Thoughts from an Accountant

Every business is required by law to keep accurate records of their income and expenditure. Apart from recording the financial transactions of the business, owners and managers also need to have an understanding of how their organisation works in order to provide accurate and timely figures enabling them to see how well, or otherwise, the business is performing.

You need to be sure that the person you ask to help look after your business accounting has the necessary skills and experience that you are looking for. It is tempting to think that all accountants are the same, but ask yourself this, if you are starting out what level of service do you want? and if you are established what level of service are you looking for? Extra advice and service is what separates a good accountant from a great one. A client once joked with me that accountants are” ten a penny” but a good accountant is priceless!!

It is easy to think that price is the deciding factor in choosing an accountant and one may incline to the view that the high street firm with “chartered status” will be the best bet.  However, whilst in some cases the high street firm may have the additional resources to offer clients a specialised service that the smaller accountancy practice does not have, a smaller firm like mine can offer a more personal service tailored to the client’s individual needs at a price that will not break the bank.

Value added should be an equally important consideration as the bottom line cost when it comes to choosing an accountant. A potential new client was recently referred to me. His company was limited with a turnover of around £44,000 per annum. His chartered accountant was charging £4,000 to prepare his statutory accounts; I offered the same level of service for £750. Needless to say he is keen to sign up with me especially as I came recommended.

Some people say that they don’t need an accountant or that their mate down the pub will help them and in some cases this may be true, my experience suggests this won’t always be the case. A recent example being where a self-employed client of mine queried the tax rebate I had calculated for him which was significantly lower than their “DIY mates” rebate calculated on the back of his “fag” packet down the pub.

When I probed a little further it came to light that his “matey” had claimed a daily mileage allowance travelling from home to work, which was their “base of operations” and therefore, they were not entitled to claim the mileage allowance.

Under the Self-Assessment regime where an individual completes their own tax return it is possible to claim for all sorts of disallowable expenses which they may inadvertently or otherwise do. The reality is that the chance of being selected for a random enquiry is pretty remote which “matey” may feel all the more reason to claim!!

However, there are plenty of other things you can do to raise your profile with HMRC. Penalties for incorrect returns can be hefty and although staffing levels at HMRC are reducing their computer systems are becoming ever more sophisticated to catch “matey” out.

Benchmarking, comparing turnover, gross and net and profit figures on tax returns within the same employment classifications are now common place. HMRC is currently targeting taxi drivers and pharmacists but you could be next?

Best advice for anyone reading this, who does receive a letter from the taxman, is to seek the help of an accountant before responding. You will almost certainly need the services of an accountant should you have a tax or compliance investigation and It is also worth asking your accountant to arrange insurance against such a risk, to cover your costs in the event of a tax compliance inspection.

As I mentioned earlier a good accountant is “priceless” and will prove to be an invaluable business partner available as a sounding board and source of advice and reassurance. For my clients my emphasis is on providing a professional and cost effective service as and when they need it allowing them to concentrate on their core business activities. I believe that to be successful, a business must continually strive to improve efficiency, drive down costs and increase sale, in order to optimise margins and ensure survival in a competitive market place.  As your business partner I will help you make it happen.

If you have yet to choose an accountant, or you are not happy with your current arrangements, you may be interested to note that I offer an initial 1 hour free “accountancy health check” regardless of whether you have an existing accountant or not which can help you evaluate my services and see if they work for you. If you would like to take me up on this please give me a call on 01255 483494 or email [email protected].

Posted in Accounting Compliance HMRC at 2015-05-01 by Alan Ovenden

Tags: Accounting