Accountant's fee for tax return

Accountant's fee for tax return

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 My accountant has charged me £1170 for preparing accounts for a small business which makes a very small profit.  We hand over all the necessary paper work, properly filed, which basically just needs  verifying.  I plan to question the fee. I would be grateful for comments on what the fee should be, how it can be justifiable to charge such a large amount, how to approach the accountant if the amount is out of proportion to similar accountancy situations and what I should do if a response by the accountant is unsatisfactory

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By ShirleyM
20th Feb 2014 15:53

How long is a piece of string?

It depends on so many factors. You have given no information except 'my partner & me', which suggests it is a partnership, and that is usually more expensive than a sole trader as there are 3 tax returns, instead of one.

Also, I find that 'records have been thoroughly prepared' means different things to different people, and they can be 'prepared' in such a way that the accountant has to redo the bookkeeping from scratch.

Having said that, you should have asked for a quotation beforehand. Were you given a ballpark figure for the work?

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Replying to Portia Nina Levin:
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By sandieluti
20th Feb 2014 16:07

Accountant's piece of string

Thanks.  My partner and I are billed separately for our personal tax returns which makes the fee even more. 

I need to ask the accountant if he has to redo the bookkeeping from scratch, in which case fair dos, but I would be surprised if this were the case.  But it is a fair point.  I have already drafted a letter to him in which I state, "If the amount we are charged is regardless of how we present the paperwork, then we would need to review the amount of time and effort we spend gathering and organizing the required information."  Your view? 

In answer to your last point and question, "you should have asked for a quotation beforehand. Were you given a ballpark figure for the work?"  the answer to both is No regrettably.

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By Ken Howard
20th Feb 2014 16:07

What book-keeping did you do?

You say you handed over paperwork, properly filed, but did you actually do any book-keeping, i.e. entering, analysing and reconciling the transactions into book-keeping software or some kind of analysis book?  If so, what system did you use and did you balance & reconcile it all, i.e. check that the bank balances per your book-keeping agreed exactly with the bank statement closing balance each month?

To be honest, £1170 doesn't sound too high unless the "books" were absolutely perfect, accurate and properly analysed.  We charge around £750-£900 as standard for a 2 person partnership with average quality record keeping, and we know we're cheap compared to local High Street firms and we're not in an expensive city, but in a relatively rundown area of the country.

As requested by others, what quote were you given by the accountant?  What does the letter of engagement say as regards their hourly rates.  It doesn't really matter what another accountant would charge - If they've charged the hourly rates as specified in their letter of engagement or elsewhere and they've actually spent a number of hours working on your affairs, then you've no real complaint.  Time to dust off the letter of engagement and any quotes etc that they provided when you first appointed them to see the detail of what you agreed to.

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Replying to @inforubina:
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By sandieluti
20th Feb 2014 16:11

Reply to Ken Howard

Thanks Ken

I have a lot to think about obviously.  I hope to reply to you in the next day or so.

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By ccassociates
20th Feb 2014 16:29

Make a living

From your post we do not know how much paperwork was involved, what the nature of your business is, and how and when you presented the information. was it a last minute job for example?

Your Accountant is in business to make a living, A charge of £975 plus VAT does not seem excessive, if he has prepared a set of accounts and a tax return. Your Accountant would have made sure the accounts are correct would have checked and reconciled the Bank account, and cash account and made sure that there were no issues that would cause problems with the taxman. He would have studied hard for at least three years to put himself in a position where he could do this and be satisfied the he has done this correctly.

Incidentally the fact that the business made a very small profit does not reduce the amount of work that is needed to prepare the accounts

If you consider that filing the paperwork reduces the amount of work you are wrong I'm afraid, as mentioned in an earlier post, did you actually do any financial analysis or reconciliation?

You should have asked how much it would have cost before you agreed the work so you got no surprises and the accountant could justify his fee

Did you get a letter of engagement outlining the charges?

 

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By mrme89
20th Feb 2014 16:34

 "My accountant has charged

 "My accountant has charged me £1170 for preparing accounts for a small business which makes a very small profit."

 

The profit doesn't reflect how much should be charged. It is based on the time spent doing the work.

 

If it was based on profit, Ocado with a turnover of around £600m but has losses wouldn't pay a penny.

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Replying to chicken farmer:
Red Leader
By Red Leader
20th Feb 2014 17:05

below VAT threshold?

You mention a charge of £1,170 which as another poster has said happens to be exactly £975 + VAT. If the cost to you is £1,170 as you imply, that would indicate your business is not VAT registered as you are not recovering VAT. Turnover below £79k does sometimes indicate that there is less work to do. On the other hand, a fee of £975 suggests that the accountant may have incurred time costs of >£1k but kept the fee to under £1k.

If a full set of accounts have been prepared (Profit & Loss Account and Balance Sheet) and it is a partnership not a limited company:

Many husband and wife partnerships don't feel the need to prepare a full set of accounts as there is no legal requirement to do so. There is however a requirement to arrive at figures for sales and expenses which would take less time than full accounts and so cost less.

In either case, the extent to which you have done more than just present the accountant with a file of invoices and bank statements will affect the fee.

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Replying to DJKL:
Euan's picture
By Euan MacLennan
20th Feb 2014 17:24

Flat Rate Scheme?

Red Leader wrote:

You mention a charge of £1,170 which as another poster has said happens to be exactly £975 + VAT. If the cost to you is £1,170 as you imply, that would indicate your business is not VAT registered as you are not recovering VAT.

 ... or that he is registered for VAT under the Flat Rate Scheme and cannot reclaim input VAT.

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By sandieluti
06th Apr 2014 20:43

Thank you.

I shall pursue some of the points you make

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