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Beware the Beancounters
An online petition has been launched to put a stop to unscrupulous ‘accountants’ trading without training, insurance and qualifications. Faith Brotherston meets the woman behind the campaign
The term ‘cowboy’ has long since been applied to unscrupulous tradesmen; those plumbers who will charge you a fortune for tightening your taps; the mechanics who shake their heads, kick your tyres, and then make you sign a hefty cheque for an allegedly ‘unfortunate’ auto-grumble – but what happens if it’s a professional who’s fleeced you? Someone you’ve trusted to advise you, file your tax returns and ensure your finances are healthy, who has left you open to fines and failure?
We’re increasingly turning to social media and recommendations to try and find tried and tested, recommended providers, naming and shaming those who lack ethics and skill. But we never associate these corrupt and dishonest practices with the professional services sector, where the effects can be far more devastating.
It seems that in the white collar area of accountancy, there is an alarming amount of corruption and incompetence and one accountant has taken it upon herself to launch a campaign to put a stop to the horror stories from trusting individuals who have bowed down to an advisor to help manage their NI, income tax and VAT, and found themselves out of pocket, angry, and back to square one.
Horror Stories
Elaine Clark, managing director of accountancy experts CheapAccounting.co.uk has been instrumental in launching a campaign to prevent small businesses and sole traders falling victim to rogue and incompetent accountants. She holds up two recent examples as her reason:
Lucy says: “I’ve recently become self employed after three years of dilly-dallying. What prevented me, made me too afraid to risk taking the step, was the fact that seven years ago I did the same thing. I registered with an accountant I met at a small business networking group and, terrified of doing things wrong and ending up on the wrong side of the Inland Revenue, I filled in the forms and did as I was told. It was the last week of March and the new tax year started the following week.
“Despite the fact that I wouldn’t be invoicing anything until the end of the month, the accountant insisted I should register for that year-end, making himself a pay-packet for processing non-existent figures. He was charging £90 a month to do nothing, and I paid for six months before a friend intervened and demanded I stop the direct debit and refuse to continue the relationship. I obviously didn’t get the money back, but the company was happy – they’d paid almost £1,000 for registering me for national insurance, and while they half heartedly threatened legal action if I didn’t stick out the year, they didn’t pursue me. I completed my self assessment with the CAB in the end, and then I got a job so I didn’t need to do it again. I’ll be treading carefully this time around.”
Being ripped off that way is infuriating, but Susie found that her accountant was practicing a second career – as a magician. His disappearing skills were superb.
“I signed up with an accountant I found from an advert in the Yellow Pages, and again, I paid my money each month and was told that I didn’t have to do anything at the moment apart from keep all of my invoices and the work would be done at the end of the first year.
“That was April 2009. Fourteen months on; not a whisper. Try as I might, I cannot get hold of this man who has taken my money month after month and then vanished, leaving me with a new set of bills payable to his replacement who, thank God, knows what he’s doing and knows how to treat his clients.”
Accountant or ‘Rogue Beancounter’?
Elaine, who has dubbed these unethical practitioners ‘rogue beancounters’ says she hears hundreds of similar stories a month, and has a sobering fact for Be Fabulous readers: Anyone can call themselves an accountant, and the onus is on us, the trusting customer, to find out if they have the necessary qualifications and training to balance our books.
Elaine’s campaign website, www.whatisanaccountant.co.uk, has received thousands of hits since it was launched last month, with business owners grabbing the chance to sign a petition to change the law and share their own awful experiences. The site is also, understandably, getting massive support from those accountants who have studied and worked to build up a reputation and trust.
Elaine, a chartered accountant with 20 years experience, explains: “The term ‘accountant’ isn’t regulated. Anyone can call themselves an accountant and it doesn’t matter if they don’t have the necessary formal qualifications, examinations, insurance or experience.”
Increasingly, she says, many small firms are complaining about the poor guidance and service they receive from so-called ‘accountants’, who frequently disappear when their shortcomings become exposed.
“The consequences range from bad business choices and unnecessarily high tax bills to fines for late filing, which places a burden on small firms they can ill afford – especially given current economic conditions. Bad tax advice has been known to contribute to the failure of some businesses,” she warns. “The recession has led many people to set up on their own as an ‘accountant’, either as a result of redundancy or as a way to supplement frozen incomes. This, in itself, isn’t a problem, as long as the person has the necessary experience, training and qualifications to support the accounting services they claim to be providing.
“Add this to the increase in small business being formed, again as a result of the recession and redundancy, and the number of people new to the business world turning to those they believe are experts for advice, and we’re seeing an upward trend in these accounting-related problems. Something must be done.”
There are about 4.5m small businesses in the UK, with 400,000 new businesses being started each year. And currently, despite the recession, limited company formations are running at nearly 30,000 a month.
Elaine continues: “The business landscape is changing rapidly. The low cost of forming a limited company means many people go for this option because it offers less personal financial liability, rather than operating as a sole trader with unlimited liability.
“However, setting up a company brings with it the burden of more complex accounts and tax returns, which means many owners seek the services of an ‘accountant’, not all of whom provide a good service – Nearly 230,000 late-filing penalties were imposed in 2009/2010 by Companies House, which gives some idea of the scale of just one symptom of the problem.”
Elaine’s is calling on major UK accounting bodies to educate businesses about the level of experience, formal qualification and service they should expect from the person doing their accounts.
“An awareness campaign along the lines of Gas Safe is needed and the main UK accounting bodies should fund and back it. Only with their support can the term ‘accountant’ be understood by those that need to use one. This will be better for the profession and for small businesses up and down the country,” she urges.
You can give your support to the campaign – which is simply called “What is an Accountant?” – by visiting www.whatisanaccountant.co.uk, where you can add your name to the online petition.
Need an accountant and even more confused? Here are Elaine’s top ten tips for choosing:
- Get a recommendation from someone already using an accountant
- Ask the accountant for client testimonials or for the names of clients to contact
- Check what qualifications that they have
- Check the years of experience that they have in providing similar services
- Ask how many clients that they have in a similar industry to yours
- What are their charges? – Check that this fee is fixed or ask about ‘extras’
- How do they ensure that all of your deadlines are met and that fines will not be paid by you if they’re not?
- Are they regulated by a professional body?
- Do they have professional indemnity insurance?
- What is their complaints procedure?
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Name: Faith Brotherston
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