As I’m an accountant myself, I think I’ve got a licence to be as rude as I like about the profession! The truth of the situation is that a very good accountant, who actually makes a positive difference to your business or financial affairs, is, I have to admit, a comparative rarity. On the other hand, a bad accountant can really mess up your business.
It’s important to choose a good accountant because if your accountant gets your return or accounts wrong, or sends them in late, you can end up being the one that pays the penalty. Some accountants, also, are on HMRC’s “blacklist”, and, as regular as clockwork, accounts that they send into the taxman get opened up for a full, and often painful, investigation.
Other accountants wait six months before they even think about answering your requests for advice; and of course there’s always the big and unexpected accountancy bill which can throw your whole cashflow out, and which is a sign of an accountant who is either disorganised or hasn’t got the courage to let you know that you’re notching up high costs while the process is happening.
Accountant or Tax Adviser?
Stop me if you’ve heard this one before, but when I qualified as an accountant, in the 1980’s, the terms “accountant” and “tax adviser” meant virtually the same thing. If you wanted advice on any aspect of your tax you went to an accountant. Simple. Unfortunately, the galloping overproduction of legislation since then has put paid to this nice simple situation. On a conservative estimate, there’s something like ten times as much in the way of legislation, practice, EC directives, etc etc for an accountant to get his head round these days, as there was 30 years ago. So your average high street accountant, who has to keep abreast of developments in all kinds of different areas, including accounting and auditing standards, insolvency law and company law, can’t possibly be expected to keep up to date with all this legislative diarrhoea that the taxman seems to suffer from.
So the first thing to get clear is the difference between an accountant and a tax adviser. An accountant will prepare your accounts, tell you how much tax you’ve got to pay, and deal with straightforward tax planning questions like whether to pay yourself remuneration or dividends out of your company. But he won’t tend to be proactive, or deal with the more complex issues of how to structure or restructure your business.
How to Find an Accountant
It’s almost certain that, as with any other kind of business, the most common method that people use is practice to find an accountant is to look on the internet. Unfortunately, this is a very unreliable way to do that. The quality of a given firm’s website has no correlation whatever with the quality of their service: it’s merely a function of how good their web designer is. It’s much better to ask around, particularly people you know who’ve been in business or are currently in business, and have had actual experience of dealing with accountants. Mostly they’ll be able to recommend the chap they’re with at the moment: otherwise they wouldn’t be with him. But they may also be able to warn you off certain notorious local firms.
How Do You Judge a Good Accountant Versus a Bad?
First of all, location is far less important these days than it ever was in the past. Our own associated firm, APT in Tunbridge Wells, has clients all over the UK: Northern Ireland, Scotland, Wales, the North of England, The West of England, you name it. With modern communications, and the ability of software accounting programs to be looked into from anywhere makes the old convenience of handing in your books in the local high street pretty much redundant these days.
Cost is obviously a far more significant criterion. Here the interesting thing to note is that there is actually no such thing as a “market rate” of fees for accountants. The most widely different costs can be associated with basically the same accounts and tax return preparation requirements.
Thirdly, has the accountant got computer systems which are compatible with yours? Unless they are still in the stone age, the answer to this question will normally be “yes”, though.
Have they got HMRC investigations insurance? This is, on the other hand, a very important question. Insurance is available not against the extra tax that HMRC might charge you if they investigate, but against the cost of the accountant conducting your defence in the investigation. Given that often the accountant’s costs can far outweigh any extra tax you might have to pay as a result of HMRC’s enquiries, this is quite an important one. An organisation like the Federation of Small Businesses (FSB), we believe, can provide tax investigation insurance; but the last we heard, this came with the disadvantage that the FSB’s own recommended accountants had to conduct the investigation, rather than you being able to do it through your own accountant.
Will an Accountant Stay Put?
This is often a real problem for clients of accountancy firms. Having found, perhaps after a number of unfortunate experiences, their ideal accountant, there is a tendency for one of two things to happen: either the service falls off, because once the honeymoon period is over the accountant stops trying to impress you and moves on to trying to impress newer client arrivals; or, usually worse still, the accountant retires or is taken over, and another firm, effectively, that you never contracted with, takes over your accountancy affairs. The number of times clients then migrate through their dissatisfaction and frustration with the new set up, that they’ve had no part in bringing about, must be very great.
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