The relationship between a contractor and their accountant is core to the success and profitability of your business. Get it right and a mutually beneficial arrangement is the result, with the accountant thoroughly versed in your way of working and able to make tailored recommendations that extract the maximum value from your efforts.
However, there may come a time when, for one or another reason, you need to switch your contractor accountant
. Possibly your business has outgrown the service level that your current accountant is able to offer. Alternatively, you may feel that your accountant is not providing the best advice, or there may have been errors or problems with the service. Whatever the reason, it is imperative that the changeover be handled smoothly in order that there be no interruption to the professional financial support your business requires.
Most guidance will tell you that changing accountants is as straightforward as selecting your new provider – all administration should be organised between your current and your new accountant without your involvement. However, there are steps that you can take to ensure that common avoidable problems do not occur.
Time for a Change?
One of your first considerations will be the timing of the switch. It may not be practical to wait for an obvious cut-off point such as the end of a financial year. It will, however, be advantageous if you can pick a changeover date when there is as little as possible active business between you and your current accountant – that neither you nor they are waiting for an action, particularly a payment, from the other. At the very least, you must ensure that you have discharged all your responsibilities towards your current accountant, as a dispute over unpaid fees is one of the most significant threats to a smooth transfer of business.
Know Your Rights (And Responsibilities)
You can save yourself trouble by checking the details of your agreement with your current accountant to ensure that there are no special circumstances that apply to transferring your custom to a new provider. You must be confident that you have kept up your end of the agreement – particularly in cases where you wish to change your accountant because you are dissatisfied with the current service, any failing on your part to honour your agreement can provide an opportunity for your current accountant, if they are so minded, to refuse to co-operate in the switch.
Anatomy Of A Switch
Assuming you have done your homework and no impediment exists, the mechanics of the transfer are straightforward. Your new accountant will write to your current accountant, notifying them of their assumption of responsibility for your business and requesting ‘professional clearance’ (essentially confirmation that there is no reason not to take you on as a client) along with any relevant paperwork. Your current accountant, unless they have reason to attempt to prevent the switch, should provide the requested details within a ‘reasonable time’ (chartered and certified accountants are required to do so by the professional standards of their governing bodies). There may be a fee for the administration necessary to satisfy the switch request, though it should not exceed an hour’s work. Once this fee and any other outstanding charges are paid and your new accountant is in possession of the relevant documents, the transfer is complete.
It Was All Going So Well Until...
The most common impediment to changing accountant is a dispute over unpaid fees. If you disagree with a particular charge that your accountant claims is due, and if discussing the problem has not brought a resolution, then you should investigate the options for arbitration. ICAEW, for example
, offers an arbitration service for disputes involving its members. As a final sanction, recourse to legal action or a formal complaint to an accountant’s professional body can produce results, but be very sure of your ground before going this route. Unless the relationship between you and your current accountant has completely broken down, you should aim to avoid matters escalating to this state by discussing and negotiation.
Similar measures can help if you are changing provider because you believe or know that your current accountant has made mistakes in their handling of your affairs. Note that final responsibility for correct submission of tax returns and so forth lies with you, not the accountant, so it important not to assume that simply because you have hired the accountant everything has been handled to time and correctly. A good accountant will welcome you taking an active interest in your finances and will be happy to keep you up to date. Although legal avenues such as a claim against your accountant’s professional indemnity insurance may apply when they can be shown to be at fault, these should be considered very much a last resort. Particularly where tax is concerned, it is always better to avoid late submission or payment, even if this means paying too much – overpaid tax can be reclaimed, but fines and interest charges will not normally be withdrawn or reduced.
Changing your accountant is a business activity like any other, and like any other will run much more smoothly if approached in a businesslike and professional fashion. A useful rule of thumb is that the end of your relationship with your ccountant will probably mirror the rest of your dealings with them – if you have allowed matters to become messy and uncontrolled then expect difficulties, while a relationship based on information sharing, openness and trust may easily be brought to a conclusion in an amicable and professional way.