Non Trading Service

[Zeppelin]

Hi. My contract ended recently and I'm currently looking for a new one. My accountancy company have advised their full fee will apply for 3 months whilst my Ltd Co is not trading before a reduced fee of 50% is applied at month 4. If the company is still not trading at month 7 a further reduction to 25% of the full monthly fee is then applied.

Obviously I don't intend to not be trading for anything like 3 months but as I'm still fairly new to contracting I wanted to ask if this type of arrangement is typical of accounting companies generally.

Grateful for any advice please!

Thanks.

[TheFaQQer]

Sounds like a good deal to me.

Rather than think of it being a monthly fee, picture it as being an annual fee spread over 12 months at 0% interest (obviously, if you're getting a discount then it's even lower than that).

Apart from not operating payroll when you aren't taking a salary, I can't see there being a big difference in the amount of work that they have to do whether you work three months of the year or 12.

[Forbes Young]

Breaks in between contracts

Accountants do not charge a monthly fee with the same work actioned every month (unlike Umbrella companies). This is because there are different amounts of work to do each month for clients who are running a limited company eg:
• Payroll work needed including year-end payroll returns
• Annual Company Accounts and Corporation Tax work
• Filing Companies House Annual Return online
• 4 x VAT Returns calculated & filed online
• Self-Assessment Tax Return and P11D/P11D(b) for directors
Contractors running through their own ltd companies normally have breaks in between contracts as a matter of course - some may have 3 or 4 contracts a year (some running concurrently) and some having a contract with extension for over a year.
Whether or not a contractor works for 35, 45, 48 or 52 weeks per year the work above still needs to be carried out which is why an annual agreed fee is normally spread over 12 months.

[Contreras]

Hi. My contract ended recently and I'm currently looking for a new one. My accountancy company have advised their full fee will apply for 3 months whilst my Ltd Co is not trading before a reduced fee of 50% is applied at month 4. If the company is still not trading at month 7 a further reduction to 25% of the full monthly fee is then applied.

Obviously I don't intend to not be trading for anything like 3 months but as I'm still fairly new to contracting I wanted to ask if this type of arrangement is typical of accounting companies generally.

Grateful for any advice please!

Thanks.

So that would average 50% discount on the year for 3 months in contract then 9 months on the bench. I don't know if it's typical. I'd say it's very fair so long as the actual fees are reasonable to start with.

Much of the effort happens in preparing accounts year end. I pay for yearly rather than a monthly 'payment plan'. My accountant charged ~£125 less for a quiet year (2 months), or say ~16% discount compared to a normal year, for EOY accounts.

[Zeppelin]

Thanks very much all, much appreciated.

[Jessica@WhiteFieldTax]

I think that's a reasonable approach; what needs to be remembered is a company is a bundle of benefits and obligations, and merely because the benefit of handling your income stream ceases, the costs of the company don't.

That said, undeniably it's simpler if you are out of contract, so some sort of step down after a waiting period is appropriate.