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Key things to check when hiring an accountant

HMRC has published its new list of 408 businesses found to have breached anti-money laundering (AML) regulations during the 2023-24 tax year, which have been collectively fined £2.28m. Over 100 of these are unregulated accountancy service providers, with many failing to apply for registration to a recognised professional body.

A growing concern for many SMEs is that they may be unwittingly using non-compliant accountants, leaving themselves potentially vulnerable. Failing to comply with AML regulations can mean at best, poor decision making or an HMRC fine; worst-case scenario is potentially committing fraud, irreparable reputational damage and possibly even loss of their business.

To help avoid these major pitfalls, here are five key criteria to bear in mind when using an accountant:

Are they qualified?

It might sound like a strange question, but it’s a fact that anyone can start their own accounting practice, even without specialised experience, technical skills, qualifications, or professional indemnity insurance. Although certain services require authorisation, many other accounting and taxation services do not. Just like you wouldn’t seek medical advice from an unqualified or unregulated doctor, the same should apply when considering the well-being of your own business.

In a recent research study conducted by the Institute of Financial Accountants (IFA), only 18% of businesses using an accountant were aware that the term “accountant” is not protected – yet respondents also listed “qualified,” “professionalism,” and “trust” as key attributes they expected from their accountant. Surprisingly, less than 1 in 5 people knew that formal training wasn’t required for someone to be called an accountant.

Are they a member of a professional body?

It is crucial for SME owners to take the necessary steps to verify the credentials of accountants before seeking their advice. By ensuring that accountants are qualified members of a professional membership body, you can be confident in the quality of the financial advice received. This not only helps in making informed decisions, but also contributes to maintaining transparency, accountability, and credibility in your business’s financial practices.

Professional membership bodies such as the IFA have certain criteria that their members must meet. These criteria encompass qualifications, experience, insurance, compliance with regulations, dedication to professional growth, and adherence to a code of ethics. IFA members who are actively providing accountancy services to the general public receive yearly practising certificates, which clients can ask for as evidence of their membership.

Will you be getting the right advice?

As a business owner, it is completely within your rights to request credentials. Typically, the decision to hire an accountant is based on either a pre-existing relationship or the price, with very few people inquiring about qualifications or professional affiliations. In fact, many assume these things without question. However, when it comes to selecting an accountant or accountancy firm, being a member of a professional body was one of the top five reasons cited by survey respondents, and it serves as a validation of their expertise. So, don’t hesitate to ask accountants if they are qualified, and members of a professional membership body.

Will they be putting your business at risk?

With all the changes in legislation and guidance, SMEs might unknowingly be jeopardising their businesses by following incorrect or fraudulent advice. Various professional organisations, such as the IFA, have highlighted the risks associated with SMEs using unregulated accountants. This situation not only exposes the sector and its clients to potential misconduct but also puts the businesses – you – at risk. Opting for an unregulated accountant in an attempt to save money could actually result in significant risks for business owners. For instance, one business faced a hefty VAT and tax bill of over £40,000 because their unregulated accountant failed to advise them to register for VAT. Another case involved an unqualified accountant mishandling the finances, leading to a £2 million deficit that was concealed.

How else can a qualified accountant help me?

As mentioned above, a qualified accountant will have a strong understanding of current and upcoming regulations. This is crucial as the industry faces significant changes to the tax system in the coming years, impacting all sizes of business.

For instance, starting from 6 April 2026, Making Tax Digital for Income Tax (MTD ITSA) will have an impact on anyone who earns more than £10,000 in gross income annually from self-employment or property. This implies that both businesses and individuals will need to maintain digital records and submit quarterly updates, end-of-year adjustments, and the final confirmation using compatible software.

Accountants who are regulated also have the expertise needed to handle sustainability and provide top-level integrated ESG reporting assurance. With their assurance skills, financial audit experience, and professional scepticism and judgement, they are well-equipped to understand various organisations and effectively tackle complex issues.

Future-proofing your SME

The importance of prioritising the expertise and qualifications of accountants can’t be emphasised enough. By hiring a qualified accountant, you ensure that your business’s financial well-being is safeguarded, allowing you to focus on other critical aspects of running and growing your business. The peace of mind and strategic insights provided by a professional accountant are invaluable assets that contribute to the long-term success of your business.

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