How to switch accountants as a sole trader (without the stress)

You can change accountants at any time if you’re self-employed. You don’t have to wait until the end of the tax year or until your next Self Assessment return has been filed.

You may want to change because you’re unhappy with the service you’re receiving, the fees have increased, or you need an accountant with experience in a particular area of tax or accounting.

Once you’ve chosen a new accountant, they will normally contact your existing firm and arrange for your records to be transferred.

Key point: Before changing accountant, check whether you have any outstanding fees or work in progress. It’s also worth downloading copies of your accounts, tax returns and other important records while you still have access to them.

Why might you change accountant?

There are many reasons why you might decide to use a different accountant.

You may be paying more than you expected, receiving a poor service or finding it difficult to get answers when you have a question.

Your requirements may also have changed. A sole trader with fairly simple accounts may need more support as turnover increases, the business registers for VAT or Making Tax Digital for Income Tax starts to apply.

Other reasons for changing include:

Your accountant takes too long to respond to emails or calls.
Your fees have increased significantly.
You don’t receive much tax advice during the year.
You want more help with bookkeeping or accounting software.
Your accountant doesn’t have experience in an area relevant to your business.
You want to move to a firm offering a wider range of services.

Price is often a factor, but compare what you’re actually receiving for the fee. A cheaper accountant may include less work in the standard package or charge separately for advice.

Can you change accountant during the tax year?

Yes. You can change accountant during the tax year.

You can also move while your next tax return is being prepared, although you’ll need to establish how much work your existing accountant has already completed.

If a filing deadline is close, speak to the new accountant before ending your existing arrangement. They will need enough time to obtain your records and complete any outstanding work.

The same applies if you have an ongoing issue with HMRC. Give the new accountant copies of any correspondence and explain what has happened so far.

What will your new accountant need?

Your new accountant will need your tax and accounting information before they can take over.

This will usually include:

Your Unique Taxpayer Reference (UTR).
Your National Insurance number.
Previous accounts.
Copies of your Self Assessment tax returns.
Your bookkeeping records.
Details of any outstanding amounts due to HMRC.
Copies of relevant HMRC correspondence.
Access to your accounting software, where applicable.

There will be additional information to transfer if you’re VAT registered or employ staff.

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Your new accountant will also need to be authorised to deal with HMRC on your behalf.

How does the handover work?

Your new accountant will normally contact your existing accountant and ask for professional clearance.

As part of this process, the existing accountant can provide information relevant to the new firm’s decision to accept you as a client. They will also be asked to transfer the accounting and tax records needed by the new firm.

These may include:

Previous accounts and tax returns.
Tax calculations.
Bookkeeping information and balances.
Details of outstanding tax matters.
Relevant correspondence with HMRC.

Tell your current accountant that you intend to leave before the new firm contacts them. You can also confirm that you authorise them to provide the information required for the handover.

Pay any outstanding fees unless you are disputing an invoice.

Check your engagement letter before leaving

Your engagement letter sets out the terms on which your accountant provides services to you.

Check the section covering termination. There may be a notice period or fees relating to work which has already been carried out.

Paying your accountant monthly doesn’t necessarily mean that each payment relates only to work completed during that month. Some firms spread the annual cost of preparing accounts and tax returns across 12 monthly payments.

Find out what you’ve already paid for and what remains to be done before cancelling your payments.

Keep copies of your records

Download any records you want to keep before your account with the old firm is closed.

This should include your previous accounts, tax returns and tax calculations, together with any useful correspondence.

You should also check access to your bookkeeping software.

If your accountant originally set up the software subscription, find out whether the account belongs to you or the firm. You don’t want to discover after leaving that you can no longer access several years of bookkeeping records.

If you’re considering changing software as well as accountant, see our guide to accounting software for MTD Income Tax.

What if you’re changing because your accountant made a mistake?

Tell the new accountant if you believe there is an error in your accounts or tax return.

Give them copies of the relevant return, calculations and correspondence so they can check what was submitted.

An incorrect tax return may need to be amended. If the mistake resulted in too little tax being paid, you may also need to pay the additional amount to HMRC.

Our separate guide explains what happens if your accountant makes a mistake on your tax return.

How to choose your new accountant

Decide what services you need before comparing firms.

For example, you may only want an accountant to prepare your annual accounts and Self Assessment return. Alternatively, you may want bookkeeping, VAT returns, tax planning and regular advice included as part of the service.

Ask each firm what its quoted fee covers and which services cost extra.

You should also check whether the accountant regularly deals with businesses like yours. If you have more complicated tax requirements, you may want a firm which provides specialist tax help as well as routine accounting and tax return services.

Ask who will be your main point of contact and how the firm deals with questions during the year. If you use Xero, FreeAgent or another accounting package, check that the firm supports it.

You may also find these guides useful:

What happens to your HMRC authorisation?

Your new accountant will need authority to deal with HMRC on your behalf.

They will normally arrange this when you become a client. Your old accountant’s authority can then be removed.

Check that the new firm has access before any tax return or other submission is due.

Using an accountant doesn’t remove your own responsibility for your tax affairs. Keep copies of returns submitted on your behalf and check the figures before approving them.