After a year of surprises and more unknowns, AAT has collected info showing some business money risks. A new survey says a big 42% of people polled have lost cash because of what their accountant or tax advisor did.
Also, it’s important to mention that one third of accountants, who aren’t regulated, are behind two thirds of the complaints HMRC gets.
Interestingly, 45% of the people polled said they had a bad time with their accountant or tax advisor. This question concerns trusting people we depend on for necessary help and advice.
The study showed that 69% of companies agree their accountant knows more about money than anyone else. Plus, 35% of people aren’t comfortable sharing bank details with their partners.
Also, 25% paid too much tax, and 17% didn’t meet tax due dates. As a result, 51% had to bring in a skilled accountant to fix errors made by an untrained one.
“Adam Harper, Director of Professional Standards & Policy at AAT commented:
These findings underline the risks and higher costs businesses can face when appointing unqualified and unregulated advisers, with over half of respondents having to hire a qualified accountant to correct the mistakes made by their unqualified predecessor. Our survey has also shown that small businesses in particular are losing money through accounting errors. This is why AAT has repeatedly said the Government should legally require anyone offering paid for tax or accountancy services to be a member of a professional body, as happens in other professions. This would provide much needed assurance to business owners that their accountant or tax adviser is suitably qualified and required to maintain their commitment to the highest standards of professionalism and ethical behaviour.”
The survey highlights the plus side of hiring a skilled, certified accountant. Notably, 70% of people agreed they saved much money thanks to their expertise.
Over time, 41% found that opting for a cheaper solution over a credentialed accountant was unwise.
In the long run, a significant 41% of the sample group made the unwise decision of choosing the more economical option over an accountant with the required credentials.
The Association of Accounting Technicians (AAT) pushes folks to be careful and do proper homework before giving out key money details. This advice is based on the top five blunders from the last financial year, which businesses can easily dodge with the help of a trained accountant.
Top 5 mistakes people commit while undertaking their tax obligations:
- Engaging unregulated accountants – HMRC says one in three accountants aren’t under any control. But these uncontrolled accountants and tax helpers get two-thirds of HMRC complaints. This can cause serious money troubles, like losing money or needing a controlled accountant to correct bad advice given before.
- Ignoring deadlines – Knowing when to file tax returns / tax obligations and sign up for self-assessment is crucial. If you don’t, you might have to pay fines and interest.
- Delaying professional assistance – Those seeking regulated accounting services should contact their provider well in advance to avoid last-minute hassles. Waiting until the New Year may limit options and force individuals to seek assistance from unregulated accountants.
- Disorganized paperwork – Maintaining an organized system for documenting receipts and invoices can simplify filing tax returns. Setting aside a weekly session.
- Failure to allocate funds to pay taxes can result in unnecessary financial strain. It is prudent to initiate a standing order that transfers a predetermined amount into a dedicated savings account every month, thus ensuring that the necessary funds are readily available when required.
Five tips to help you avoid making a mistake
AAT & Sepera College shares its top five tips to help businesses and individuals prepare for the new financial year / tax obligations. These tips can prevent mistakes and financial losses, especially during the current cost-of-living crisis.
- Draft a business plan. To reach your targets this year, make a business plan with future projects, predictions, and key info. Please discuss your ideas and how to carry them out, and include details on managing, running, promoting, selling, and money predictions.
- Please organize yourself immediately. Monitor your financial performance by reviewing the balance sheet, profit and loss statement, and cash flow forecast. Organize your paperwork and set up a system. Mark tax return and Corporation Tax payment deadlines in your diary and dedicate time each month to review your budgets.
- Sort your data – ensure you have the information to prepare your accounts for the upcoming year. Collect and organize essential documents such as your Unique Taxpayer Number, National Insurance number (for self-assessment), invoices, receipts, bank statements, VAT details, wage slips (if applicable), and information on loans and capital items. Create a folder to store this information and promptly add it to the file as soon as you receive it.
- Enhance your business skills – explore online finance courses that cover bookkeeping, read business literature and articles, and take advantage of freely available resources to expand your knowledge about managing your business. Investing in your education as a business owner will provide enduring benefits.
- It would be best if you considered employing a regulated accountant. For tax help, consider working with an accountant or tax advisor affiliated with a professional organization. The Association of Accounting Technicians (AAT) created a free e-book, “What you should know before hiring an Accountant.” It helps you find a regulated accountant or tax advisor that suits your needs.