Many of us stay with the same bank for decades, without considering whether we’ve made the right choice. The same is true with accountants, where clients often remain loyal for long periods, which is great if you’re getting what you want and work well together. Sometimes though, people have reasons for wanting to change but don’t, being concerned about the risk or hassle that might be involved. It’s not as hard as it’s perceived to be though and here’s an insight into what’s involved.
YOUR NEW ACCOUNTANT
If you’ve decided to change, the first order of business is to find yourself a new accountant! You will also need to notify your existing accountant of the change, giving your consent to release your records and share information. Your new accountant can often provide a simple pro forma letter you can use for this, should you need one.
There are a couple of straight forward formalities that you’ll need to go through with the new accountant. The main one is that all accountants are legally obliged to undertake some simple checks before taking on new clients and you may well be asked to provide current proof of your identify and address. This is part of the accountant’s responsibility to help HMRC combat fraud and illegal money laundering but it’s nothing to be concerned about.
THE HANDOVER PROCESS
The good news is that your new accountant and the previous one will generally manage the handover between themselves. If your existing accountant belongs to a chartered body or is otherwise professionally qualified, they will be duty bound to fully support the handover within a reasonable timeframe, in the best interests of the client.
Your new accountant will write to your previous accountant to ask for “Professional Clearance”, which involves providing information and documents to ensure a smooth handover. Typically, this will include things like the latest accounts and returns, breakdown of assets, tax computations and details of any outstanding issues with HMRC. It is very unusual for your existing accountant to charge you for handing over, since it should not take long to compile the information and documents from their files. They could charge a small fee for about an hour of their time but, in practice, very few accountants do this.
Following “Professional Clearance”, you will normally be asked to agree and sign a “Letter of Engagement” from your new accountant. This defines the scope of work and everyone’s responsibilities. It can look detailed but it’s not especially onerous and makes sure everything is clear up front.
The most common problem is a dispute with your existing accountant, where they charge you a fee you don’t think is appropriate and they want it resolved prior to handover. If they belong to a chartered body they should not refuse “Professional Clearance” on the basis of a fee dispute alone, although they are entitled to advise your new accountant of the circumstances. Your new accountant may be able to assist in resolving the problem.
Another problem may be that your existing accountant does not respond, although this would be very unusual from a member of a chartered body. This could occur if they are no longer in business, are unqualified or simply refuse to answer correspondence. If this happens then your new accountant must make a reasonable attempt to contact them and obtain a response. If all else fails then it can be inconvenient but, for a small business, it’s unlikely to be a significant problem.
It’s in everyone’s interests that the handover runs smoothly, including the outgoing accountant. Although no-one likes to lose a client it’s just part of being in business and accountants do value their professional reputation. Professional bodies also have ethical guidelines and rules in place to make sure this happens. It’s generally much easier than you think!