As someone who is looking to work with his first accountant in the near future and founder of a new Tax Blog, I came across some interesting reading the other day:
A report published a few days ago indicates that beleaguered small businesses are facing further woes due to inept accounting.
The report is called “Your blueprint for a better accountancy practice” and it’s published by The Accountants Club, an association of over 700 UK based accountants -it found that this ineptitude is losing UK businesses a staggering £1.8billion.
Alarmingly, many of the errors constituted “major” mistakes – for example, allocation of illegal dividends, lack of inheritance tax planning, not reviewing tax credit eligibility, not considering incorporation, capital allowances not claimed properly and not claiming R&D tax credits.
At a time when small businesses are struggling to get funding from banks, poor advice from their accountants in these areas could mean businesses having to close.
According to one of the reports’ authors, Mark Wickersham FCA:
“Large parts of the accountancy profession are costing clients a huge £1.8 billion in poor advice. The entire profession has to sit up and do something about this as a matter of urgency.”
Thankfully, some accountancy firms are already giving a much better service to their clients. The report reveals that the UK has a ‘two track accountancy profession’, where 27% of practicing firms are ‘Stars’ and 73% are ‘Laggards’. Explaining the findings, another of the report’s authors Steve Pipe FCA said:
“Our research indicated that the ‘Stars’ grow at 20% or more a year. But, for the ‘Laggard’ firms and their clients, the picture is very different and very much worse, with widespread under-performance and under-achievement. The good news, though, is that by identifying what makes the Stars so successful, the research provides a blueprint for other firms that want to replicate their success.”
Another key finding is that Star firms also seem to be much better at spotting the mistakes made by other accountants. Therefore, the research suggests that if all accountants followed in the proven footsteps of the Stars, clients would no longer have to suffer the £1.8 billion of unnecessary losses and costs that appear to be inflicted on over 40% of businesses as a result of the mistakes made by their accountants.
An overview of the report’s findings and the full report itself are available from the Accountants Club at www.myaccountantsclub.co.uk/