Taking account – is having an accountant a luxury or a necessity?

Are you confident that you can keep up to date with all the changes in tax law, practice, tax tribunals etc? It’s hard enough when it’s your full time job, so should we as sessional GPs be managing our personal tax or should we be seeking the services of a professional?

Why use an accountant if you are not trading through a limited company?

Are you confident you can deal with pension certificates, calculating your pension input figures for tax purposes and calculating unused relief to carry forward?

Can you think of a better use of your time spent dealing with it all yourself?

If you are salaried, with just a claim for professional subscriptions and no other income, no complications around child benefit or pensions annual allowance charge – then you will probably be capable of doing your own return safely – but it may be time consuming, particularly checking HMRC’s calculation of your tax/student loan repayments etc.

If it’s more complicated than that, look at how much time it takes you to deal with it – and work out how many hours you need to work to pay an accountant – you’ll probably get a lot more pleasure doing the work you trained to do to pay your accountant, than trying to do your tax return yourself.

You may keep immaculate records, but if you are not sure what you can and can’t claim, you still need an accountant to review them to produce the figures for your return.

What can you expect of your accountant?

  • An understanding of the quirks of medical practitioners from a taxation point of view.
  • Accurate and timely work of course, but they should make sure that you are claiming for everything you should, and equally importantly not claiming for things you shouldn’t to protect you from the consequences of a tax investigation.
  • Warning of amounts and dates of payments due (the length of warning will of course depend on how quickly you get information to your accountant), so you don’t have any nasty shocks.
  • Adjustments to payments on account where there has been a material reduction in your tax liability so you don’t pay more than you need to.
  • Warning you if you are getting close to your annual allowance limit for pension contributions, and estimating resultant tax liabilities before the pension savings statement is available.
  • Assistance with your pension certificate (and annualisation where applicable).
  • Prompt provision of SA302 substitutes when you need a mortgage.
  • Advice at relevant stages of your career, such as effect of maternity leave, review of accounts before joining a practice as a partner, arithmetic advice in connection with your pension (note you do still need a properly qualified and experienced pensions specialist for advice about stopping/starting contributions/retirement options etc).
  • Consideration of your personal circumstances to see if the use of a limited company could be beneficial
  • Other general tax advice as needed – capital gains tax and inheritance tax for example.

What will it cost?

  • Each firm of accountants will have their own charging scale. Don’t be afraid to ask for a formal quotation or a fixed fee for specific work, but do not expect to have a fixed fee for totally open-ended services (that would be a bit like agreeing a fee for a locum work session at a practice, and then the practice asking you to do all sorts of other unrelated tasks after the agreed session for no extra payment!).
  • Look at value for money rather than the cheapest fee. Remember you will get tax relief on the fee paid.
  • Keep the fee low by having good records, using locum specific software (like the NASGP’s LocumDeck which contains Bookkeeper) and by providing all information in one go, rather than drip-feeding it via dozens of emails.

Once you’ve decided you want an accountant – or you want to change your accountant – how do you go about finding someone?

  • If the firm is a member of AISMA (the Association of Independent Specialist Medical Accountants) you can be sure that they will understand the medical profession.
  • Talk to your colleagues and get recommendations; practice managers can be a good source of information too.
  • Look at websites and social media for prospective accountants to ensure they have a medical specialism.
  • Once you have a name or two – get in touch with them and either meet them face to face, or have a telephone conversation with them. Find out if that individual is the person you’ll be dealing with, and ideally meet/speak to the person you’ll actually be dealing with. You need to find someone you understand and feel comfortable with. Whilst it’s no use having a personable accountant who knows nothing about doctors, it’s equally no use having a really clued up person that you don’t understand or don’t feel comfortable that you can work with.
  • Decide if you want someone close by that you can pop in to see (that’s rarely necessary nowadays and will start to get expensive) – or if you’re happy dealing with someone by email/phone etc. We successfully deal with a large number of doctors that we’ve never met face to face (or only via Skype) – and we can follow our clients’ careers as they move around the country (and even out of the country!) without it affecting our relationship.
  • If you are wanting to change accountants – the handover process is very simple – just advise your previous accountant that you are moving and the new one will contact them, obtain the necessary information and get on with what is needed without any hassle on your part.
  • There are rumours that changing accountants will increase the likelihood of getting investigated. Whilst that might be a risk if you chop and change regularly particularly using unqualified accountants, I’ve certainly never seen it with people who have moved to us. You are more likely to get investigated if you are making unsubstantiated claims or where costs look disproportionate to income.
  • If you are dealing with a reputable firm of accountants, then HMRC will rely on them to have sorted problem areas correctly before the return is submitted, thus reducing the risk of an investigation.
  • Most firms will also offer some sort of professional fee protection that will cover their fees if you are the subject of an HMRC investigation (provided you have not deliberately misled the accountant or hidden income etc).
  • It’s useful to let your new accountant know what you felt was lacking with the previous accountant, just to make sure that everything you need is properly covered.
  • Ideally don’t change while your current accountant is in the middle of doing some work for you as that is likely to result in a duplication of charges. A good time to change is after one year’s return has been completed and before any work is started on the following year’s return.

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