Switching accountants checklist for limited company directors

The advice you will read everywhere is to move straight after your year-end accounts are filed, so the new firm starts with a clean opening balance sheet and nothing half-finished. That is sound, and if your accounts went in last month, now is a good moment.

It is also the wrong advice for plenty of companies. Three situations where waiting costs you more than moving:

• Deadlines are slipping. If a confirmation statement went in late, or a VAT return was filed on an estimate, or a corporation tax payment was missed, the penalties keep coming while you wait for a tidy moment.
• Something big is coming. A funding round needs SEIS advance assurance in place before investors commit. A VAT scheme change has a date attached. A patent box election has a window. Waiting six months can mean the relief is gone.
• You are paying monthly for work that has not started. Ten months of fees towards a year end that nobody has begun is not a reason to stay another two.

Months to be realistic about

Mid-December through January is busy for every practice in the country, because personal tax returns are due by 31 January. A handover started on 18 January will move slowly at both ends. It will still happen, it just will not be quick. If your situation can wait until February, it often should.

Where your accounts are not yet prepared and you have already paid for them, you have a choice: let the old firm finish that set, then move, or ask the new firm to pick them up as they are. The second usually costs something, and that cost is worth weighing against another year of the same service.

You do not need to assemble a file before you speak to anyone. But the handover runs faster when you know where these things are, and the gaps you find while looking are often the interesting part.

• Your last two sets of filed accounts and the corporation tax returns that went with them.
• Your Companies House authentication code, which more directors have lost than will admit it. It can be reposted to the registered office.
• HMRC references: company UTR, VAT registration number, PAYE reference and accounts office reference, CIS details if you operate the scheme.
• Your bookkeeping login, and confirmation of who owns the subscription. If the old firm pays for your Xero or QuickBooks, the file moves with you, but the billing has to be transferred rather than cancelled.
• Payroll records for the current tax year, including the pension scheme details and the last submitted FPS.
• Your engagement letter with the current firm, which tells you the notice period you agreed to.

The things worth checking while you look

Pull your VAT returns for the last four quarters and look at the scheme you are on. Online sellers with a meaningful share of overseas sales are routinely left on the flat rate scheme, paying VAT on turnover that was never UK VATable, and reclaiming nothing on input costs. One watch seller came to us with around 70 per cent of her sales going overseas and the flat rate scheme still ticked. Moving her to the standard scheme meant she paid VAT on the UK portion only and reclaimed her input VAT properly.

Also check your payroll. If you are the only person on it, your company cannot claim the employment allowance, and the fix is usually straightforward.

Once you have chosen, the administrative work sits with the incoming firm. Your part is signing and answering a few questions.

Identity and anti-money laundering checks

Every regulated firm has to verify who you are and who owns the company before it can act. Photo identification, proof of address, and the shareholding structure. This is usually done digitally in a few minutes and it happens before anything else, so expect it as the first ask rather than a sign of suspicion.

The letter to your current accountant

The incoming firm writes to the outgoing one, tells them it has been asked to act, and requests the records and any information relevant to taking over. The outgoing firm replies, usually with a disengagement letter setting out what has been done, what is outstanding, and anything the new firm should know. That reply protects you as much as anyone, because it establishes in writing where the work stopped.

This exchange is professional courtesy rather than law. It is also the step where delays happen, so a firm that chases it matters.

HMRC authorisation

Separate authorisations are needed for each tax: corporation tax, VAT, PAYE, self assessment. These are handled online through the agent services account, with a code posted to you or an authorisation request you approve digitally. Giving a new agent access does not automatically remove the old one, which is why that is a separate step in the checklist below.

The engagement letter

You will receive a written engagement letter setting out exactly what the firm will do and what it will cost. At Fiscal Umbrella the fee is fixed and agreed in writing before any work starts, with no hourly billing and no surprise invoices.

Two to four weeks is the realistic range for a standard limited company handover, assuming the outgoing firm responds in reasonable time. Nothing stops during it. Your VAT return is still due on its date, payroll still runs, and Companies House does not extend anything because you changed adviser.

Week one

Checks completed, engagement letter signed, HMRC authorisation requests sent, and the letter to the old firm goes out. Where a filing falls inside the handover window, the new firm should tell you on day one who is doing it.

Weeks two and three

Records arrive. The new firm reviews opening balances against the last filed accounts, checks the trial balance agrees, and looks at the detail behind it. This is where problems surface: directors’ loan accounts that have drifted, capital allowance pools nobody carried forward, VAT returns that do not reconcile to the ledger, CIS deductions suffered that were never offset against the PAYE bill.

A construction client came to us after years with a firm that filed forms and nothing else. In the first meeting, looking at their HMRC portal, there was over £100,000 sitting with HMRC from CIS and VAT returns filed incorrectly over several years. They had taken a loan to cover costs while their own money sat there.

Week four

Software access confirmed, old agent authorisations removed, and a written note of what the new firm found and what it plans to do about it. If you reach the end of a handover without that conversation, you have changed the name on the invoice and nothing else.

The reason most directors switch is that compliance was done and nothing else was. Filing accounts correctly is the floor, not the service. Before you sign, get specific answers to questions that a form-filler cannot answer well.

Questions worth asking

• Who does the work? Ask whether the qualified person you are speaking to prepares the return, or whether it goes to a team you will never meet. R&D claims in particular are often farmed out to claims shops that disappear once the money lands.
• What would you look at first in my business? A firm that knows your sector will name something concrete within a minute. For an online seller it is the VAT scheme, import VAT, reverse charge, and whether returns and refunds are reversed properly. For a funded startup it is whether you are still inside the SEIS window. For a professional services company it is how the director is paid.
• What is in the fee and what is extra? Get it in writing before anything starts.
• What software do you work in, and who sets it up? If marketplace payouts need to reconcile to the ledger, A2X mapped properly into Xero or QuickBooks is the difference between books that agree and books that nearly do.

On credentials

Check the firm is a member of a recognised professional body. Fiscal Umbrella is run by Fasih Khan, ACCA qualified, an AAT licensed member and a CMI member, with an MSc in Finance and more than nine years in UK practice before founding the firm.