View Full Version : Accountant costs - does this sound high?
I've just had an unexpected invoice from my accountant - I'm chasing this up with them now asking for a breakdown of what I have actually paid for this year, but was hoping for a little advice.
So far this year my accountant has invoiced me for over £2000 - this is to cover:
1. The setup of a limited company (Poisonous Monkey Ltd)
2. Cessation of my DVD Times business and the transfer of assets to the new co
3. My 2007-2008 tax return (which I could do myself in about 30 mins!)
The first invoice was raised at the time of the set up of the Ltd co, the second appeared this week.
This is a lot more money than I was expecting to be charged - in fact, my initial quote (before deciding to set up the Ltd co.) was for around £400! I can't imagine that the additional work of setting up the Ltd co can account for £1600+ can it?
still average joe
10-11-2008, 13:28
Cant you regester a Ltd company via an online agent for about £100?
Cant you regester a Ltd company via an online agent for about £100?
This specific bit cost £150ish through my accountant. So I'm not too worried about that.
My tax return and organising of my receipts (which should have been a simple case of checking the receipts against the bank statements as I'd documented everything in depth anyway) accounts for £455+VAT
The remaining work was:
1. Carrying out a valuation of the businesses as of 31st March (ie DVD Times value)
2. Competion of IR forms 64-8 and CT41G (whatever these are!)
3. 'Preparation of an election under Section 77(3) Capital Allowances Act 1990
4. Dealing with the transfer of VAT registrations
5. Writing up the company's statutory books in respect of share allotment and share certificates.
I seem to be being charged £1500 + VAT for this - I guess this is my main area of contention - is this a reasonable charge for that amount of work?
The remaining work was:
1. Carrying out a valuation of the businesses as of 31st March (ie DVD Times value)
2. Competion of IR forms 64-8 and CT41G (whatever these are!)
3. 'Preparation of an election under Section 77(3) Capital Allowances Act 1990
4. Dealing with the transfer of VAT registrations
5. Writing up the company's statutory books in respect of share allotment and share certificates.
I seem to be being charged £1500 + VAT for this - I guess this is my main area of contention - is this a reasonable charge for that amount of work?
I reckon:-
1. assuming he based the valuation on final accounts figure, then probably about 15 mins work - ask him for copies of valuation workings to see what he actually did
2. 15 minutes to do
3. model election would already be on his computer, so case of filling in old business/new business names 15 mins
4. transfer of vat - another quarter of hour
5. writing up company's books/etc - this should have been included in the initial set up fee, but say 15 minutes
so total 1.25 hours, but say 2 hours tops making his hourly charge-out rate about £ 750 - I don't think even the large London firms are on this rate
you sure he's an accountant and not a QC?
bollecks
10-11-2008, 17:07
Accountant's fees absolutely stagger me, even relative to other professionals like lawyers and doctors.
I'm an author, my accounts are very simple (Incoming - royalties, advances, appearence fees, outgoing - stationery, travel, research materials).
Accountant wanted £800 to do my accounts. Plus extra £600 for VAT returns. These fees were minimums and not fixed.
It takes me about 15mins to do my quarterly VAT and an hour to do my annual return. So basically, £700 per hour!
As you have a limited company, 2K sounds about right.
NicolaUK
10-11-2008, 17:39
I'd say it's stupidly high, your set up sounds fairly straight forward and I'd definitely question it - BigH knows his stuff ;)
KennyVader
10-11-2008, 19:00
Looks insanely high to me too, my accountant charges me about £600 a year for my ltd company, for which I get loads of great advice from him throughout the year. I do my own VAT (15 minute job once a quarter as I have a spreadsheet that works it all out from my invoices and expenses so it really is just a case of logging in, cut and paste the numbers, and electronically pay the bill) and I do my own personal tax return (maybe 2 hours work once per year). He does everything else.
I found him through someone else who recommended him.
I pay £70.50 a month for my accountants, £2k sounds like a very expensive accountant (bit like my old one), didn't you get a quote before the work was done ?
I pay £70.50 a month for my accountants, £2k sounds like a very expensive accountant (bit like my old one), didn't you get a quote before the work was done ?
Well I had a quotation for the basic Tax Return which was £455+VAT. I then decided to go the Ltd route so asked them to sort it all out. I didn't have a quote following this but then had the invoice through and paid it assuming it covered everything which it seems it did not.
I'm not happy with this given the information I've now had from you guys, but I'm not sure I'll be able to do much other than throw my toys out of the pram. If I'm going to be ripped off year after year though they've got another thing coming.
How easy is it to change accountants?
easy to change accountants, but not so easy to get out of what's already been charged
Has he not done any accounts then? I'm assuming your tax return will have a set of accounts or two?
If he has done all of that and prepared a years Ltd Co accounts or a few sets of sole trader accounts then I would say it seems reasonable.
The thing is about accountants fees is that the client always does the books so that it just takes 15 minutes for us to do. Always, guaranteed. However, its never right, never just 15 minutes at all. There's always something wrong, something missing or some reason why the bank doesn't balance or the receipts don't match. Granted, if we could mind read and home straight into the one place that contains the error first time then you may have a point, but we can't so we need to start checking, check the additions, check the amounts to the statements, check the outstanding cheques, and so on until the error is found.
So that 15 minutes you expect has suddenly turned into 3 or 4 hours. Then there's the rest of the job.
Unless of course your not bothered about them being correct, in which case you need a bookkeeper not a chartered or certified accountant. If you want professional advice then you will pay a professional fee for it, just like a solicitor.
Seriously, in most cases, it costs more to get your car serviced, your hard drive fitted or you boiler serviced than it does for an hour of advice from an accountant. Do you know if I take my cat to the vet for a 10 minute check they charge me £13, that's £78 per hour, never mind mark up on medicines etc. Don't even get me on about Dentists.
And as for a valuation being 15 minutes work, it probably takes that long to type the damn valuation up. I mean be serious people.
Does look high if no annual or cessation accounts were prepared.
Looking at what you seem to have had done, my Missus would charge about £1000 max for all that.
Defnitely ask for a breakdown of costs and disbursements and argue with them if you are not happy.
Has he not done any accounts then? I'm assuming your tax return will have a set of accounts or two?
If he has done all of that and prepared a years Ltd Co accounts or a few sets of sole trader accounts then I would say it seems reasonable.
And as for a valuation being 15 minutes work, it probably takes that long to type the damn valuation up. I mean be serious people.
By the sounds of it, I don't think any ltd co accounts have been done - the company has only recently been incorporated
the OP says that final sole trader accounts accounts for 455 pounds of the bill - he is contesting the other work done
as for the valuation, if deferrment has occured between old and new business (not unusual), then no actual valuation would have been done
otherwise, I can't think it being more than "lets take value as x times turnover/profit on final accounts" - if that's the case then it would be 15 mins work
The valuation will probably be include goodwill in the Ltd and, more importantly, to create a directors loan account for Colin to withdraw free of tax. If thats the case the valuation needs to fit within the HMRC criteria so that they don't contest it. As his empire contains some very strong branding DVDTimes, DVDForums etc theres no way thats a 15 minute job.
If the goodwill is greater than around £30-£40k then there will also be capital gains tax on the incorporation, but it may be they put in the minimum to take up his CGT allowance.
Colin, did they tell you this will create a tax free loan account for you?
Anyway, you need a fleshed out bill I think. And as for putting the completion of the 64-8 on the bill :D Thats such a filler item, its the form you sign to allow them to talk on your behalf to the revenue.
The valuation will probably be include goodwill in the Ltd and, more importantly, to create a directors loan account for Colin to withdraw free of tax. If thats the case the valuation needs to fit within the HMRC criteria so that they don't contest it. As his empire contains some very strong branding DVDTimes, DVDForums etc theres no way thats a 15 minute job.
.
.
if the accountant has spent a lot of time on the valuation, then it surely would have also taken a lot of time & input from Colin to get the right figure - which doesn't seem to be the case here
NicolaUK
11-11-2008, 13:23
And as for putting the completion of the 64-8 on the bill :D Thats such a filler item, its the form you sign to allow them to talk on your behalf to the revenue.
And surely that immediately tells you he's being ripped off?
.
if the accountant has spent a lot of time on the valuation, then it surely would have also taken a lot of time & input from Colin to get the right figure - which doesn't seem to be the case here
It certainly should have been discussed, but I doubt Colin would know how to value it. So short of answering questions and being involved in giving the accountant a picture of his set up I can't see what input he could have?
If a bank can charge £200 for drive by valuation then a qualified accountant has the right to charge a decent fee for something which is far more complicated.
I'm sorry but to say it takes 15 minutes is utterly ridiculous and if your a practicing accountant and your valuations are being done in that time frame then I would question the accuracy of your valuations.
But it all depends exactly what they have done for Colin doesn't it. Without knowing that you can't judge the amount of the bill as flippantly as you did.
And surely that immediately tells you he's being ripped off?
2 + 2 = ?
KennyVader
11-11-2008, 13:36
It certainly should have been discussed, but I doubt Colin would know how to value it. So short of answering questions and being involved in giving the accountant a picture of his set up I can't see what input he could have?
If a bank can charge £200 for drive by valuation then a qualified accountant has the right to charge a decent fee for something which is far more complicated.
I'm sorry but to say it takes 15 minutes is utterly ridiculous and if your a practicing accountant and your valuations are being done in that time frame then I would question the accuracy of your valuations.
But it all depends exactly what they have done for Colin doesn't it. Without knowing that you can't judge the amount of the bill as flippantly as you did.
Maybe it was just a really simple "cash" valuation that simply added up assets, bank accounts, creditors, debtors etc, rather than the complexity of a brand's perceived value etc.
NicolaUK
11-11-2008, 13:44
2 + 2 = ?
4 when you've admitted it's filler :thinking:
Maybe it was just a really simple "cash" valuation that simply added up assets, bank accounts, creditors, debtors etc, rather than the complexity of a brand's perceived value etc.
Thats not a valuation thought is it, and if they did that it would take less than a second as that figure is already totaled on the accounts. And why on earth would you want to ignore the the biggest asset he owns?
The very point in doing the valuation is to create a nice tax free lump sum for Colin to withdraw. The biggest asset is the intangible value of the brands and as such it has no easily identifiable market value, it needs to be arrived at.
As I said the revenue have a vested interest in this figure so your paying for the accountants experience in this matter. It will be partners or senior managers time too, so your looking at £150+ p/h. The tax return work will be unqualified time at around £35 p/h.
Same charging rates as most other professionals.
4 when you've admitted it's filler :thinking:
So how much of the total bill was to do with filing in that form then? :brickwall
NicolaUK
11-11-2008, 14:14
So how much of the total bill was to do with filing in that form then? :brickwall
I'm not the accountant - how much would you have charged?
If the goodwill is greater than around £30-£40k then there will also be capital gains tax on the incorporation, but it may be they put in the minimum to take up his CGT allowance.
is this how you do valuations Baz?- "put in the minimum to take up his CGT allowance"
the term 'dodgy accountant' would spring to mind
I'm not the accountant - how much would you have charged?
Well dodged.
To spell it out though, just because its on the bill does not mean that everything else on the bill is a rip off. We don't know what was charged for that piece of work so how you can conclude the whole bill is a rip off is a large leap of faith.
is this how you do valuations Baz?- "put in the minimum to take up his CGT allowance"
the term 'dodgy accountant' would spring to mind
Now you are being even more ridiculous :clap:
There's no right answer. Personal circumstances dictate sometimes and if an unneeded tax charge can be avoided at the same time as maximising my clients wealth then I'm duty bound to do it. Simple. As long as the answer we come up with is reasonable and can be demonstrated to be as good an answer as any then the revenue will accept it. Im still regulated and duty bound by the ethical guidelines as laid down by the icaew.
We go on CPD courses that talk you through such procedures that you are calling "dodgy".
If you do the opposite of that and ignore the tax planning opportunities placed in front of you in such a subjective area then thats your business. Allowances are there to be used. I would question your worth if you were not utilising them for me to be honest.
There's no right answer. Personal circumstances dictate sometimes and if an unneeded tax charge can be avoided at the same time as maximising my clients wealth then I'm duty bound to do it. Simple. As long as the answer we come up with is reasonable and can be demonstrated to be as good an answer as any then the revenue will accept it. Im still regulated and duty bound by the ethical guidelines as laid down by the icaew.
We go on CPD courses that talk you through such procedures that you are calling "dodgy".
If you do the opposite of that and ignore the tax planning opportunities placed in front of you in such a subjective area then thats your business. Allowances are there to be used. I would question your worth if you were not utilising them for me to be honest.
I also go on these CPD courses and am regulated, but if I were a Tax Inspector, the capital gains computations I would want to investigate further are the ones that have a valuation of the magical £ 36,000-ish figure - your client isn't going to very happy with you if your response to an enquiry letter is "well that's what the lecturer on a course told us to do"
Hardly takes much brains or financial acumen to come up with this sort of computation
douglasb
11-11-2008, 15:07
http://i34.tinypic.com/j0kyfs.jpg
NicolaUK
11-11-2008, 15:28
Well dodged.
To spell it out though, just because its on the bill does not mean that everything else on the bill is a rip off. We don't know what was charged for that piece of work so how you can conclude the whole bill is a rip off is a large leap of faith.
Not dodged at all, I'm merely responding to your admittance that it's there as filler. Doesn't take an accountant to work out that it looks like Colin's been had.
I also go on these CPD courses and am regulated, but if I were a Tax Inspector, the capital gains computations I would want to investigate further are the ones that have a valuation of the magical £ 36,000-ish figure - your client isn't going to very happy with you if your response to an enquiry letter is "well that's what the lecturer on a course told us to do"
Hardly takes much brains or financial acumen to come up with this sort of computation
You wouldn't make a good tax inspector then as the very fact its under the CGT limit means there aren't any capital gains computations to inspect.
If I were a tax inspector I would pull out the ones valued at a large figure that potentially look inflated. The ones were potentially £100,000+ worth of tax free pots are created on the back of non existent goodwill. I know thats what the inspector does do as well which is why it is such common practice to do. I guess you don't believe in wifes wages either? Or low salary and tax free dividends? Or any other tax planning schemes? And you missed the part where I said as long as it can be demonstrated as being as good a figure as any. I would never say what you said to a client.
And thats why I said "he may have done". It actually backs up your overcharged point if thats what he has done. Your just arguing for arguing sake as you pulled out a random comment to argue over but then just ignored the more important point I was making.
But regardless of what value it's still more involved than taking the last three years turnover and multiplying by the first figure you thought of 15 minute job you suggest.
Not dodged at all, I'm merely responding to your admittance that it's there as filler. Doesn't take an accountant to work out that it looks like Colin's been had.
Its a filler to make the amount of text on the bill look more, they still did the work though. If they took off the £10 charge and omitted the text would it still be obvious he had been "had"?
If they have charged £200 for doing that then yes I agree, but you don't know ho much they charged for that form? So how can you say he's been had?
We don't bother putting the 64-8 on the bill as In my eyes it's so insignificant that its not worth it.
Anyway it seems theres a pack mentality in this thread though and a alternative view isn't welcomed.
NicolaUK
11-11-2008, 15:40
Its a filler to make the amount of text on the bill look more, they still did the work though. If they took off the £10 charge and omitted the text would it still be obvious he had been "had"?
If they have charged £200 for doing that then yes I agree, but you don't know ho much they charged for that form? So how can you say he's been had?
We don't bother putting the 64-8 on the bill as In my eyes it's so insignificant that its not worth it.
Having gone through a similar process to Colin this year and knowing what I paid, yes I think he's being charged way too much.
Having gone through a similar process to Colin this year and knowing what I paid, yes I think he's being charged way too much.
As I already said, without a set or two of accounts in there I also think its high.
What I really took exception to was BigH saying that all that work should take 2 hours and then you saying that because they had 64-8 on there bill means immediately he is being done.
Both of which is simply not true and not the line that Colin should be taking when approaching them about the bill.
Thanks for all of the feedback on this.
I am having a meeting with them in a week or two - at which point I'll bring up this issue.
The cessation accounts and valuation could be more complex than I first thought - there may be some CGT to pay, obviously dependent on the final valuation. I'm not expecting it to be that much and may well now come under the £36K limit due to the particularly poor year we had last year.
NicolaUK
11-11-2008, 16:58
Anyway it seems theres a pack mentality in this thread though and a alternative view isn't welcomed.
:lol:
You wouldn't make a good tax inspector then as the very fact its under the CGT limit means there aren't any capital gains computations to inspect.
yes - that's right Baz - because if a computation has been done so that it doesn't need to be entered/declared on a tax return, there's no way it would be picked up/questioned during an enquiry so no need to worry about it :thinking:
my point is that when valuing a business, you appear to start with a figure (maybe 36000 pounds, maybe 100,000, depends what the client wants it to be) and then come up with a story to justify it
re. wifes wages/low salary and high dividends - not really the same kettle
yes - that's right Baz - because if a computation has been done so that it doesn't need to be entered/declared on a tax return, there's no way it would be picked up/questioned during an enquiry so no need to worry about it :thinking:
my point is that when valuing a business, you appear to start with a figure (maybe 36000 pounds, maybe 100,000, depends what the client wants it to be) and then come up with a story to justify it
re. wifes wages/low salary and high dividends - not really the same kettle
Yep, that's the real world I live in. Exactly what the clients want. Its the same as when they want profits low one year to pay less tax but high the next because they want a mortgage. There's always a bias, my job is to realise that bias using all of the tax laws and avoidance loopholes I have available. And we are quite happy knowing when they get inspected theres nothing dodgy to find. Ive never yet met a tax inspector that can value a business, and the ones that can are inspecting the £10m valuations not the £36k ones. I guess HMRC don't have any bias either, straight down the line they are.
And for the avoidance of doubt, if the client wants £100,000 as the valuation and its worth £20k tops then it wont get valued at it, simple, at least not by us. If the calculation comes out at anywhere between £20 and £60k then it goes in at £36k. Simple. No malpractice. Plus the £36k thing was when taper relief was available, doesn't work the same way now.
And its exactly the same kettle. Why is it the wife's wages are exactly £6035? Think of a number and justify it. Same old same old. But no doubt thats dodgy too. :lol:
Are you in practice for small businesses by the way?
yes - that's right Baz - because if a computation has been done so that it doesn't need to be entered/declared on a tax return, there's no way it would be picked up/questioned during an enquiry so no need to worry about it :thinking:
There you go again, picking on the trivial to try to make a point and trying to put words in my mouth. It was you who said you would select non existent CGT computations to inspect.
vBulletin® v3.8.5, Copyright ©2000-2010, Jelsoft Enterprises Ltd.