How to Switch Accountants: A Step-by-Step Guide

If your accountant is slow to reply, sends invoices you weren't expecting, or only gets in touch when a deadline is looming, you're not stuck with them. Plenty of business owners stay with an accountant they're unhappy with simply because switching sounds complicated. In reality, changing accountant is a well-trodden process, and a good new accountant does most of the work for you. Whether you're looking for local accountants in Bristol or a firm that works with you remotely anywhere in the UK, here's how it works.

Signs it's time to change accountant

• You struggle to get a reply, or wait days for simple answers
• Your bills vary from month to month, and you're charged for every phone call
• Deadlines are met at the last minute, or missed altogether
• You only hear from your accountant once a year, when your accounts are due
• You never get proactive advice on tax, cash flow or growth
• Your business has grown and needs more than basic compliance

Any one of these is a good reason to look around. Your accountant should make running your business easier, not add to your to-do list.

When is the best time to switch accountants?

You can switch accountants at any time of year, and you don't need to wait for your year end. That said, the smoothest moment is often just after your financial year ends, before work on the next set of accounts has started, because your new accountant can take ownership of the whole year. If a Self Assessment deadline or a Companies House deadline is close, tell your new accountant straight away so they can prioritise it. A deadline shouldn't stop you moving, but it does affect the order in which things are done.

How to switch accountants, step by step

• Choose your new accountant. Agree what's included, how you'll work together and what it costs, ideally as a fixed monthly fee.
• Sign an engagement letter. It sets out the services your new accountant will provide and your responsibilities, so everyone is clear from day one.
• Tell your current accountant. Check your existing engagement letter for any notice period, and settle any fees you owe.
• Professional clearance. Your new accountant writes to your previous one to ask whether there is any professional reason they shouldn't act for you, and to request what's needed for a handover.
• Hand over your records. Your previous accountant passes on what's needed, such as prior year accounts and tax returns, balances, and any open issues with HMRC.
• Authorise your new accountant with HMRC. You give them agent access for the taxes they'll handle, such as Self Assessment, Corporation Tax, VAT and PAYE.
• Update Companies House. If your old accountant's address is your registered office, change it, and share your company authentication code if your new accountant will be filing for you.
• Move your software. If you use cloud accounting software such as Xero or QuickBooks, your new accountant is invited as an adviser, so your records stay exactly where they are.

What is professional clearance?

Professional clearance is a step that members of the professional accountancy bodies, including CIMA, ACCA and ICAEW, are expected to follow before taking on a new client. It protects you as much as the accountants. It makes sure nothing is lost in the handover, and that your new accountant knows about anything that needs attention, such as an open HMRC enquiry or a return that's nearly due. It's a routine letter, not a dispute.

Keep your passwords to yourself

You should never need to share your own HMRC or Government Gateway password with an accountant. HMRC has a proper process for authorising an agent to act for you, and your new accountant will send you what you need to approve it. The same goes for your bank: give your accountant read-only access through your accounting software's bank feed, not your online banking login.

What you'll need to hand over

• Your Unique Taxpayer Reference (UTR), and your company's UTR if you're a limited company
• Your company registration number and authentication code
• Your VAT registration number and employer PAYE reference, if you have them
• Your last set of accounts and tax returns
• Access to your bookkeeping software, or your records for the year so far
• Details of anything outstanding, such as HMRC letters or unpaid tax

Will it cost anything to switch?

Most of the work in a switch falls on your new accountant, so ask up front how the handover is priced. Your previous accountant may charge for work they've already done, so settle any fees you owe to keep things moving. If your books are behind, catch-up bookkeeping may be quoted separately, which is worth knowing before you commit.

How long does it take?

For most small businesses the handover takes a few weeks, depending mainly on how quickly the previous accountant responds and how up to date your records are. You carry on trading as normal throughout. The only thing that changes is who you call when you have a question.

Switching to LN Accountants

We're a CIMA-qualified practice in Bristol with over 20 years of combined experience, working with sole traders, small businesses and limited companies across Bristol and the UK. When you move to us, we handle the entire handover with your previous accountant, including the professional clearance process, so the move is seamless. See our fixed fee pricing, or get in touch to talk it through.