How to change accountants

Changing accountants can be a very difficult decision.

Every year make a point of reviewing your relationship with your accountant. Your relationship with your accountant is integral to the success of your business.

Consider the following-

Is your accountant proactive?

You need an accountant that can advise you on the best way to progress your business, increase profits and expand. Are they proactive in ensuring you are paying the right tax and making savings where possible?

Are you being supported to use a cloud accounting platform?

With Making Tax Digital now implemented for VAT registered business and the full roll out on the horizon its vitally important you are using an online platform for your accounts.

Do you feel your accountant is friendly and approachable?

There is nothing worse than calling up your accountant with questions and being made to feel you should already know the answer! Ideally you need an accountant that is happy to answer any questions you may have and reassure you. You also want phone calls returned and emails answered within a sensible time limit!

If you feel you are not getting the service you require then it might be time for a change. You might feel it’s a very daunting but here are some tips to help you transition from one accountant to another without too much pain!

Find a recommended accountant.

The best place to start is among your network of connections and ask for a recommendation. If you don’t have a network, check out the trusted accountants listed at Handpicked Accountants. Or you can use Google to find an accountant in your area. Look for companies with recommendations online or check other social media platforms such as Facebook or LinkedIn and see what testimonials they have.

Arrange a meeting with a prospective new accountant

Before making a final decision arrange a meeting to disusss your accounts. Find out the costs, which online platform they are using and what support they can offer you.

Give notice to you existing accountant

Once you have decided send and email to your existing accountant advising them you are changing and give them the details of your new accountant.

Notify HMRC

You will need to notify HMRC of the change, some accountants will do this for you. Just check.

Register with your new accountant

They will require proof of I.D which is part of the law surrounding money laundering. They will also ask you to sign a form to allow them to deal with HMRC on your behalf. Your new accountant will also write to your existing accountant and ask them for any existing records and information. This is called professional clearance and they will also ask if there is any reason, they should not work with you! Sometimes accountants will charge a small fee for compiling the paperwork. An hour’s rate is reasonable.

If you experience problems

Changing accountants should be seamless. Problems can arise. This can be when fees are not paid which you may be disputing or consider unreasonable. If you cannot resolve this then you can contact the body your accountant is registered with.  Or you contact the fee arbitration officer at the the Institute of Chartered Accountants (ICAEW) who can help you settle a dispute.

If there are believed to be any accounting irregularities, you may also find problems switching accountants. Your existing accountant may discuss this with your new accountants.

There shouldn’t be any issues changing accountants if you are running your business correctly and have complied with all the relevant HMRC tax laws.

Speak to Spicer and Co!

We pride ourselves on ensuring our new clients have a seamless and stress free experience.

Part of our onboarding process is an initial meeting to discuss your requirements. Once you have decided that we are the right accountants for you we can arrange a further meeting if required. Our team will send you all the relevant paperwork and we will send you a welcome pack.

 

Demystifying the Domestic Reverse Charge VAT

Update from HMRC – DATE CHANGED from October 2019 to October 2020

Industry representatives have raised concerns that some businesses in the construction sector are not ready to implement the VAT domestic reverse charge for building and construction on 1 October 2019.

To help these businesses and give them more time to prepare, the introduction of the reverse charge has been delayed for a period of 12 months until 1 October 2020. This will also avoid the changes coinciding with Brexit.

CLICK HERE FOR HMRC BRIEF 


On October 1st 2020 there is a big change being implemented in the way VAT is being collected in the building and construction industry. It is called the Domestic Reverse Charge VAT.

This has been set up to tackle fraud. This will mean that fraudsters will no longer be able to set up a construction business, charge VAT to customer then disappear before paying the VAT to HMRC. This practice is known as missing trader fraud and the change means that the customer receiving the service will have to pay the VAT due to HMRC instead of paying the supplier. It will only apply to individuals or businesses registered for VAT in the UK (although it will not apply to consumers).
This will affect you if you supply or receive specified services that are reported under the Construction Industry Scheme (CIS).

We would like to draw your attention to the details on the HMRC website which states the following –
You need to prepare for the 1 October 2020 introduction date by:
• checking whether the reverse charge affects either your sales, purchases or both
• making sure your accounting systems and software are updated to deal with the reverse charge
• considering whether the change will have an impact on your cashflow
• making sure all your staff who are responsible for VAT accounting are familiar with the reverse charge and how it will operate,

What contractors need to do
If you’re a contractor you’ll also need to review all your contracts with sub-contractors, to decide if the reverse charge will apply to the services you receive under your contracts. You’ll need to notify your suppliers if it will.

What sub-contractors need to do
If you’re a sub-contractor you’ll also need to contact your customers to get confirmation from them if the reverse charge will apply, including confirming if the customer is an end user or intermediary supplier.

The reverse charge does not apply to consumers or final customers of building and construction services. Any consumers or final customers who are registered for VAT and Construction Industry Scheme will need to ensure their suppliers do not apply the reverse charge on services supplied to them.

For reverse charge purposes consumers and final customers are called end users. They are businesses, or groups of businesses, that do not make onward supplies of the building and construction services in question, but they are registered for CIS as mainstream or deemed contractors because they carry out construction operations, or because the value of their purchases of building and construction services exceeds the threshold for CIS.

Services affected by the domestic reverse charge
The reverse charge will affect supplies of building and construction services supplied at the standard or reduced rates that also need to be reported under CIS. These are called specified supplies.
There is an important difference between CIS and the reverse charge where materials are included within a service. The reverse charge applies to the whole service whereas CIS payments to net status sub-contractors are apportioned and no deductions are made on the materials content.
The reverse charge does not apply if the service is zero rated for VAT or if the customer is not registered for VAT in the UK.

It also does not apply to some services.

These are those supplied to end users or intermediaries connected with end users. Find out more found in the End users and intermediary supplier businesses section.
Employment businesses who supply staff and who are responsible for paying the temporary workers they supply, are not subject to the reverse charge. Read the Applying the domestic reverse charge for construction services to certain sectors or types of transactions section for more information.

You will have to apply the reverse charge if you supply any of these services:
• constructing, altering, repairing, extending, demolishing or dismantling buildings or structures (whether permanent or not), including offshore installation services
• constructing, altering, repairing, extending, demolishing of any works forming, or planned to form, part of the land, including (in particular) walls, roadworks, power lines, electronic communications equipment, aircraft runways, railways, inland waterways, docks and harbours
• pipelines, reservoirs, water mains, wells, sewers, industrial plant and installations for purposes of land drainage, coast protection or defence
• installing heating, lighting, air-conditioning, ventilation, power supply, drainage, sanitation, water supply or fire protection systems in any building or structure
• internal cleaning of buildings and structures, so far as carried out in the course of their construction, alteration, repair, extension or restoration
• painting or decorating the inside or the external surfaces of any building or structure
• services which form an integral part of, or are part of the preparation or completion of the services described above – including site clearance, earth-moving, excavation, tunnelling and boring, laying of foundations, erection of scaffolding, site restoration, landscaping and the provision of roadways and other access works

For more detailed information please visit the HMRC website or give us a call to check what you need to do if you are affected by this change. Click here

Please also see our graphic below which explains this in simple terms!

6 Top Tips for Smarter Bookkeeping

To be successful in business its vitally important to have a good accountancy system in place. Knowing your numbers is essential for you to track your progress and to ensure your business is profitable.

Most small business owners hate doing accounts – we know this because they tell us! For many it’s the most boring, mundane job they must do to run their business and consequently many do not have a system for doing their business accountants efficiently and therefore leave doing their tax returns to the last minute. It also means they do not know the trading position, which will reflect in the progression of the business.

If you are a small business owner who finds themselves working late in the day or weekends to keep up with the accounts and do not know at a click of a button your figures in your business then you need to start thinking how you can work smarter with your book keeping.

Keep your business finances separate from personal finances

We all hate paying bank charges but there are ways around this. Sole traders (not a limited company), can sometimes use normal bank account for business, transactions with all the better terms that involves but check your terms & conditions – some banks won’t allow this.

Most banks offer the first 18months- 2 years for new business banking customers. So, you could avoid charges by simply switching banks when the free banking ends. Money supermarket shares some tips here on the best banking deals and tips to save on bank charges,

If you have an FSB membership you can qualify for free business banking with the Co-Op, worth checking as there are a lot of other benefits too.

Keeping your business finances separate is important as it helps you to be clear which expenses relate to what and should you ever get a tax inspection this will make things much easier.

Choose an online accounting cloud software package

Using a cloud-based accounting software package means you have immediate access to your financial data. There is a huge choice of online cloud bookkeeping software packages on the market. Which one you choose will depend on what your business does. We recommend Xero because we think it is user friendly, you can access your accounts anyway and you can sync it with payment portals. Plus, you can quickly get a picture of how your business is performing, payments which are outstanding and your day to day bookkeeping tasks will be reduced dramatically. You can also use this to monitor your orders and customer activity, vital knowledge about your products or services.

HMRC plans to make all business report their tax information digitally, companies who are VAT registered are already using this system. It makes sense to start using an online package now to be ready for this change. Find more about this here.

Get into a bookkeeping routine

Ensure at least once a month you ensure all transactions have been recorded, payment owed to you have been made, you have invoiced your clients, enter your expenses into your accounting system and reconcile your bank statements. If you find you are spending a lot of time doing this, it might be more cost effective to use a bookkeeping service. Discuss this with your accountant who can advise you, many accountants offer this service. Time spent doing your books could be time spent building your business. Outsourcing activities like bookkeeping often makes more sense.

Weekly
  • All invoices are raised
  • All receipts and expenses are up to date
  • Ensure supplies are paid
Monthly
  • Reconcile your bank account
  • If you have staff you will need to run your payroll
  • Chase any unpaid invoices from customers
  • Ensure all receipts and expenses are up to date for the month
Quarterly

You may have a VAT return to submit

Review your business and how it is trading

Apps to support your bookkeeping

Are you always losing receipts? Or do you find the job of entering them online boring and time consuming then there are 2 apps we recommend both are very easy to use. Check out Auto Entry or  Receipt bank

If you use your vehicle for business and find keeping track of your business mileage difficult then try using an app called MileIQ. It will save you a lot of time by logging the trips automatically. You just have to categorize them by swiping left for Personal and right for Business

Cash in no longer King

Try and get all your customer to pay via a digital payment. This makes tracking payments easier and simpler. You do not want to be holding large sums of cash on your premises anyway!  HMRC regularly target cash-based businesses as they know many do not declare their full income or keep good records. If you are a cash-based business keep very clear, detailed records and receipts.

Create a filing system

Have a folder, box file or some means of creating a filing system for paperwork relating to your business finances. Filing monthly receipts, invoices in chronological order for most businesses works best.  Keep your records safe. Sole traders must keep their paperwork for at least 5 years after the 31st January submission deadline of the relevant tax year, as if you do get an inspection HMRC may ask to see it.  Here is a guide from HMRC for sole traders about what records you must keep.

If you are a Director of a limited company, you can be fined £3,000 for not keeping adequate business records and even be disqualified. Records should be kept for at least six years from the end of the last company financial year which they relate to.

In both cases, if paperwork is missing, be sure to inform HMRC that you’re using estimated or provisional rather than actual figures.

Next Steps

Our overall advice is firstly sit down with your accountant, discuss a system which works for you both. Ensure you get into a proper routine and review your business finances on a regular basis. This way any issues or problems can be picked up and quickly corrected.

If you aren’t using an accountant- why not? They are experts in tax and most accountants will pay for themselves in the savings you make on your tax bill. Plus, by using an expert you know you are paying the correct tax! If you want some initial free advice contact us.