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Blog posts tagged accountant
What you need to know about finding an accountant
November 21, 2011
The term “accountant” is not regulated, so anyone can call themselves an accountant regardless of their background, experience, training or professional qualifications.
Like any industry or profession, there can be cowboys or people who don’t have the ability to advise clients on all aspects of accountancy and taxation.
If the accountant gets it wrong it will be their client who ends up in trouble. This can result in HMRC imposing fines, penalties and at the very worst – a prison sentence on the client.
How do I identify if my accountant is qualified?
There are formal accounting qualifications and on gaining these, an accountant becomes qualified. Examples of qualified accountants are those that are members of recognised accountancy bodies such as:
- Institute of Chartered Accountants in England & Wales (ACA or FCA)
- Institute of Chartered Accountants of Scotland (CA)
- Institute of Chartered Accountants in Ireland (ICAI)
- Association of Chartered Certified Accountants (ACCA or FCCA)
- Chartered Institute of Management Accountants (ACMA or FCMA)
- Chartered Institute of Public Finance and Accountancy (CPFA)
- Association of International Accountants (AIAA or FAIA)
- Association of Accounting Technicians (MAAT)
Should you only use a qualified accountant?
An accountant who is a member of a recognised accounting body should adhere to rules/ standards/ethics/guidelines set by their professional body.
In addition, if they offer accounting and tax sources directly to clients, they must have gained sufficient experience to hold a “Practicing Certificate”, which is only issued by their accounting body once they have shown evidence of having the necessary experience.
Accountants holding such a Practice Certificate and providing services to clients must take out professional indemnity insurance, which gives their clients protection in the unlikely case of a complaint or litigation being brought.
Of course it may well be the case that a non-qualified accountant has the equivalent experience and insurance cover. It cannot be assumed that your accountant is qualified and you should always check.
Are all qualified accountants good and unqualified accountants bad?
There are many excellent qualified and non-qualified accountants around. Often an unqualified accountant is referred to by the term “QBE” (qualified by experience). The challenge lies in just how you measure the experience of a QBE accountant.
Formal training ensures that accountants have been exposed to many, if not all aspects, of accounting and taxation. While it is essential that the accountant keeps their knowledge up to date in a constantly changing space, at least they have a base knowledge.
A QBE learns by experience. If they have not experienced a particular aspect of taxation or accounting, they will not have learnt about it.
What if my accountant gets it wrong?
Qualified accountants who are members of a professional body must have a complaints procedure that explains what clients should do if they have an issue with their accountant.
Included in the complaints procedure will be the right for the client to complain to the relevant professional body if they aren’t happy with their accountant’s handling of their complaint.
In the event of a serious disciplinary matter, the accountant could be struck off by its professional body following a client complaint. Accountants who aren’t members of a professional body don’t need to have a complaints procedure nor is there any recourse to a professional body.
Do I need a local accountant or can I use a remote one?
Traditionally, businesses have used a local accountant. However, businesses can now use remote/online accountants at a more affordable price.
Good remote/online accountants offer the same service and deliver the same quality as a traditional local accountant. They can be contacted, generally, by email and/or telephone when necessary.
Crucially, the credentials of remote/online accountants should be checked just as thoroughly as you would for a traditional accountant.
How can I ensure I choose a good accountant?
- Seek recommendations from businesses already using a reliable accountant.
- Ask prospective accountants for client testimonials or for the names of reference contacts.
- Check the accountant’s qualifications.
- Find out about their relevant experience.
- Ask how many clients that they have like you.
- Ask for a full break down of their charges – is their fee fixed or will you be expected to pay any ‘extras’?
- How will they ensure your deadlines will be met and that you won’t have to pay any fines?
- Are they regulated by a professional body?
- Do they have professional indemnity insurance?
- What is their complaints procedure?
Elaine Clark, Chartered Accountant with Cheap Accounting.
For a whole host of information about accounts, tax and finance, look at our Tax Donut.
PAYE – new late-payment penalty legislation for the 2010-11 tax year
April 22, 2010
We’ve seen many new taxes come in under the radar over the past few years, but for me, this is probably the most badly thought-out, badly communicated of the lot. And once again, it’s being left to accountants and tax advisors to communicate the bad news.
If you employ staff, you’ll be familiar with the need to pay monthly PAYE and NI contributions to HM Revenue & Customs (HMRC) by the 19th of the following month.
Up until now, the legislation has been such that if you pay late, it doesn’t really matter. HMRC might write nasty letters – or even send someone round – but ultimately, there was no penalty for paying late. The trick was to get everything square by 19 May annually, and there was no comeback.
This changed on 6 April this year, when the new legislation came into effect.
Here is a brief synopsis of the new rules and penalties for those on the main monthly scheme:
- pay your monthly liability by the 19th of the month following (this is the date by which the funds must be deposited in the bank account at HMRC – so beware of paying online on the 19th. Confirm with your bank that it will get there on time);
- pay late once in any year and there’s no penalty – unless the payment is more than six months late – see below;
- pay late two-four times in any year, you’ll be fined 1% of the total amount that is late (ignoring the first late payment), so, if your monthly payment is £10,000 and on four occasions you’re a day late paying, the penalty will be 3 x £10,000 x 1% = £300;
- pay late five-seven times and you’ll be fined 2% of the total amount that is late (ignoring the first late payment);
- pay late eight-ten times and you’ll be fined 3% of the total amount that is late (ignoring the first late payment);
- pay late 11-12 times and you’ll be fined 4% of the total amount that is late (ignoring the first late payment);
- if any payment is more than six months late, you’ll have a pay a penalty of 5% of the overdue amount. If the payment is 12 months late, you will pay a further 5%.
No due reflection is given to the extent to which you’re late. If you are one day late, the penalty will apply.
From an administrative point of view, the law allows HMRC to charge penalties at any stage during the tax year, or after the end of the tax year up to two years of the due date.
In 2010-11, penalties will be charged after the end of the tax year. Therefore, penalty notices will not be sent out until April or May 2011. So please don’t test the system and think you’ve got away with it – you will get a nasty shock in April next year!
Tim Haggard is founder and managing director of My Bookkeeping Online Ltd
Ten top tips for completing your Employer Annual Return
April 06, 2010
- File the returns by 19 May 2010. Late filing can result in a penalty which is £100 per 50 employees for each month or part month that your return is outstanding.
- Nearly all returns must now be filed online. Make sure that you are set up to do this well in advance of the due date.
- You must have paid any outstanding PAYE and NI by 19 April 2010 (22 April 2010 if you pay electronically).
- You have to complete a return for all employees who have been paid at or over the lower earnings limit.
- By 31 May 2010 you have to give a form P60 to all employees who your completed a P11 for and who still worked for you on 5 April 2010.
- You need to complete a P11D for relevant employees by 6 July 2010. Late filing can result in a penalty which is £100 per 50 employees for each month or part month that your return is outstanding.
- Any NI due on expenses and benefits on kind must be paid by 19 July 2010 (22 July 2010 if paying electronically).
- If you are set up as an employer you must still file a return. If you have no entries then you will file a nil return.
- If you are a sole director/employee company paying yourself a small salary you may still need to file an Employer Return. Your accountant may do this for you but check that it is included in your fee.
- If this all sounds too complicated – get an accountant to do it for you!
Elaine Clark, www.cheapaccounting.co.uk
In a muddle with your numbers? Pick up the phone
September 14, 2009
One of the first things you need to do when you set up your own business is to find yourself a good accountant. However simple or complicated your business’ finances are, you are going to get yourself in a muddle if you don’t know exactly what you need to record, how to fill in your tax returns or when to file your accounts.
Speaking to the Institute of Chartered Accountants in England and Wales (ICAEW)’s Clive Lewis the other day, I learned that many start-ups don’t use their accountant as much as they could or should.
You should be able to rely on your accountant to be there for you if you call up with a query about your book-keeping, however trivial it may seem, or if you have a sudden change of circumstances – for example if a client suddenly puts in a big order and your cashflow is thrown off-balance. They should also be reminding you of deadlines for self-assessment or, if you’re a limited company, when your accounts are due to be filed.
There is certain information your accountant will need from you in order for him or her to understand your business and do your accounts for you, too, but again, a good accountant will tell you what they need. According to Lewis, your relationship with your accountant should be a long-term one with regular contact.
Ask other business owners you know who they use, or visit one of the accountancy associations’ websites to do a search for your local accountants. Even if you have a good brain for maths, you still might need somebody to hold your hand while you work out how to use your new accountancy software. Ideally, you will choose an accountant who has previously worked with other businesses of your size and in your industry.
So, don’t be shy; pick up the phone and ask away. And if the person at the other end doesn’t want to help you out, take your fees elsewhere and find an accountant who will make life easier for you.
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