Four in Ten Have Lost Money Due to Poor Accounting

• 51% have had to hire a qualified accountant to correct the mistakes of a previous unqualified accountant’s work
• 41% prioritise cost over checking accountants’ qualifications
• Unregulated accountants causing two thirds of complaints according to HMRC

 After a turbulent year, with more uncertainty on the horizon, AAT (Association of Accounting Technicians) has captured views that sheds light on the risks that some businesses are taking with their finances with 42% of respondents to a recent survey claiming to have lost money due to the actions of their accountant or tax adviser.

Meanwhile, although one in three accountants are unregulated, this group are responsible for two-thirds of complaints received by HMRC. However, 45% of those surveyed shared that they had encountered a negative experience with their accountant or tax advisor, potentially challenging the wisdom of the trust they put in those they rely on for crucial advice and guidance.

The survey revealed that 69% of the businesses acknowledged that their accountant knows more about their finances than anyone else.  A quarter (25%) have overpaid on tax, with 17% also missing a tax deadline and 51% have subsequently had to hire a qualified accountant to correct the mistakes of a previous unqualified accountant’s work.

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 highlighted the advantages of appointing a qualified professional, with 70% of respondents acknowledging the benefits of good accounting with it leading to cost savings. However, despite these financial benefits, and mitigation of the risks outlined by the survey findings, cost is the most important factor in appointing accountants or tax advisers with 41% choosing the more affordable option over an accountant with appropriate qualifications (24%).

AAT urging us to make sure we all do our homework before handing over any information, as it reveals the top five mistakes from the previous financial year:

Top 5 mistakes people make when doing their taxes

1. Using unregulated accountants – whilst one-third of the accountancy profession is unregulated according to HMRC, unregulated accountants and tax advisers make up two-thirds of complaints to HMRC, potentially leading to significant financial costs for those using them through losing money or hiring a regulated accountant to correct the previous accountant’s mistakes.
2. Not knowing your deadlines – make sure you know when your tax returns are due and when you should register for self-assessment
3. Waiting to enlist help – if you do choose to use a regulated accountant, contact them in good time ahead of needing to submit your tax return. Looking for help in the New Year may leave you with limited options and risk resorting to an unregulated accountant
4. Not having your paperwork in order – make time once a week if possible to file your receipts and invoices, so you’re prepared when the time comes to submit your tax return
5. Not putting money aside to pay for your tax bill – if you can, set up a monthly standing order to transfer a certain amount into a savings account for taxes so you don’t get caught out

Top five tips for business owners

To help businesses and individuals prepare for the new financial year, AAT is also releasing its top five tips to help you avoid making a mistake – and even losing money – especially at a time when the cost-of-living crisis is putting finances under increasing pressure:

1. Write a business plan – get an idea of what you want to achieve this year by putting together a business plan with the future plans and predictions for your business. The plan should explain your ideas, map out how they’ll be put into practice and provide information on areas including management, operations, marketing and sales strategy and financial projections.
2. Get organised now – monitor your financial performance, including your balance sheet, profit and loss and cash flow forecast, and set up a filing system for your paperwork if you don’t already have one. Make sure you’ve got the deadlines for your tax returns and Corporation Tax payments (if necessary) in the diary as well, and make time to review your budgets on a monthly basis
3. Get your data sorted – make sure you’ve got the information you need to prepare your accounts for next year available. This includes your Unique Taxpayer Number and National Insurance number for self assessment, as well as invoices, receipts, bank statements, VAT information, wage slips if you employ staff and details of loans and capital items. Set up a folder to save this information and add it to the file as soon as possible after it’s received
4. Sharpen your business skills – look at online finance courses in areas such as bookkeeping, read business books and articles and take advantage of free resources to help you learn more about running your business. Investing in your education as a business owner will be the gift that keeps on giving.
5. Consider using a regulated accountant – if you feel you need help managing your taxes, look into working with an accountant or tax adviser who is regulated by a professional body to support you in this area. AAT has created a free e-book, ‘What you should know before appointing an accountant’, with advice on tips on how to find a regulated accountant or tax adviser who is the best fit for your needs.

AAT is committed to working with others across the profession to press the Government to take much needed and long-overdue action on this matter that will deliver greater confidence in those who employ the services of others in advising on their finances.

About the research 

The research for AAT, was carried out online by Opinion Matters between 07/03/2023 and 13/03/2023 amongst a panel resulting in 1,011 people who employ an accountant/tax advisors responding. All research conducted adheres to the MRS Codes of Conduct (2019) in the UK and ICC/ESOMAR World Research Guidelines. Opinion Matters is registered with the Information Commissioner’s Office and is fully compliant with the General Data Protection Regulation (GDPR) and the Data Protection Act (2018).

About AAT

• AAT (Association of Accounting Technicians) is the UK’s leading qualification and professional body for technical accountants and bookkeepers, and has around 130,000 members and students in over 100 countries. We have been helping people enter and develop their skills within the accounting sector for the past 40 years.

• We offer a range of qualifications that are open to all regardless of previous education or age, such as the AAT Accounting Qualifications that provide a non-degree route into chartered accountancy, and the AAT Bookkeeping Qualifications that can support business growth through accurate and up-to-date financial records. Students encompass a wide range from school and college leavers, to older people hoping to change their career or learn the skills to run their own business.

• An AAT Accountant is a qualified accounting professional with the practical and technical skills needed to support businesses with their accounting activities. Typical job roles of an AAT Accountant include: Financial Accountant, Commercial Analyst, Senior Finance Officer, Payroll Manager, VAT Accountant and Tax Supervisor. An AAT Accountant in the UK can sign off the accounts for small companies that meet two out of three of the criteria of turnover less than £10.2 million, total assets less than £5.1 million and less than 50 employees. Currently over half a million businesses trust AAT Accountants and AAT Bookkeepers to service their accounting requirements.

• AAT awards around 80% of all technical qualifications in accounting in the UK, and generous exemptions are provided by many of the senior UK bodies including ACCA, CIPFA, ICAEW, CIMA and ICAS. As part of our ongoing commitment to service excellence, we’re proud to be a member of the Institute of Customer Service, the independent professional body for customer service.

• AAT’s qualifications are internationally respected. AAT works hard to raise the profile of accounting technicians worldwide and their role in building stronger economies. Globally, in select economies, AAT plays a role in establishing, maintaining and raising professional standards of accountancy practice. See our international page for more information about options for international students.