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Fee for finalising Property Rental Accounts & SA Tax Rtn for H&W

Fee for finalising Property Rental Accounts &...

Hi all. This question seems to come a lot to us in these recessionary times & we thought we will get views from our other colleagues on the web.

We have been approached by a client to finalise the Tax Rtn 2012 of H&W and between them they own 3 BTL residential properties. Both work on PAYE and even after inclusion of their rental profits, they will each be under basic rate tax band (so little tax planning involved here). They have no other source of income. Their record keeping is reasonable and their expense receipts are not too much too. Of course they have the normal monthly letting statements, Tenancy agreements, Bank Stat, Mortgage Interest Stat, Completion Stat, etc No record maintained on spreadsheets or Accting software of their rental income & expenses. We have a lot of work on at present but can accept this assignment as we are ahead of our targets. Based on outskirts of London, we were planning to charge a fee of £375+VAT per person. The client thinks this is too much 'cos once we have established the income & exp of rental profits, the other is a mirror copy except of course for their respective PAYE income which does not take too long to enter on their SA Tax Rtn. The VAT in our fee is biting them but we are VAT registered so cannot do anything about that. Do you think they have a point? Would you charge less or more than that? How do you justify your fee? We do not want to lose the client but then do not want to encourage other clients that pay us low fee too.

 They claim that their present Accountant is a bit further away from them so they are looking for someone local and that we are to them.  

Your views wil lbe highly appreciated .

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By thomas
12th Dec 2012 13:02

I'd do it for about £400 +

I'd do it for about £400 + VAT in total. As you say the work is in the calculation of the rental income and assuming its not overly complicated that should be about 2 hours work. Im in the midlands though, work from home so have lower overheads to cover.

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By thomas
12th Dec 2012 13:02

Or ask them to put all the information onto excel and reduce your fee accordingly.

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By AccSec
12th Dec 2012 13:14

You are right thomas but..

...we are in an office block and our overheads are higher (and also have staff) so could not do it for less. Our fee for rental accts will also give them tax relief and filing the ITR online is the only option to avoid late filing penaty. We have tried to advice them that we can assist them in future tax planning for IT, CGT & IHT purposes but of course that will be an extra cost. If we spend more time in these areas, we can save them the taxes but the point is they don't appear to want to pay extra fee for that too!!!  Do we really live in very challenging times?

 

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12th Dec 2012 13:57

£500 + VAT

Seems right, we are a city centre office - not in london I may add.

But £750 + VAT does seem steep.

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17th Dec 2012 15:07

500 + VAT ????? er im a bit lost ere

JCresswellTax wrote:

Seems right, we are a city centre office - not in london I may add.

But £750 + VAT does seem steep.

375+VAT per unit equals? Perhaps my abacus needs new batteries but HTF does 375 go into 750 without a remainder? And you've the cheek to add tax to your name!
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By LyneT
12th Dec 2012 14:48

About right

I think you are about right.  I would not do this for less than £375 per person.  I also would never negotiate on fees, because once you start doing this you never stop.  I don't want clients who moan about their fees.  There are pleny of clients out there without having to do that.

I do work for quite a few solicitors and some accountants, and solicitors will negotiate and compromise with the clients much less than accountants on hourly rates and fees.  However, they do  seem to be worse than accountants at raising the topic in the first place.

I think many accountants undervalue themselves from a fee point of view.  I think £375 per person is quite reasonable.  As well as completing the returns etc, there is checking HMRC computations, speaking to the clients on the phone etc. 

If you think you have got the fee right, I would not compromise.

Only my thoughts, others may have different experiences and views.

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By dreamcatcher
12th Dec 2012 15:57

£500 to £600 + VAT

I would look to charge £500 to £600 + VAT.  We are based in Sheffield so at London prices £750 + VAT seems about right to me.

I'm with LynnT here I never negotiate on fees when it comes to pure SA cases.  If clients don't like the price then they use another accountant.   

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By NH
12th Dec 2012 16:17

how long is a piece of string?

How long will it take you to do a quick add up of the receipts (probably a junior member of staff will do that), and put the P60 figures into your software - I guess between one and two hours max.

£375 + VAT for both is a good fee, £375 each too much.

But then again thats your choice, I am sure if they went to KPMG it would be twice as much again....

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By AccSec
12th Dec 2012 17:25

Thanks for everyone's contribution

I agree with LyneT & dreamcatcher that there there is a lot of work involved as above. However, tend to look a lot deeper into clients tax afairs to see if we can save any more monies in taxes or not. We examine their tenancy agreements, loan agreements, structure of finances (for maximum interest claim), compute a schedule of additions to cost of purchase (for ultimate CGT comps when sold/gifted,etc), the split of profit between H &W bearing in mind thier income, declarations,elections, etc. This additional work helps in reducing their taxes but is more time consuming.

If we were to make it clear to clients that if they want compliance work in completing their returns (which would probably be NH's route) then their fee will be lower but if they are looking for more in-depth analysis where we can spend more time to extract maximum tax savings then the fee will be higher, then it may probably work.

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13th Dec 2012 07:32

Choices

AccSec wrote:

If we were to make it clear to clients that if they want compliance work in completing their returns (which would probably be NH's route) then their fee will be lower but if they are looking for more in-depth analysis where we can spend more time to extract maximum tax savings then the fee will be higher, then it may probably work.

Why haven't you given them the choice already? You are making a lot of assumptions, and they may have had a review done previously so why would they want to pay for another?

If they just want compliance (and no in-depth review or tax planning) then give them what they want. Better to have a decent fee for compliance work (and a happy client) than nothing at all. If you only want clients that can/will pay for lots of 'added value services' then these clients won't make you happy, so let them go.

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By pedant
12th Dec 2012 17:32

What happened to honesty?

Surely your charge is based on the time taken to complete the returns. If it takes 3 hours, you don't charge for 5.

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By AccSec
12th Dec 2012 17:39

That is correct

@pedant what you say is correct. If it takes us 3 hrs to do the compliance work then we will charge for 3 hrs but to analyse the other aspects I noted above, requires expenditure of greater time and this would be reflected in the higher fee. Remember, you need a be well conversant with the tax rules and therefore it is not a junior that can help in spotting the tax opportunities. That is where the premium has to come in.  

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By pedant
12th Dec 2012 17:48

It doesn't matter

how the time is used, whether you call it "compliance" or "preparation".

If you can justify it, then charge it.

"We have a lot of work on at present but can accept this assignment as we are ahead of our targets. " sounds like you're more interested in the money than helping the client.

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12th Dec 2012 19:38

income is marginal beyond a certain point

so its all extra if you start applying oheads to all fees and deciding on that basis alone you cant grow aas efficiently as you like , and on an opportunist costing basis?

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13th Dec 2012 07:52

We just had

similar job to the one the OP describes. We billed it £150 for the land and property accounts and £150 (our min. fee) for each self assessment + VAT. Our total time came at just over three hours (no client meeting). This was a compliance only job with no tax advice required.

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13th Dec 2012 10:05

quote

I would quote £300 + VAT per person.

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By AccSec
13th Dec 2012 10:34

I saw something interesting too

@canaryboys-it makes a lot of sense too. I visited a few of the online Accountants websites that specialise in this area and it appears that a lot of them charge on the basis of the no. of BTL properties (ranging from £85-£125 per property per person) in addition to a fixed fee for completion of SA Tax Return. This makes a lot of sense too as there is more involved if there are more BTL in future years too.

@ShirleyM-Thanks for your valuable input too as I guess I was just seeking reassurance that we are on the right path and we now know that we are, without being unfair to the client as well as ourselves.

Thanks to all other members too for your thoughts.

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14th Dec 2012 04:00

Waaayyyy Toooo Looow Feeeeees

I have just recently taken on a couple of clients who have rental properties and the preparatory work and multiple Qs through email, so as I may be as exact as I can, as is my norm, were numerous. Letters, phone calls and an initial meeting, fact finding, a bit more than most on here, and setting up a file, all takes time that some people on here seem to waive a magic wand at and produce and not eat into their time.

Lots of initial expenses listed by client prior to leases with tenants which I have had to explain have been largely capital in nature and meant their thoughts of large losses and setting off against other income etc all had to be explained. I have listed allowable expenses for CGT later calculations and explained this and by the time I am comfortable with the figures for the SATR for 11/12 and deducted a genuine 25% FYD and then a further largish discount to attain a previously agreed rather silly low fee, I have completed for not much more than half my already very modest hourly rate of £30. 3 properties, 2 of which partly owned.

I would love to care less and do for £400 for 2 hrs work whilst also working at home (Do you really charge that at home?) or could I morally do that?

By the way, I have exluded about 3 or 4 hours of study time too to be super fair.

I think I may have to be much tougher on fees, push to 100% client capacity first, in the spring, which should be easy enough and then care a wee bit less about clients as you simply cannot pls all people all day every day especially tradesmen whom I have as about 60% of my clientele.

Although this is not about the self employed, trying to pls the self employed, mainly tradesmen and getting them to turn up on time, never mind appreciate the work you do for them at rock bottom prices, is almost impossible. They are after all, not all, but by and large, a bunch often difficult to get on with when you have the morals and standards I have of expecting them to turn up on time and get info requests to me within 20 attempts etc and they need a calendar instead of a watch, less of a jump down your throat and I'll argue about anything attitude. I have this is all a wee bit wrong at the moment and I'm working myself ragged for silly money on most of my clients.

 

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By AccSec
14th Dec 2012 12:54

i sympathise with you..

@rhangus. As LynnT says, sometime we undervalue ourselves as Accountants. There is a lot of work involved in carrying out a professional job like this.

To other contributors, may I add that I have since spoken to this prospect and when I suggested that we will charge £375+VAT per person, he couldn't wait to get off the phone. The prospect was happy until I said that the fee was per person. All my talk about how we can assist him in reducing his tax liab fell to deaf ears. I did not compromise on the fee and I am now relieved that I did not accept this assignment. However, I felt stupid as well 'cos I did spend a lot of time going through his rental & tax affairs at our initial meeting (more then an hour an a half) when I should probably have given him a range of fee even before taking this free consultation forward. Valuable lesson learnt, though!!!!

Hopefully, we can all learn from this for the next time.

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14th Dec 2012 14:54

Do not forget to check ownership at the Land Registry

I just do not understand why clients think that they can just make this stuff up

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15th Dec 2012 17:03

Is it necessary to check the land registry for all buy to let properties? surely if the client gives this sort of incorrect information then they take full responsibility if the apportioning of income is incorrect - they do sign that they have provided all relevant information

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By ringi
17th Dec 2012 14:32

Thinking of this from a client’s viewpoint.

We have two rental properties and both do tax return, so what would we be willing to pay if we got an accountant to do the work?

The fact that an accountant decides to have expansive officers etc is of no value to us, so should not affect the cost of the work.

I would want an accountant that is a specialist in property, ideally someone that invests in property themselves and is well respected on property forums etc.    For example Stephen Fay, his charges are listed here, about £110+vat per tax return and £80+vat per property.

I would expect a “do everything” accountant that is not dealing with landlords every day of his/her life to charge a lot less.  

A specialist accountant will already have template letters wrote to explain what is capital and revenue ect as well as articles published in magazines on property related subjects. 

(At present we don’t pay an accountant to do our tax returns, as there is nothing complex on the tax side and the book keeping is easy, however if we buy another property I may start to use Stephen Fay due his is experience in knowing how far revenue/capital can be pushed on pre-letting work.)

My only connection with Stephen is reading some of the fee advice he gives out, and knowing some of the clients he has that are people I greatly respect.

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17th Dec 2012 15:16

BLAH BLAH

ringi wrote:

We have two rental properties and both do tax return, so what would we be willing to pay if we got an accountant to do the work?

The fact that an accountant decides to have expansive officers etc is of no value to us, so should not affect the cost of the work.

I would want an accountant that is a specialist in property, ideally someone that invests in property themselves and is well respected on property forums etc.    For example Stephen Fay, his charges are listed here, about £110+vat per tax return and £80+vat per property.

I would expect a “do everything” accountant that is not dealing with landlords every day of his/her life to charge a lot less.  

A specialist accountant will already have template letters wrote to explain what is capital and revenue ect as well as articles published in magazines on property related subjects. 

(At present we don’t pay an accountant to do our tax returns, as there is nothing complex on the tax side and the book keeping is easy, however if we buy another property I may start to use Stephen Fay due his is experience in knowing how far revenue/capital can be pushed on pre-letting work.)

My only connection with Stephen is reading some of the fee advice he gives out, and knowing some of the clients he has that are people I greatly respect.

I am a bot, I have been sent from my space to inhabit the body of a real person. I will troll the web and plug, pitch or promote my controller's business by any means possible. At present I use Fred Flintstone, the only accountant with a QWERTY year guarantee that you'll not be caught short in your tax calculation.
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By ringi
17th Dec 2012 15:25

Before claiming I am a bot, go and look at my posting history!

Paul Cleverley wrote:

ringi wrote:

We have two rental properties and both do tax return, so what would we be willing to pay if we got an accountant to do the work?

The fact that an accountant decides to have expansive officers etc is of no value to us, so should not affect the cost of the work.

I would want an accountant that is a specialist in property, ideally someone that invests in property themselves and is well respected on property forums etc.    For example Stephen Fay, his charges are listed here, about £110+vat per tax return and £80+vat per property.

I would expect a “do everything” accountant that is not dealing with landlords every day of his/her life to charge a lot less.  

A specialist accountant will already have template letters wrote to explain what is capital and revenue ect as well as articles published in magazines on property related subjects. 

(At present we don’t pay an accountant to do our tax returns, as there is nothing complex on the tax side and the book keeping is easy, however if we buy another property I may start to use Stephen Fay due his is experience in knowing how far revenue/capital can be pushed on pre-letting work.)

My only connection with Stephen is reading some of the fee advice he gives out, and knowing some of the clients he has that are people I greatly respect.

I am a bot, I have been sent from my space to inhabit the body of a real person. I will troll the web and plug, pitch or promote my controller's business by any means possible. At present I use Fred Flintstone, the only accountant with a QWERTY year guarantee that you'll not be caught short in your tax calculation.

Before claiming I am a bot, go and look at my posting history!

If the above had been posted by a new user that had just register, then you would be right to question it.

 

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18th Dec 2012 11:57

Apology to ringi & others.

ringi wrote:

Paul Cleverley wrote:

ringi wrote:

We have two rental properties and both do tax return, so what would we be willing to pay if we got an accountant to do the work?

The fact that an accountant decides to have expansive officers etc is of no value to us, so should not affect the cost of the work.

I would want an accountant that is a specialist in property, ideally someone that invests in property themselves and is well respected on property forums etc.    For example Stephen Fay, his charges are listed here, about £110+vat per tax return and £80+vat per property.

I would expect a “do everything” accountant that is not dealing with landlords every day of his/her life to charge a lot less.  

A specialist accountant will already have template letters wrote to explain what is capital and revenue ect as well as articles published in magazines on property related subjects. 

(At present we don’t pay an accountant to do our tax returns, as there is nothing complex on the tax side and the book keeping is easy, however if we buy another property I may start to use Stephen Fay due his is experience in knowing how far revenue/capital can be pushed on pre-letting work.)

My only connection with Stephen is reading some of the fee advice he gives out, and knowing some of the clients he has that are people I greatly respect.

I am a bot, I have been sent from my space to inhabit the body of a real person. I will troll the web and plug, pitch or promote my controller's business by any means possible. At present I use Fred Flintstone, the only accountant with a QWERTY year guarantee that you'll not be caught short in your tax calculation.

Apology if I offended, I wasn't having a go at you, I make an error in reading and division, hence my post aimed squarely at myself. Will engage brain & check mental arithmetic in future.

Before claiming I am a bot, go and look at my posting history!

If the above had been posted by a new user that had just register, then you would be right to question it.

 

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By VLH
17th Dec 2012 15:06

We bill based on time taken

A very basic tax return takes a minimum of an hour with all the required due diligence, checking of HMRC statements in the year etc.  Property rentals I usually reckon on half an hour per property.  Three rental properties = 1.5 hours plus 2 SARs say 3.5 hours at whatever chargeout rate is applicable.  We're in Lincolnshire but based on this calculation would be charging half what AccSec is quoting with the work done by a partner.

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By Monsoon
17th Dec 2012 15:15

Maths

Paul, 375 goes into 750 twice, exactly. 

Me, I'd probably charge £375+VAT for the lot, from good records - and I don't consider myself at the cheaper end of the spectrum.

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17th Dec 2012 15:19

Maths

Monsoon wrote:

Paul, 375 goes into 750 twice, exactly. 

Me, I'd probably charge £375+VAT for the lot, from good records - and I don't consider myself at the cheaper end of the spectrum.

Taken, reading 3 & 2's incorrectly. SLAPPED!

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17th Dec 2012 15:37

£500+vat is what JCresswellTax would charge

which is why they reckon £750+vat (which is indeed exactly twice £375+vat) is a bit steep. I think Paul Cleverley's abacus needs a total overhaul, not just new batteries - when did 375 ever go into 750 WITH a remainder?!  I would doubt it would work out at less than £600 of my time (excl vat) and poss a bit more in year one.

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18th Dec 2012 12:00

500 + VAT is what .....

susanna russell-smith wrote:

which is why they reckon £750+vat (which is indeed exactly twice £375+vat) is a bit steep. I think Paul Cleverley's abacus needs a total overhaul, not just new batteries - when did 375 ever go into 750 WITH a remainder?!  I would doubt it would work out at less than £600 of my time (excl vat) and poss a bit more in year one.

Yip, need to check mental arithmetic, read one thing and interpreted it completely differently.

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By Wilts
17th Dec 2012 16:02

Wow!!!
At these rate I am way too cheap... I would be looking at £450 for the job lot. If it takes me a day then thats fine with me.
Oh and by the way if anyone wants to sub-contract any of this please let me know as you can see my rates are very reasonable! :o)

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21st Dec 2012 11:50

Waiting

for Bob to come in on this.
 

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