What You Should Know Before Appointing An Accountant
If you are appointing an accountant in the near future here is all you need to know.
Accountants are expected to be reliable and trustworthy. For example, when you apply for a new passport, ‘accountant’ heads the list of professions that the Government accepts to verify your identity.
The trouble is, not all accountants are the same.
Not all accountants are accountable.
The surprising fact is that anyone can call themselves an accountant – without taking an appropriate qualification or meeting any objective standards.
One third of high street accountants are unregulated. Here’s what this means:
What you should know about accountants
Unregulated accountants and agents are more likely to promote tax evasion and money laundering activities, whilst their mistakes and errors can leave many taxpayers with large and unnecessary fines and penalties.
Most people are simply unaware of these facts – and the risks they could be exposing themselves to by using an unregulated accountant.
“If small business owners aren’t aware that people without appropriate qualifications or recognition can operate as an accountant or tax agent, there is an inherent risk of inappropriate advice.”
What happens if you appoint an unregulated accountant?
Employing an unregulated accountant can appear to be a money-saver. But businesses can pay dearly through missed opportunities, fines and even fraud.
Seven out of ten AAT members say their clients have suffered trauma and loss at the hands of unregulated accountants.
of AAT accountants said they had witnessed malpractice by unregulated agents.
said unregulated accountants had caused their clients harm.
said the situation had worsened in the pandemic.
The Government is concerned by the mounting evidence of tax avoidance, unethical and even illegal behaviour by unregulated accountants. As a result, it is finally looking at ways to raise standards and protect consumers.
The Government’s favoured plan is to make Private Indemnity Insurance (PII) mandatory for all accountants.
However, simply requiring unregulated tax advisers and accountants to hold PII will do nothing to address the causes of incompetence, poor advice and in some cases, dishonesty.
Buyers of accountancy services should be aware that insurance won’t magically make inept accountants competent. Neither will it make them knowledgeable about the Coronavirus Job Relief Scheme or regulatory changes, such as Brexit, Making Tax Digital and IR35 employment rules. It won’t stop unregulated accountants from behaving unethically, charging for information that should be free or failing to file accounts and returns properly. It will simply mean that, in some cases, some costs could eventually be recovered.
Bad accountants may be able to get PII and continue to attract new customers until their misdeeds come to light. By then, for some, it will be too late.
How can you look after your interests?
It will take time for the law to be changed to protect consumers. In the meantime, be an aware buyer.
Here are the essential questions we recommend that you ask your accountant to have peace of mind: