Accountable
Let's make accountable a reality
More than three years after AAT first asked members to share their experiences of unregulated accountants, the government is considering compulsory membership. Calum Fuller reports
In the March/April 2021 edition of AT, AAT launched its Accountable campaign to raise standards, particularly among unregulated accountants. We invited members to share their experiences of dealing with clients who had come to them from unregulated accountants.
The response was quick, as you relayed stories of clients who had been badly let down. Too many members have had to address extremely difficult predicaments – for instance, situations where figures have been made up, where the previous unregulated accountant requested payment to hand over client information, and where an unregulated tax agent disappeared with client funds.
These examples show the consumer learning the hard way that anyone can call themselves an accountant, and the harm it causes.
Members have continued to share their experiences, enabling AAT to inform MPs and decision-makers about the need for change.
The key facts
Two-thirds of complaints about tax advice to HMRC are about the one-third of accountants who are unregulated. HMRC research has also shown that unaffiliated agents don’t work to recognised standards:
Just 4% of unaffiliated agents follow the Professional Conduct in Relation to Taxation
only follow HMRC’s standards of tax advice
don’t know what the standard is
of unregulated accountants don’t hold a professional qualification
Major victory
Since then, it has become clear that MPs were largely unaware of the issue and the risk it poses to both the profession and the public. Through a process of education and regular campaigning activity in the intervening years, Accountable took a major step when the government announced a consultation on compulsory membership of a professional body for tax advisers in this year’s Budget.
Mandatory membership of a professional body, such as AAT, is one of three options the government is considering in order to ensure and enforce higher standards among accountants and tax advisers.
The alternatives under consideration include joint enforcement between HMRC and the industry and regulation by another, separate statutory government body. The consultation will close on 29 May. HMRC will publish a summary of the responses in due course, following which a preferred approach will be developed for a bill to go before Parliament.
Where AAT stands
Fundamentally, AAT believes that the public needs to be able to trust their accountants and tax advisers. AAT members, along with members of other professional bodies such as ACCA, ICAEW, ICAS, CIMA, CIOT, ATT and CIPFA, are required to undertake regular CPD and comply with a code of professional ethics.
The government’s call for evidence on Raising standards in the tax advice market (2020) showed there is a minority of practitioners who, are “incompetent, unprofessional or unscrupulous”, the consultation said in its foreword.
Through Accountable, AAT has long argued that membership of a professional body is the best way to drive up standards, requiring agents to:
- be appropriately qualified,
- undertake regular CPD,
- hold Professional Indemnity Insurance (PII),
- be subject to the body’s disciplinary procedures, and
- sign up to Professional Conduct in Relation to Taxation (PCRT).
“We know that the public expect a professional, honest service when they engage accountants and tax advisory agents,” says AAT director of professional standards and policy Adam Harper. “It’s in the interests of the whole profession that every person engaged in tax advisory is engaged in tax advisory service provision.”
How unregulated accountants have affected you
AAT members talk through their experiences inheriting clients from licensed members
Rosie Berridge FMAAT Accountability Edinburgh
“I provide services that are in the outsourced finance space. That leads me to collaborate very often with other accountants, so I see the work of a lot of other finance people, and a lot of other accountants. Another AAT accountant locally and I work quite collaboratively together because he only is interested in year end and I don’t do that, so we fit quite nicely.
“We took on a client who had no idea if VAT returns that they’d approved had been filed. They had no idea if their payroll submissions had been submitted. They had tax bills coming at them and they had no idea why. Their accountant didn’t respond to any clearance request. We did end up taking it over, but we had a situation where we had incomplete records because we couldn’t get any of the information we needed. The accountant that we were taking over from was a chartered accountant, or claimed to be at least. Between us, we went and looked at all the professional bodies’ directories to see if we could find him and he wasn’t there. And it was just an absolute pig’s ear to unpick, and that poor client ended up suffering.”
Andy Sullivan FMAAT CompleteHQ
“What’s maybe slightly different is our our client base is is national really, so they’re not just always in our geographic area, so that maybe dilutes the chances of us taking over work from an unregulated accountant. However, there are like two other local firms near us. One is also regulated and one isn’t regulated. And on the occasion that we have taken over clients from the unregulated firm, the information that we’re handed over isn’t in the same sort of level of depth that I would expect. Going into technical detail, for example, in every set of accounts we prepare, we have a detailed schedule of working papers behind every number in the accounts. That’s very common practice within the industry. But with these guys, it was like, ‘here’s a trial balance. We don’t have the detail behind the numbers. We just don’t do work papers’. The attention to detail and the level of preparation work is not the same as you’d expect from others.”
Glynis Dance FMAAT Orchard Business Services
“I’ve seen poor prior year accounts bearing little information; no schedules or CA details; evidence of incorrect handling of expenses and relief claims.”
Nicola Darroch FMAAT AATQB Darroch Accountancy
“Expenses over-claimed, not recognising when clients should register for VAT, incorrect capital allowances claimed, income clearly understated, strange accounts format.”
