Contractors' Questions: Should I ditch my new accountant?

Contractor’s Question: I was recommended a local accountancy firm but so far all I have had back is a VAT registration. The accountant doesn't respond to emails, only takes phone calls. Odd advice too, such as telling me to speak with HM Revenue & Customs about cancelling my tax return, even though it’s already been completed online. Should I just switch to a different accountant? This tax service doesn’t seem like much of a service.  

Expert’s Answer: You appear to have a breakdown in communication with your accountant. You should contact the accountant and get a meeting with them as soon as possible. If they will not meet, you should switch to another accountant.

But you also need to understand the way a limited company’s tax is reported and paid. HMRC is notified by Companies House when any limited company is formed. With this information, HMRC sets up a computer record for your company and allocates it a Unique Taxpayer Reference (UTR). They then send form CT41G (Corporation Tax - Information for New Companies) to you. This form includes your company's UTR so you need to keep it safe as you will need it to contact HMRC.

When a company becomes ‘active’ (starts trading), you must inform HMRC, if you have not already done so. This must be done within three months of starting business activity.

And whoever you eventually settle on as your accountant, you should use a Form 64-68 to authorise HMRC to communicate with such an accountant, tax agent or adviser acting on your behalf. If an agent is employed they can file a corporation tax return on behalf of the company and make sure that accounts and computations are properly prepared in the correct format.

It might be useful for you to note that with corporation tax, small companies with straightforward tax affairs can use the short return form – Form CT600 (Short) (2008) Version 2 to deliver a Company Tax Return. HMRC’s online services can be used to file a company tax return over the internet using HMRC’s free online filing software or commercially available software. A company’s Corporation Tax accounting period is normally 12 months long.

The expert was Clive Lewis, head of enterprise at the Institute of Chartered Accountants in England and Wales (ICAEW), which offers firms a free advice session with an ICAEW accountant.

Editor’s Note: Related Reading -

Picking an accountant – a contractor’s checklist

Contractors’ Questions: Is changing accountants a red flag to HMRC?

Contractors’ Questions: Is my accounting fee fair?