Are by the hour accountants out of time?

The practice of accountants charging by the hour could be on the way out thanks to a cocktail of legislation and technology.



So says Brookson, which believes a new generation of tech-savvy tax experts are forcing traditional high street accountants to revamp their customer offerings.



According to the firm, these experts have come up with innovative business models to safeguard themselves from the Managed Service Company legislation, but this has put them more in competition with the high street.



Typically, such expert accountancy service providers, many of whom are online, commit to a clear and transparent cost of a certain service, allowing the customer to easily see what they're getting and for how much.



Traditionally, Brookson says, this has not been the case with high street accountants.



"Service users should know, up front, exactly what they are paying for before they hand over their hard earned money, not billed at the end of a given period," said Martin Hesketh, Brookson's managing director.



"These new accountancy service providers have strong IT systems in place and the right tools to act as a day-to-day accountant working within a business. Small businesses need access to key information when they need it and this is not facilitated by the hourly rate when a monthly visit from an accountant is considered adequate.



"The systems that many accountancy service providers operate allow a contractor to access their accounts online and in real time 24 hours a day. Traditional high street accountants can't compete with this."



The firm also believes accountants exclusive to the high street further lose out when it comes to the offering of 'add-on' products.



"Self-assessment forms are now integral to anyone operating in business on their own account and must be completed at the end of each financial year. For the majority of high street accountants, this would be an additional service, charged at an additional cost."



Likewise, financial references for mortgage applications are often included by the tech-savvy providers as part of the overall package, not for an additional fee.



The same is also true with guidance, important given the weight of compliance issues for contractors, which the more traditional providers may offer but often not without a charge.



"IR35 remains the legislation that determines the employment status of contractors and it would be rare to find a high street accountant that is fluent in IR35 and able to give the best possible advice on compliance and taxation specific to contractors," Mr Hesketh said.



"From the contractors' perspective, competition between service providers is a good thing. It drives innovation, improves quality and can reduce costs; however value for money is more than just cost.



"Access to valued services and technology that helps a contractor to run their business smoothly and efficiently has a value all of its own. On the face of it, paying a traditional accountant that operates to an hourly fee may appear the best option but are they really getting value for money?"