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low fees low work?

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I suppose it’s is nothing new but I've seen some very low prices quoted for work, for instance a firm of chartered accountants will do a tax return for a btl investor for £140 + VAT yet still offer free consultations, have all the costs and headache that comes with icaew, owning an office, employees etc.

I charge £250 and want to up it as it's time consuming when you consider the questions you get throughout the year, is it repair, general cgt questions, missing paperwork, why is my tax higher this year and so on.

Are these low prices achieved by doing little, i.e the client provides figures and a junior plugs them into software and files? Perhaps this is too harsh and maybe it's economies of scale and having lower paid employees focused on one task.

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boat
By SouthCoastAcc
27th Jul 2020 12:28

The thing is most experienced chartered or certified accountants in the south east can go employed for 50k to 60k relatively easily and get all the benefits that go along with it. So with that in mind you need to be earning £60+ per hour to break even and ideally you need to be charging more to make it worth it.

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Replying to SouthCoastAcc:
Hallerud at Easter
By DJKL
27th Jul 2020 12:39

No so, you do not need £60 per hour to breakeven with employment at that salary level.

£60,000 /46/40=£33 per hour, software , subs, PII etc tend to be negligible for the one man band accountant, maybe adds 5%, so breakeven (ignoring employer pension foregone) maybe circa £35 per hour.

Edit-should have mentioned you likely need to leave your expensive Institutes to keep costs down to 5%, but even at 10% you are still only at £37.

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Replying to DJKL:
boat
By SouthCoastAcc
27th Jul 2020 13:02

I was working on 60,000/45/30 and with my current structure I have costs around 25% of turnover. I'm too inefficient to be charging 40 hours a week :(

Another factor is ER pension contributions.

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Replying to SouthCoastAcc:
Hallerud at Easter
By DJKL
27th Jul 2020 13:18

At 25% you must have an office, my part time practice used to struggle to have more than £3k costs in any year. Taxcalc (tax and accounts)/ICPA subs and PII/Brightpay/E Mail and a bit of post/stat/mileage being pretty much my only costs and I could have serviced far more clients than I actually had re the client capacity available within my software subs

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Hallerud at Easter
By DJKL
27th Jul 2020 12:32

I would suspect automated information request, plug in what then provided, automated letter advising client the tax etc.

Welcome to the future, so glad I no longer have clients.(Though suspect I might have actually been able to do a return for that cost, but I kept my hourly recovery rate modest)

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RLI
By lionofludesch
27th Jul 2020 12:46

It depends. Some jobs can be very straightforward.

I've done buy to let returns for around that. Less than 50 transactions to add up, maybe a P60, template letter - I can do that in an hour, maybe one and a half.

Maybe folk aren't as efficient as they think.

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By ireallyshouldknowthisbut
27th Jul 2020 13:02

We charge £299+VAT minimum as they are often issues with BTL, normally "whats not there" and there are the endless questions about CGT and other matters such as repairs vs capital.

We find most of the first cheap accountants banging them out for £150 cant even get the basics right, mistake mortgage repayments for interest paid etc. Don't ever check the open/closing rents, service charges, almost always miss remortgage fees, dont ever check the capital employed vs debt etc So shoddy jobs done by the junior who doesn't know a first thing about BTL just slaps in some data into the return. We had a transfer in recently when they hadn't even checked who's name the property was in..................absolute basic stuff.

That said, if we get a good stack of them I can blitz through 4 or 5 in a day so can be good jobs, especially once settled and you have pulled out all the wrinkles. They key as ever is getting the right paperwork from the client and spotting what they haven't given you.

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Replying to ireallyshouldknowthisbut:
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By Mr_awol
29th Jul 2020 09:58

You forgot the endless circle of "shall I pay off the mortgage more quickly as it's reducing my profits" followed by "it's not worth it then as my tax will go up" then "shall I borrow more to get my tax down" before starting at the beginning again.

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Replying to Mr_awol:
RLI
By lionofludesch
29th Jul 2020 10:02

Mr_awol wrote:

You forgot the endless circle of "shall I pay off the mortgage more quickly as it's reducing my profits" followed by "it's not worth it then as my tax will go up" then "shall I borrow more to get my tax down" before starting at the beginning again.

That might not be as daft an argument as it might've been pre-2017.

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Replying to Mr_awol:
Red Leader
By Red Leader
29th Jul 2020 10:17

"It's all going in tax".

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By Mr_awol
28th Jul 2020 10:18

To Be Honest the majority of my clients with a single BTL have them managed by an agent, so it is pretty much a case of summarising 12 agent statements, looking at the mortgage interest, and checking whether they paid anything else out not through the agent (normally no). Even those managing it themselves are more often than not 12 x £x, buildings ins, gas safety cert, and a few minor repairs here and there. If there's no mortgage on the property most of them end up having costs lower than the property allowance.

If anyone cant knock that out in an hour and a half, there is something seriously wrong with them and they probably don't deserve to be charging £100 p/h

I normally start at a minimum of £200 plus VAT for a SATR anyway, so if there is a very simple 12 x £x style BTL I might not charge anything. I'd maybe add £50 on for summarising the agent's statements.

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Replying to Mr_awol:
blue sheep
By NH
29th Jul 2020 09:41

[quote=Mr_awol]

If anyone cant knock that out in an hour and a half, there is something seriously wrong with them and they probably don't deserve to be charging £100 p/h

same here, I have never believed in making a mountain out of a molehill, usually its not really that difficult is it unless you make it so

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Red Leader
By Red Leader
29th Jul 2020 10:17

£300 + VAT

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Glenn Martin
By Glenn Martin
29th Jul 2020 12:28

depends on the setup. If a sole trader with limited overheads a BTL tax return is maybe an hours work, if you email for signarture never meet him and there will be very few queries on it during the year that's maybe an hours work so £140 per hour less costs is ok if you could rattle 10 off at a time. Once you bring in staff and have to review work etc and overheads then costs go up. Ultimately your business has to work for you, if the guy is happy with £140 for a return thats up to him.

Your rates are your rates, you dont charge what the competition charge +/- a %.

We don't do loads of tax but we would be £225 to £250 for that anything less and I would not want to be involved, but I still think that is very reasonable for what we do.

Clients will shop at Aldi, Sainsburys or M & S it depends on where you see yourself at. All three models work but I guess they all have their challenges.

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Profile
By indomitable
29th Jul 2020 15:26

Time to change professions if all that you can charge is £140 plus VAT for a BTL.

To do things PROPERLY and make sure the client is not paying more tax than he has too and doing all the necessary checks and pier reviews at least £250 plus VAT for a very easy one

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Replying to indomitable:
RLI
By lionofludesch
29th Jul 2020 15:34

indomitable wrote:

Time to change professions if all that you can charge is £140 plus VAT for a BTL.

I am, at this very moment, making the transition from accountant to Government Artist.

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Replying to lionofludesch:
Hallerud at Easter
By DJKL
27th Aug 2020 14:06

Once you fix the date and finish are you going to be hanging around on here or do you need us to organise your virtual retirement party:- in reality a thread that has no real purpose, goes on forever and ends up with half of us barred,the other half remembering little of what happened and the authorities wiping all record that the event even took place at all. (Happy to set it up then half way through, in a strop, delete the initial invite)

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Replying to indomitable:
blue sheep
By NH
29th Jul 2020 16:22

indomitable wrote:

Time to change professions if all that you can charge is £140 plus VAT for a BTL.

To do things PROPERLY and make sure the client is not paying more tax than he has too and doing all the necessary checks and pier reviews at least £250 plus VAT for a very easy one


load of old cobblers with all due respect - and reviewing a Pier is not an accountants job now is it - although we have quite a famous one around here
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Replying to NH:
Profile
By indomitable
30th Jul 2020 12:44

Meet client
Take on client perform due diligence and risk assessment
Obtain professional clearance
Send client self-assessment checklist
Send client our BTL checklist
Review the information & assess
Queries
Prepare Self-assessment return
Review it
Get client to approve
File

All for £140 plus VAT!

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Replying to indomitable:
blue sheep
By NH
30th Jul 2020 13:05

maybe you need to look at your systems, for example the first 5 on your list can all be done almost automatically, our client onboarding used to take ages, now it takes about 5 minutes.
Admittedly £140 is low, but I can easily see how it can be done for that with a combination of using better systems and having the experience to know what to look out for.

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Replying to indomitable:
RLI
By lionofludesch
30th Jul 2020 13:08

indomitable wrote:

Meet client
Take on client perform due diligence and risk assessment
Obtain professional clearance
Send client self-assessment checklist
Send client our BTL checklist
Review the information & assess
Queries
Prepare Self-assessment return
Review it
Get client to approve
File

All for £140 plus VAT!

True. If all your clients are new and you don't retain any.

Half of that work disappears in subsequent years.

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Replying to lionofludesch:
Profile
By indomitable
30th Jul 2020 13:23

That's fine if you think that £140 plus VAT is sufficient for your time and expertise. Personally if that is all you are charging this client in a year, this is not our type of core client and wouldn't be prepared to do it for that

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Replying to indomitable:
RLI
By lionofludesch
30th Jul 2020 16:04

indomitable wrote:

That's fine if you think that £140 plus VAT is sufficient for your time and expertise. Personally if that is all you are charging this client in a year, this is not our type of core client and wouldn't be prepared to do it for that

Not my core type of client anyway. But £140 a throw is £70 an hour (at least) for my time which, as I'm not in London, is a very good rate for me.

I've always been out to make a living, not a killing. I'm not here to rip clients off.

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Replying to indomitable:
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By Mr_awol
30th Jul 2020 15:06

indomitable wrote:

Meet client
Take on client perform due diligence and risk assessment
Obtain professional clearance
Send client self-assessment checklist
Send client our BTL checklist
Review the information & assess
Queries
Prepare Self-assessment return
Review it
Get client to approve
File

All for £140 plus VAT!

That's year one and half of it is admin anyway. I have several clients who I class as almost 'accidental' landlords - they have employment income, a bit of bank interest and their mum's house they inherited or their old batchelor/ette pad they kept when they moved in with their current partner and which provides a bit of rental income with or without a mortgage. For those without mortgages and collecting the rent themselves, nine times out of ten the actual expenses come to less than £1k anyway and a property allowance is claimed (buildings insurance c£200, gas boiler service contract c£150, and gas safety certificate c£75).

All of our year end reminders are sent out in early April by the admin function, but when we sent them out ourselves and apportioned the total time between the number of requests sent out, the time costs came to about a fiver. Once you've got to that stage, for my accidental landlords it is:
- Enter P60 per client (or in most cases compare to HMRC data feed).
- Enter bank interest per bank certs/client entries on info request/etc (in many cases none and in most cases wont affect tax anyway)
- Enter pensions, gift aid, etc from client info request (in many cases ask client if they are 'still' paying £200 p/m to Scottish Widows). Often doesn't affect tax anyway but good to have it on there.
- Enter rental data from info request.
- Run tax comp, phone client, spend ten minutes discussing any possible omissions etc and confirming a few details (no change of tenant, no remortgage, did they not pay for a gas safety cert this year etc)
- Send out TR
- Get TR back
- File TR

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My photo
By Matrix
30th Jul 2020 13:50

You are not charging for your time. You are charging for your expertise. Well I am anyway.

This rate devalues the profession.

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Replying to Matrix:
blue sheep
By NH
30th Jul 2020 13:53

partly true, however even if you charge fixed fees you have charge according to how long you think the job will take - if a job takes me half an hour I am very unlikely to charge the same as a job I know will take all day - 1 BTL set up with the correct systems in place is not rocket science and I can see why a firm could charge £140. If it was a BTL with 25 properties however the expertise would still be same but obviously the fees would be more.

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Replying to Matrix:
RLI
By lionofludesch
30th Jul 2020 16:04

Matrix wrote:

This rate devalues the profession.

Nonsense.

No offence intended.

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Replying to Matrix:
Hallerud at Easter
By DJKL
27th Aug 2020 13:20

What ought a CA be able to earn then, £100k pa?

Working for myself, virtually no costs, I was pretty happy at the £55-£65 per hour level I charged my clients

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Replying to DJKL:
Red Leader
By Red Leader
27th Aug 2020 13:23

DJKL wrote:

What ought a CA be able to earn then, £100k pa?

It's certainly possible.
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By Homeworker
27th Aug 2020 13:03

Low fees don't necessarily mean low quality work. I work from home, so have low overheads and some clients (though not all) assume that means low prices. If I try to charge more, I have found that those clients will go away and do it themselves after one or two years. I am almost certainly undercharging in those cases and it probably doesn't help that I like to explain to the client how I have arrived at the figures, so that they can genuinely say they have "checked" the return if there are any HMRC queries.

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