My Accountant is killing me with fees HELP!

My Accountant is killing me with fees HELP!

Didn't find your answer?

Hello, 

This is a quite long story but I am going to make it short and simple.  I am a small business owner and in 2010 I was hit with a tax investigation and I was with a Big accounting firm in the UK.   Anyway I have already paid the accountant at ongoing 600 per month to clear arrears, I think I've already paid in excess of 17k.  This is a big accounting firm so I trusted them and they are registered with ICAEW.  Anyway the tax enquiry has finished now I have been landed a further 24k accounting fees, I am dying here.  I trusted the accountant who dealt with this, but it seems he is bleeding me.  I have since met with the accountant who will write off 6K?? But I think I am being robbed, I need expert advice here please.  I don't know where to turn or who to talk to, some of the invoices are duplicates for large amounts.  one invoice for a meeting and obtaining supplier invoices and writing to hmrc and computation of capital gains tax fee was £2k. another invoice for draft accounts for 3 years and further meetings 6k. another invoice in dealing with enquiry for them 3 years and further meetings and obtaining supplier infomation and meeting tax officers another 6k..There is more and more like this, please help.

Replies (19)

Please login or register to join the discussion.

By The VAT Doctor
12th Feb 2013 21:21

Get a full breakdown

I presume that you were not covered by some kind of fee protection insurance (that most of the large firms try to sell you)? Were you offered this?   I would ask for a full breakdown of each persons timesheet and charge out rate.

Of course the starting point with all this is the initial contract you entered into for the work.  What does this say?  If there is no contract or terms, the firm are likely to be in breach of their own insurance cover etc. Did they ley you know fees were building up, or did they just assume?  If the latter, your hand is stronger.

It can be the case that certain types of jobs and certain clients are seen as being more easy to bill time to, and those who are facing large tax clawbacks are one of these, so, as I say, ask for the information and, if the time taken looks to be excessive, challenge it politely but firmly.  If there is no contract or they have exceeded the agreement, your hand is stronger.

Good luck.

Thanks (0)
avatar
By dailyman
12th Feb 2013 21:33

Thanks for reply, I was offered the Tax safe but I did not take this up, I wouldn't have been covered anyway due to the previous accountant underdeclaring items.  The terms of engagement is a generic one I signed at the start when I took them up as my accountant.  Should I write to the companys compliance officer and if so what should I say?  Moreover the fees werent discussed before hand, no quotes given, just here you go the bill pay it now.

Thanks (0)
Replying to johngroganjga:
By The VAT Doctor
12th Feb 2013 21:45

fee agreement

dailyman wrote:

Moreover the fees werent discussed before hand, no quotes given, just here you go the bill pay it now.

I would focus on this as a basis for discussion, because this does seem somewhat odd.  It would obviously make their life a lot easier to keep you updated, provide an estimate etc, but the fact is most large firms HATE discussing fees up front.  That original engagement may not be valid for this type of work.

Some of the other comments made by others I agree with though.

Thanks (0)
Avatar
By I'msorryIhaven'taclue
12th Feb 2013 21:36

How Good was the Outcome?

You say some of the invoices are duplicates - if I were you I would ask for a statement to include all invoices, both paid and unpaid, so that you can check them off against the original invoces.

Then, when you have a complete pile of invoices and are satisfied that you have weeded out any duplicates, list the work charged on each invoice to check for any double-charged work.

TBH a £6k charge for drafting three years' accounts doesn't sound excessive, especially under enquiry conditions. Neither does £6k for handling 3 years' enquiries sound much. You don't say whether the outcome of the enquiry was good for you: did your accountants do a cracking job of defending your misdemeanours, errors and omissions? Or were you relatively innocent, so that your accountants didn't have to do much? And given that they are prepared to knock £6k off the job, not to mention give you two and a half years to pay @ £600 pm, they don't sound too unreasonable.

Thanks (0)
Locutus of Borg
By Locutus
12th Feb 2013 21:37

Probably not much anyone can do for you
Tax enquiries are frequently a time consuming and expensive exercise. As the work is specialist a higher proportion of partner / manager time is often required, resulting in big fees. If you hire a big firm to do it then you will get even bigger fees.

You say in your posting that the fees included the preparation of 3 years of accounts, so it sounds like you were rather behind with your affairs.

I have to ask the question, if you thought the fees were getting rather expensive, why did you stay with this firm for so long and allow such large fees to be run up? Although I don't know the detail, I can't help feeling that you only have yourself to blame here.

I suggest that you have a meeting with the partner concerned and get them to explain the fees. If there is evidence that you have been double charged for something then raise it with the partner.

Thanks (0)
Replying to itp3asso:
avatar
By dailyman
12th Feb 2013 22:01

I trusted him the accountant was a sort of a family friend.  I was stuck with a enquiry I didnt know what to do.  You certainly live and learn,

Thanks (0)
avatar
By dailyman
12th Feb 2013 21:56

Im sorrylhaven, the full enquiry cost me about 20k vat and about 10k tax and about 15k penalties..That was one of the 6k invoices I could give you detailed ones 

1- dealing with enquiry for them 3 years and vat returns meetings -6k

2-prep of estimated profits, and tax calulations and individual self assessment and quarterly vat 2k

3-draft accounts for 3 years and book keeping and meetings 6k

4- dealing with enquiry in three year returns and meetings with hmrc 6k

5- meeting with me and writing to hmrc and prep of cgt- 2k

6- amending 3 year accounts and internal meetings and deatileed work with hmrrc 7k

7- bookkeeping n draft accounts from 08-11 ..13k

8- prep of tax returns for those years 1k

9- further detailed work in hmrc 5month period 6k

 

Thanks (0)
avatar
By bernard michael
13th Feb 2013 09:12

3-draft accounts for 3 years and book keeping and meetings 6k 

7- bookkeeping n draft accounts from 08-11 ..13k 

 

Items 3 & 7 appear to be the same or do they refer to a different 3 year period?

Thanks (0)
Glenn Martin
By Glenn Martin
13th Feb 2013 16:11

No Quotes were giving...

but did you ask for a quote for the work they were doing. Everyone I meet always includes "how much" in the first few  questions they ask. If you have a generic letter of engagement it should still state the standard charge out rates that apply to your case. If say the member of staff handling your case is charging £100 per hour you can work back to your bill to roughly see the hours applied. Also you dont indicate the size of your business, standard of bookkeeping, etc. i would suggest you need to be with an appropriate size of accountant for you size of business.

The bigger firms have very high charge out rates and the extra benefits they offer a small firm are minimal.

if you  earn £50k per year the tax planning opportunities are minimal, so being with a large would not give you anything a local accountant wouldnt but present you with huge extra costs . If you earn £millions then the big firms can set you up with JImmy Carr style tax planning which is worth the fees you pay as they will save you huge amounts of tax.

Moving forward its obvious you are un happy with current arrangement, I would get 3 quotes from local accountants to get an accurate picture of what your job is worth and move on from it.

i have just signed up a client from a national operator who was charging £7.5k per year for a husband and wife service company. I quoted £2.5k which I happy with and they are over moon as actually get a better job, more contact more hands on advice etc as only got one meeting before where they were informed of their tax liabilty. They were too small for the firm they were but the firm would never tell them that. Where are you based.

Thanks (0)
Replying to johngroganjga:
Red Leader
By Red Leader
13th Feb 2013 11:04

£400 per hour

A typical manager's charge out rate at a large firm is about £400 per hour. Easy to rack up big costs at that rate.

Thanks (0)
avatar
By dailyman
13th Feb 2013 13:55

partners charge for this firm is £180 a hour, I dont see how it is this much.  I have asked for a fee breakdown he is not providing me it. they are icaew by the way, and time sheets.

Thanks (0)
avatar
By L Hunter
13th Feb 2013 15:54

Fees

I think it is the element of surprise that upsets people the most.

Is it COMPLETELY impossible to quote a figure for the job upfront?

Other businesses do it. Is their situation so very different from that of an accountant?

 

Thanks (0)
Replying to SJH-ADVDIPMA:
Locutus of Borg
By Locutus
13th Feb 2013 22:46

Fixed fees for tax enquiries

L Hunter wrote:

I think it is the element of surprise that upsets people the most.

Is it COMPLETELY impossible to quote a figure for the job upfront?

Other businesses do it. Is their situation so very different from that of an accountant?

How could any accountant realistically give a fixed fee quote in advance for a tax enquiry covering multiple years and multiple taxes?  I've had enquiries rumble on for 3 years, but sometimes they can be resolved within 6 months.  It all depends upon what the Tax Inspector finds, what avenues the enquiry goes down and how many areas of disagreement develop.

To follow on from Flash Gordon's builder analogy, it would be like asking a builder how much it would cost to build you a house, but without having any architects plans or even any idea of how many rooms the house will have.

Thanks (0)
avatar
By User deleted
13th Feb 2013 16:19

Fees

£180 per hour for a partner - it doesn't matter if you think it's right or not. If you didn't agree a fixed fee at the start then you should have asked what their hourly rate was, how many hours they thought it was likely to take, and kept an eye on it. I had a solicitor draw up a will for me last year and her rate was £225 + vat - absolute rip off but I could have gone elsewhere.

@L Hunter - if its an enquiry that resulted in £20k vat, £10k tax and £15k penalties (wow) then I don't see how you could quote upfront. That could take forever or be over and done with quickly - depending on client co-operation, HMRC speed etc. How long is a piece of string. A builder quoting for work has a fixed job to price - if the work changes their price changes. The same I'd think for most service-providers. But if the service is this fluid then I don't think it's possible...

Thanks (1)
Replying to andy.partridge:
Red Leader
By Red Leader
13th Feb 2013 16:45

@dailyman

In your original post, you say that the accountancy firm is a big firm. But you also say later that the partner rate is £180 per hour. These two statements appear inconsistent to me.

Thanks (0)
avatar
By mackthefork
14th Feb 2013 00:26

Instead of this

Why not pay £100 per year for tax investigation cover.  I have no idea why every single person does not have this.

Regards

MtF

Thanks (0)
Replying to Eric.c:
avatar
By cparker87
14th Feb 2013 00:44

Devil is in the detail

mackthefork wrote:

Why not pay £100 per year for tax investigation cover.  I have no idea why every single person does not have this.

Regards

MtF

If you look at most of these policies only claims where the taxpayer is unlikely to face any further liability to tax are covered. To me, that doesn't leave much meat on the bone.

Has anyone actually gone down the route of invoicing their fee insurance company. How did it go?

Thanks (0)
By ShirleyM
14th Feb 2013 08:18

@cparker

Good point about the insurance. I thought most of them wouldn't cover any overdue returns, and if they get a smell of something not being 100% kosher they won't cover the in-time ones either.

Thanks (0)
avatar
By justsotax
14th Feb 2013 10:33

It appears to be a big enquiry

covering multiple years and various issues....not sure why being a member of the ICAEW would have any impact on fees apart from making them bigger not smaller.  As others have suggested it is highly implausable to expect a fixed fee, or indeed a ball park figure for an enquiry.  'Can...worms....open'....tends to be the issue when the revenue investigate, they then head off in various directions.

 

I guess I would be more worried about the 30k of underpaid taxes  and the 15k of penalties which suggest that someone got it wrong big time.  

Thanks (0)