of Integro Accounting explains how the switching process works in practice – both for you (the client) and between accountants. The key is to make the transition as smooth and stress-free as possible!
How to tell your accountant you’re leaving
Assuming you’ve done your research and have chosen your new accountant, the first step would be to give your current accountant (or what we’ll refer to in this article as your previous accountant) notice in writing that you’ll be leaving.
Of course, it’s helpful if you can give them reasons, and you might want to talk it through on the phone too – this way you can discuss anything you’d like them to complete (or not) before the handover.
If you’ve been particularly disgruntled by poor service, it’s understandable that you may want to leave as soon as possible, but if you’re not in such a hurry, think about what you’ve already paid them for. Do you have some company accounts or a tax return due imminently that you’d still like them to complete?
Once this has been ironed out, they should send you a disengagement letter to formally set out these details so you’re aware of exactly what they’ll be working on and where your new accountant will pick things up.
The professional clearance process
Before a new accountant can act on your behalf and deal with your tax affairs, they are obliged to obtain professional clearance.
They’ll write to your previous accountant in the form of a professional clearance request letter, but they should only do this once you’ve given them the go ahead. This will usually take place once you’ve already notified them you’re leaving, so there are no surprises and they’ve no excuse to start getting things ready.
The letter will ask whether there is any reason the accountant cannot or should not accept the appointment. It is mandatory for this to be answered, and the previous accountant must not withhold any statutory information or company records.
Examples of possible reasons why they shouldn’t act on your behalf could be tax evasion, fraudulent activity or misleading client information. While this does sound ominous, it’s a matter of process and something every accountant should be doing for compliance reasons.
The professional clearance letter will also request the handover of relevant information to carry out the work needed. This includes such things as HMRC references, your Companies House authentication code, previous tax returns and VAT and payroll submissions and so on.
It has also become usual to provide workings to back up the accounts, however, whilst it’s common courtesy, it is optional.
They may also divulge to your new accountant if there have been any pay disputes between you and them, and it’s at the discretion of the new accountant to decide whether they will take you on as a client based on the information given.
It’s unlikely you should be turned away unless of course there are some serious concerns, of which if they arose you should be aware prior.
The previous accountant is obliged to respond in a timely manner and cannot refuse to answer on the basis that there may be fees outstanding.
Unfortunately, it is the case that some accountancy firms might do this, so it’s a good idea to get all fees up to date, as they could also refuse to provide workings until the account is settled.
The information will be sent via email or post, and once received, should there be no issues, the new accountant should be ready to formally engage you as a client.
3 Tips for a smooth Accountant switching process…
- At Integro Accounting, we aim to have accounts switched over within one month, subject to receiving the right information from the previous accountant. We will request this as soon as we have your authority to do so, with any chasers as appropriate. A little nudge from yourself to your contact at your old firm can also help too. If you have copies of any of the documentation your new accountant asked for in professional clearance for example your Company UTR number, it doesn’t harm to forward a copy of these to them.
- Be aware of the contract with your previous accountant, paying attention to any notice period or whether you are tied in to paying for a certain time.
- Ensure your disengagement letter is clear and understood – if you’re clear on what they are and aren’t doing you can make your new accountant aware of what you need them to complete. If there’s some extra ad-hoc work that needs doing at least you’ll have a view of any extra costs involved from the beginning.
Engaging your new accountant
In formally appointing your new accountant, you should be sent an engagement letter to sign outlining the service you shall receive, the date it’ll start, fees, terms and conditions and so on. Alongside this, it’s usual to also complete ID checks to ensure that the accountancy practice is adhering to their Anti-Money Laundering Regulations.
Some accountants may ask you to sign this documentation before they reach out for professional clearance. Some may charge a switcher fee due to work involved in switching accounts over and taking over your bookkeeping software access for example.
- You can read Integro Accounting’s guide to switching accountants here.
- How do catch up fees work when you join a new accountant.
- When is the best time to move accountants?
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