Switching contractor accountants

For any contractor, switching contractor accountants may be a fact of life as circumstances change. The relationship between a contractor and an accountant is key to the success of your business, and when it's working it's a great experience: they understand your business and your way of working almost as well as you do, they know your industry and they can create tailored solutions that are quick and make your life much easier. If your business grows or changes, your industry shifts, customer service levels drop, or you find yourself operating a different model, that relationship can drift off course: you're no longer quite as in-tune with your accountant as you once were, and it's time for a change.

Changing times

The first thing you need to ask yourself when considering switching contractor accountant is what it is you want from a new provider that you weren't able to get from your old one. If industry knowledge was a problem, you may want to seek out an accountant who specialises in your specific industry - from IT to finance, there are accountancy specialists for every industry there is. Accountants also specialise in different areas, for example, they may focus on UK tax law or have a particular expertise in contracting. If that's the direction your business is heading in, it's worth considering if your potential new firm will be able to handle your future plans. When choosing your new limited company accountant you might also need to consider which software they can work with, whether they are professionally regulated, and what knowledge they have on IR35 – as these are areas which may be becoming increasingly important to you.

Different models

There are a number of pricing models commonly available on the market, and a number of packages to suit different needs. For example, some accountants offer a software-based service which can be cheaper and faster to manage, but lacks a personal touch and may not be suitable for more complex or out of the ordinary businesses. There is also the option to choose a bespoke service for a separate fee, or have the accountant perform the full suite of tasks your company needs - from invoicing to payroll. Limited company contractors may benefit from picking and choosing the services they have provided to them, as contractor accountant fees can vary from around £60 to £150 but are likely to offer different components.

The switch

You've found a new contractor accountant that ticks all the right boxes, and you're ready to take the plunge - but the next stage is vitally important to getting a clean break from your current accountant. The switch itself is relatively straightforward and is largely completed between your old and new accountants, with the legal assumption of your business requiring some legal checks and paperwork before it can go through. But there are things you can do to avoid any unexpected hiccups.

Firstly, check your contract with your old contractor accountant to make sure there are no clauses in place to prevent you switching to a new accountant immediately - such as notice periods. You should also ensure that you have no outstanding invoices with your old accountant, because you might not be able to switch until all debt is cleared. The more difficult the switch from their perspective, the less they'll be inclined to help you, and so the more difficult taking on the new accountant will be.

It's also important that the handover is able to happen smoothly between your accountants, so try to conduct the switch in a quiet period when there isn't much work for them and there are fewer loose ends to tie up between them, for example after the financial year end. Remember: you are ultimately responsible for any tax liabilities that happen as a result of a botched transfer of accountants, so it's in your interests to ensure the process happens as smoothly as possible.

Your new accountant

The new company that will act as your accountant should be able to help you in every way with the setup process, but there are a few steps you must take before you can start work together. Firstly, you'll need to authorise the accountant to work with HMRC on your behalf - which requires you to sign a new 64-8 form or register online. Chartered accountants will then send an official letter from ICAEW which sets out both parties' expectations, rights and obligations so that this is clearly stated at the beginning of the process. At this stage, depending on your old accountant’s filings, you may have to negotiate an additional fee for your accountant to get your house in order as soon as they start. The new accountant will write to the old accountant requesting access to your tax records and notification of the change.

Whatever the motivation for switching contractor accountants the process should be straightforward, but of course this can be dependent on the old and new accountant working together.

Further reading:

Contractor Accountants Directory

Contractor Accountant Fees – how much do they cost?

Choosing a Limited Company Accountant