There are plenty of reasons why you might be looking to change accountants. Perhaps you feel that you are not getting the level of service you deserve, your current accountants do not offer a cloud accounting solution, or they are not able to deal with the national move to Making Tax Digital (MTD). Whatever the case may be, there are certainly things to consider when you decide to cut ties with your accountant.
Your accountant is a key player in the functioning and profitability of your company. Apart from managing your accounts, they will also make sure you are tax compliant and operating as tax efficiently as possible. The majority of VAT registered businesses with a taxable turnover above the current VAT threshold (85,000), are obligated to keep digital records of their accounts. This is where your accountant should step in and offer cloud accounting software that is compatible with MTD.
According to SAGE, only 10.5 % of accountancy practices were prepared for MTD at the end of 2018 and only 25 % say they have not started the onboarding process. And with the clock counting down, many business owners will find themselves struggling to find accountancy practices that are prepared for MTD, before the deadline. This will vary depending on when your VAT period starts, but as it stands, this will be the first day of your first tax return period after April 2019.
You should make sure that your accountant has a MTD strategy in place, are they preparing you for the digital adoption? Do they have MTD compatible software? These are all questions you should ask, and your accountant should be able to provide you with the answers. If this isn’t the case, then it is time to move on and find an accountant that can offer the support and expertise that you deserve.
One of the main reasons people hesitate before changing accountants is the mistaken belief that it will be a complicated, laborious process. The process of changing accountants should be straightforward however, and providing your business is running as it should be, there shouldn’t be any disruption to your business.
Informing your accountant that you will be moving elsewhere is the first thing you need to do, as you’ll need to grant them permission to speak to your new accountants to handover paperwork. Ideally this process would take place when there is as little activity happening as possible, during a quieter period, but as is the nature of business, this can sometimes be unpredictable so is certainly not a requirement. You should also ensure that all loose ends are tied up, bills paid, and that all financial responsibility has been discharged.
Two formal letters will need to be sent, the first, a disengagement letter that is a professional document from your current accountants that provides key dates and information of your accounts. The second document is a professional clearance letter, that your new accountant will need to send to your previous accountant asking for professional clearance and requesting any paperwork. These documents are formalities that precede the final step of assigning authority to your new accountants, which will enable them to file taxes on your behalf.
At Lite Tax, we keep things simple for you, minimising the disruption to your business and making sure that you are always kept up to date with the latest developments in tax. We are always at hand to answer any questions you may have and provide you with the knowledge and confidence that by changing your accountants you will be benefiting your business.
Get a quote here.