A good accountancy practice that really knows its onions is worth its weight in gold. But what happens if your trusty firm is bought out?
Whether a change of ownership has occurred or you’re simply thinking of shopping around and moving on, there are several things you should take into consideration. Here we take a look in more detail.
Why has another firm taken over the accountancy I use?
Sometimes it’s simply because the firm is struggling financially, but there’s a variety of reasons why an accountancy firm may be bought out by another entity.
For example, if talent is in short supply then a merger or acquisition might be an appealing option simply to get more expertise on board. There may also be a desire to build an internal succession team which will help to secure the longer-term prospects for the firm.
Introducing niche accounting services
Buyouts of other firms also allow an accountant to bring niche services in house, without having to recruit that expertise and then market it from scratch.
Niche services could be anything, from helping clients apply for R&D Tax Credits, to specialising in CIS returns. If your existing accountant is bought out (or merges with another firm) it may be their way of strengthening existing services, or a cost-effective method of introducing new ones.
The owners of the acquiring firm will be looking to widen the talent pool, and increase their client base by offering a broad range of services. After all, the more services that are offered, the more chance there is for the firm to grow.
Expanding their (geographical) reach
Thanks to the COVID-19 pandemic, many accountants have been working remotely from home. However, longer term it’s expected that office life will resume to some degree, and many of the traditional high-street firms will have long-standing plans to geographically expand their operations.
For example, a large accountancy firm in central London may wish to branch out and acquire one or more smaller firms in another location. It helps them reach more customers, and again helps them to attract talent from different areas. You might even see some high-street firms making the move to operating as an online accountancy, with a national (and international) customer base.
Do I have to sign up to the new firm?
Just because your usual accountants are being bought out, it doesn’t necessarily mean you have to move on or stick with them. You’re the customer, and it’s your choice! It’s well worth seeing what might be on offer, and how they plan to manage the transition.
Your firm should let you know their plans and how this will affect you. If the accounting practice is small, the process of being bought out may be quite quick.
I can’t decide whether to stay with my existing accountant or move on and find a new one. What should I look out for?
Again, there’s plenty of factors to think about, whether you end up staying put or jumping ship and taking your business elsewhere.
The first thing that will probably be on your mind will be whether your accountant’s fees post-takeover still fit your budget. Accountancy firms generally charge either a fixed rate for a package of services, or an hourly rate. But what these rates are will obviously vary from one firm to the next so whether you stay put or move on, you need to be comfortable with what you’ll be paying.
If you’re staying with your accountancy firm after they’ve been bought out, make sure you’re clear on what the new fees will be (don’t assume they’ll stay the same). If you’re going to try another firm, the same applies.
Some crucial advice on accountancy fees: Find out what’s included!
It’s also well worth remembering that accountancy fees are the same as any other purchase; you get what you pay for! Cheapest isn’t always best, especially if you’re looking for a high quality offering with a diverse range of services.
This one is pretty standard. If you’re moving to a new accountancy firm always check the accountants employed there are chartered or otherwise certified to the correct standard.
Top-notch services appropriate for your business
Again, this one applies whether you’re staying with your accountancy firm after it has been bought out, or if you’re moving to pastures new.
Make sure they will continue to offer the services you actually need (or if you’re signing up elsewhere check they offer these services in the first place). This is especially the case if your company is very large, very small or particularly complex.
After all, you want an accountancy team who will do far more for you than just your tax returns. They should be able to offer you specialised or niche support where required, as well as financial management, cashflow reporting, auditing and more. Also, make sure the firm will use (or is continuing to use) the latest technology such as cloud accounting to maximise the benefit to your business.
The main job of an accountancy firm is to make sure their clients keep up to date with their tax affairs. However, a good accountant will also take a pro-active approach in offering advice to help you be as tax efficient as possible.
Business owners have a lot on their plate and don’t necessarily have the time or expertise for all the different facets of tax and financial planning. Make sure your accountant asks plenty of questions about your business, including your plans going forward, so they can flag up information that may be important to you. For example there may be new tax requirements within your industry that you need to know about – a good accountant will be on top of this for you.
Ok, I’ve decided on the new accountant I’d like to go with. What should I do next?
If you decide that cutting ties with your existing accountant is the right move for you, the first thing you should do is carefully look through the legal agreement you have with them. Make sure there are no exceptional circumstances that would come into effect by transferring your custom elsewhere. If your existing firm is being taken over this might mean that you’re released from your contract – but not always!
You also need to make sure you’ve kept up your end of the agreement so that your existing accountant can’t legitimately refuse to cooperate with your request to change over. For example, if you haven’t paid your bill!
It’s well worth thinking about the timing of your switch too. The best time to make the leap is when there’s not much business going on between you and your account, and when neither of you is waiting for payment or action. For example, if you want an easy and swift change over, maybe don’t go for it during tax season!
Issuing a letter of professional clearance
Once you’ve made your plan, you’ll need to appoint another accountant. It’s ethical and routine for your new accountant to prepare a letter for you to sign and pass on to your existing accountant. The purpose behind this letter is to:
Ask for professional clearance in taking on and managing your accounts going forward.
To double check that no professional reasons exist as to why your new accountant shouldn’t take you on.
Ask for all the relevant paperwork and documents relating to your account to be transferred over.
Request that your existing accountant provides a letter of disengagement in return. This essentially lays out all the work they’ve completed for you so far, including key pieces of information and important dates that you’ll need to sign off on.
If the accountant you’re currently using is Certified, Chartered or possesses any other professional qualifications, they are duty-bound by their regulatory body to undertake these requests promptly, assuming there are no exceptional circumstances.
Members of professional bodies should also provide the requested documentation without charge. Some accountants may charge a small fee to reflect time spent compiling the paperwork. They’re entitled to do this, though the fee should be proportionate.
Registering with your new accountant
Once your existing accountant has completed everything required of them, you can now pass authority on to your new accountant. This gives them the official ‘nod’ to deal with HMRC on your behalf, and manage your tax arrangements.
Your new accountant will ask you to complete a registration form to record your personal and business information. You’ll also be supplied with a ‘letter of engagement’, laying out what is expected of both yourself and your new accountant in legal terms. Your new accountant will also undertake anti-money laundering checks on you.