Changing accountants is usually far less work than business owners expect. Your new accountant does most of it: they contact your old accountant, get authorised with HMRC, collect the records they need and agree a timetable with you.
Your part is smaller but important. Decide what you actually need, check your current engagement terms, approve a few access requests and make sure nothing falls between the two firms. The real risks in a change are timing and missing information, not the switch itself.
This guide is written for established businesses: companies with a few years of history, payroll, VAT and perhaps more than one company. The steps are the same for smaller businesses, there is just more to hand over.
Is it difficult to change accountants?
No. Accountants change clients all the time and the process is well established.
When you appoint a new firm, members of the professional bodies make what is often called a "professional clearance" request to your existing accountant. ICAEW, one of those bodies, describes that name as a misnomer: it is a professional enquiry, not a request for permission. Your old accountant cannot block the move. Its purpose is to let the new firm find out whether there is any professional reason it should not act, and to arrange the handover of information.
If there are unpaid fees or a disagreement with your current accountant, it is sensible to settle or agree them before you move. They do not stop you changing, but they can slow the handover down.
What should you sort out before you decide?
Before you start talking to other firms, be clear about why you want to move. For most established businesses it is not one mistake. It is a gradual gap between what the business now needs and what it is getting: slower responses, information arriving too late to be useful, no one who really knows the business. If that sounds familiar, Why Growing Businesses Outgrow Their Accountant Before They Realise It covers the common signs.
Then check a few practical points:
- Your engagement letter. Look for a notice period and for any work already in progress that you have agreed to pay for.
- What you need now. Year-end accounts and tax returns only, or bookkeeping, VAT, payroll and monthly management accounts as well? Write it down, because it is the basis for comparing quotes. What Should You Expect From a Good Accountant? may help you decide what matters.
- Who owns your software. Make sure your accounting software subscription and data belong to the business, not to your accountant's practice account. If they do not, ask for the file to be moved into your name.
- Scope and price in writing. A new firm should be able to tell you what is included, what is not and what it will cost before you commit.
What does the handover involve?
Once you have chosen a new accountant, the handover usually follows the same steps. Some happen in parallel.
- Engagement and identity checks. You sign an engagement letter. Accountants are covered by the Money Laundering Regulations, so the new firm is legally required to carry out customer due diligence, which includes checking the identity of the business and the people behind it.
- The professional enquiry. Your new accountant writes to your old one. You usually just need to tell your old accountant that you are moving and give permission for them to respond.
- HMRC authorisation. Your new accountant needs to be authorised with HMRC for each tax they will deal with. For many taxes this is done online: they send you an authorisation request link, and you approve it using your own HMRC sign-in details. HMRC's guidance says the request must be responded to within 21 days, so it is worth doing when it arrives.
- Companies House access. To file accounts and other documents online, your accountant needs the company's authentication code. It is a six-character code that Companies House treats as the equivalent of a company officer's signature. If you cannot find it, it can be requested online and is posted to the company's registered office, which Companies House says can take up to 10 working days. Allow for that if a deadline is close.
- Software and bank access. You invite the new firm into your accounting software, and remove the old one once the handover is complete.
- Records. The new firm gathers what it needs from you and, where appropriate, from your old accountant.
Which records does a new accountant need?
For an established company, the list usually includes:
- the last filed accounts and corporation tax return, with the tax computations behind them;
- any tax losses, capital allowance pools or other figures carried forward;
- VAT returns and the VAT scheme you use;
- payroll records, including pension auto-enrolment details;
- a breakdown of balance sheet figures, such as fixed assets, loans and the director's loan account;
- loan, hire purchase and lease agreements;
- details of anything unusual, such as an HMRC enquiry, a pending sale or a change in shareholders.
Much of this sits in your accounting software already. The balance sheet workings are the part most often missing. If the closing figures from last year cannot be explained, the new accountant will need to rebuild them, which takes time.
When is the best time to change accountants?
You can change at any point in the year. Some points are easier than others:
- Easiest: shortly after your last accounts and tax return have been filed. The new firm starts with a clean year and has the most time.
- Fine with planning: soon after your year end, before the old firm has started the accounts. Agree clearly who is preparing that year's accounts.
- Harder: a few weeks before a filing deadline, with the old firm part way through the work. It can be done, but agree in writing who is responsible for which deadline.
If your accountant runs your payroll or VAT returns, move those at a clean break, such as the start of a pay month or VAT quarter, so there is no confusion about who submits what.
What if you have more than one company?
Move them together if you can. Each company needs its own HMRC authorisations and its own Companies House authentication code, and intercompany balances are much easier to agree when one firm is looking at both sides. It is also a good moment to check whether each company is still needed. Groups & Company Structures covers how we approach businesses with more than one company.
What should the first few months look like?
A good new accountant will spend time understanding the business and checking the opening position, rather than simply picking up last year's figures. Expect some questions about balances and how things have been done. Expect an agreed timetable for deadlines and, if you need them, regular reports. You should know who your contact is and what the fee covers.
If something from before the change needs correcting, it should be explained to you plainly, with what it means and what it will cost to fix.
Is it worth the effort?
If the current relationship is working, stay put. If it is not, the switch itself is rarely the hard part. What matters is choosing a firm that fits the business as it is now.
If you are weighing up a move, Switching Accountants explains how we handle it, and Accounting sets out what we do for established businesses.