Should I change my accountant?

[booms]

Hi all,

I’m trying to get a feel for whether I should move to another accountant. I started my first contracting gig about six months ago – so this is my first accountant and I’m not sure if my expectations are fair.

Basically I’ve not been very impressed with them so far, and I don’t really trust their tax advice. That alone is probably good enough reason to move…

Since I’ve started, they’ve:

• Given me advice on charging personal mobile phone contracts through my company that I consider wrong, if not just a bit ‘brave’
• Repeatedly asked me if I wanted to pay myself a pro-rated salary based on the optimal £8,060, ignoring that I’ve already done salaried work in the 16/17 tax year and already used up my PA and most of my BRB (yup, I’d already sent them my P45)
• Then my specified accountant disappeared and I’ve been without an allocated accountant for about six weeks and still don’t have one.
• Then started asking me again if I wanted to pay myself a pro-rated salary based on £8,060, and when I’ve again said it doesn’t make any sense given my pre-existing 16/17 salary, weasled out of it and said ‘it depends what I want to do’.
• When I’ve asked them about paying myself a dividend they’ve said I can basically just do a bank transfer from my business account to my personal account without any mention to all of the documentation that’s required
• On a side note, my VAT registration took four months, and on the back of everything else I can’t help but feel it had something to do with them!

I’m paying about £100/month including the VAT which seems a pretty good price, and they use Freeagent which I really like.

Is this all par for course, and I shouldn’t expect anything better, or should I be jumping ship? I’d expect them to give better tax advice given the information I’ve already given them, and they don’t seem particularly proactive.

But it does seem a bit silly to pay them money and then spend my time on here trying to figure out if I trust them.

[Fred Bloggs]

Sounds hopeless to me. As you have FreeAgent moving should be pretty painless. You can find my recommendation if you poke around here.

[RonBW]

Is this all par for course, and I shouldn’t expect anything better, or should I be jumping ship? I’d expect them to give better tax advice given the information I’ve already given them, and they don’t seem particularly proactive.

It's not par for the course to be given bad advice like this. Change accountants.

[WordIsBond]

I've heard of other slow VAT registrations, that might not be them. Other stupid stuff is them. Change.

What was the advice on mobile phones? YourCo can take out a mobile phone contract for you, even if you use the phone for personal purposes. That's crystal clear. So depending on what advice they gave you, you might be mistaken, and they might be right, on that one. But the salary thing is pathetic.

[pr1]

I was given the same bad salary advice when I started contracting (7 months into a tax year working perm)

I binned them off

[TheCyclingProgrammer]

It sounds like you're not happy and you've had some iffy advice so yes, I'd change. Happy to recommend my accountants: FreeAgent Accountants - Freelancer & Contractor Accountants.

[RonBW]

It sounds like you're not happy and you've had some iffy advice so yes, I'd change. Happy to recommend my accountants: FreeAgent Accountants - Freelancer & Contractor Accountants.

Even if you don't use them, it's worth signing up to their mailing list / blog.

[Maslins]

From a very practical perspective:
- mobile phone - in the grand scheme of things, it's typically trivial.
- salary - if you've already earned more than the personal allowance there's often no benefit to taking further salary...but often it's no loss either. NICs are "per job", so previous earnings are irrelevant. Therefore if you've earned (say) £20k already, then taking further salary at up to the NIC threshold is typically costing you 20% income tax but saving the company 20% corporation tax, net impact = £nil.
- dividend - well, strictly that's a bit iffy, but in practice I imagine that's what most contractors do and don't suffer any ill effect.
- VAT registration - this one did surprise me. Whilst ours can vary from a couple of days to a few weeks, I don't think we've ever had one take more than a month. Have you been given any reason for the delay?

Reality is if you're not happy, you should change. However, I guess it depends a bit on the finer details of the advice you've summarised below. There could be some arguments that it was all fine in context, but equally they could be clueless. Hard to tell.

[Alan @ BroomeAffinity]

From a very practical perspective:
- mobile phone - in the grand scheme of things, it's typically trivial.
- salary - if you've already earned more than the personal allowance there's often no benefit to taking further salary...but often it's no loss either. NICs are "per job", so previous earnings are irrelevant. Therefore if you've earned (say) £20k already, then taking further salary at up to the NIC threshold is typically costing you 20% income tax but saving the company 20% corporation tax, net impact = £nil.
- dividend - well, strictly that's a bit iffy, but in practice I imagine that's what most contractors do and don't suffer any ill effect.
- VAT registration - this one did surprise me. Whilst ours can vary from a couple of days to a few weeks, I don't think we've ever had one take more than a month. Have you been given any reason for the delay?

Reality is if you're not happy, you should change. However, I guess it depends a bit on the finer details of the advice you've summarised below. There could be some arguments that it was all fine in context, but equally they could be clueless. Hard to tell.

I was just about to write a very similar post to this. It's good advice. One thing I'd add is maybe escalate to a director/partner in case it's only a problem with the accountant. Maybe you can change accountant without changing firms.

[EinsteinTax]

Paying some salary could be optimal

• Repeatedly asked me if I wanted to pay myself a pro-rated salary based on the optimal £8,060, ignoring that I’ve already done salaried work in the 16/17 tax year and already used up my PA and most of my BRB (yup, I’d already sent them my P45)

These guys don't sound perfect, but if you've not used your full basic rate allowance it can be a good idea to pay a pro-rata £8,060 salary to take you up to £43k and then £5k dividends.

Dividends are potentially taxed at up to 32.5% after suffering 20% Corporation Tax.

If you had earned £38k in previous employment, you could potentially take £5k salary (20% personal tax) and £5k dividends (after 20% Corporation Tax).

If you take £10k in dividends (instead of £5k salary and £5k divs) you would pay 32.5% tax on £5k dividends which is an unnecessary £1,625 of tax.

It all depends on your previous earnings, but it's certainly not always a bad idea to pay some salary in your situation.

It's reasonable for you to have expected your accountant to explain this to you.