UK My accountant is ghosting me after I payed them to do my end of year accounts

[RobertB]

Hi all,

I'd love to hear some advice on how I should handle my current relationship with my accountant...

For context I'm a solo founder of a startup that sells VR fitness content. The startup hasn't been profitable at this point unfortunately, even though I have a small stream of income from the software sales which just about cover server costs it's a long way from covering the costs that went into building the content. I've been doing my bookkeeping online via quickfile.

This is my second year looking to file my end of year account and I thought it would be easiest to contact the accountant that I had found the year before (originally found via the listings provided by the accounting website I use).

Since there were a few things with the previous years filing that I felt needed extra attention I tried to itemize these when I reached out to ask if they could do my accounts this year. In particular:

1. I have various assets (a second-PC and VR headsets) that I had brought in previous years which I wanted to depreciate.

2. There was a discrepancy between my books and end of year accounts because of a last minute decision to pay myself a minimal salary and because I didn't understand how to correctly update my books or track I just wanted a bit of extra help understanding this so I could make sure my books properly reflected everything properly.

I was sent an invoice for £172 that referred back to these itemized issues which I paid immediately.

One of the first things they asked for was bank statements for each of my accounts - which made sense to me so they can cross reference my books with those bank statements. (They specifically said "We need to confirm the bank balances in your bookkeeping")

Now it turns out that actually my books were not fully up to date as I had thought they were at the time of contacting the accountant, which I mention at this point because one of my concerns (in retrospect) is that I don't understand why the accountant didn't immediately notice that the bank statements didn't match the books before they went ahead and started sending, and amending, drafts for my end of year accounts.

So ignoring that for a moment they sent a first draft on the 14th of Sept. (6 days after I sent them my bank statements)

I noticed that the assets sum / depreciation didn't account for all assets that are accounted for in my bookkeeping (and I highlighted the sum of assets that quickfile shows)

I also asked two questions:
1. One related to the 'net liability' which looked like it somehow reflected the salary from the previous year. I was hoping to understand whether this information should somehow be reflected in my books - and in particular how it compares to the liability that I can see from my directors loan account.
2. I asked how can I synchronize my books to be in line with the end of year accounts from last year (i.e. how to track the owed salary in my bookkeeping)

This is the first period of silence I get.

On the 29th of Sept. (15 days later) I sent an email asking how they are and whether it was possible to get a response. They respond saying that they had end-of-month deadlines and they will look tomorrow. I said 'no worries' I wasn't in a big rush since we were still well in advance of my deadlines.

On the 4th of October I got a second draft (20 days after the first draft), updating the sum of assets that they were depreciating, matching the numbers I had given them. They also said there was an "Adjustment for salary allowance added to director loan account" but I couldn't infer what this meant since I didn't see any change to my directors loan account. (I honestly have no idea what that adjustment refers to)

On reviewing this second draft I then realized that the accounting of sales was highly suspect. There were zero sales accounted for. For the previous year they had accounted for £1,921 for sales and I have made more sales in the following year.

When I went and double checked my books for sales this was when I realized that they weren't fully up to date as I had originally thought. I spent that evening correcting that and making sure all my sales were fully tagged in my books. I should highlight though that only some of the years sales hadn't been tagged (so it didn't fully explain why the draft was showing zero for sales)

This is where I was struck by the fact that they clearly hadn't used my bank statements to "confirm the bank balances in your bookkeeping" because if they had done that they would have immediately seen the mismatch (as I did).

After noting the sales issue and also letting them know that I had realized I needed to update my bookkeeping they responded: "We're redoing the data extraction to cover you changed to the bookkeeping and will comment on any other queries you may have after the draft accounts are issue"

On the 18th of October (14 days later) I got another draft.

Now the sum for assets and the amount to depreciate had be reset again to the original (incorrect) value and the sales showed £1.

For context my startup earns money by generating royalties from selling its content via online stores. Nothing has changed between this year and the previous year regarding how I track those sales. In the previous year I had accounted for £1921 as royalties in my bookkeeping which the accountant had put as Sales in my end of year accounts. This year the bookkeeping shows £4435 and so I've been expecting that the Sales should be £4435 this year.

After raising this question about the Sales figure looking surprising (and the assets sum being reset) I haven't heard from them since the 18th of October.

I don't really know what I should do. I've already paid them £172 for the work but they basically aren't doing anything (or anything they have done has been wrong).

I feel bad that I realized I had not got my bookkeeping fully up to date but on the other hand I feel like this also represents a failure of the accountant to do what they said they would do at the outset which was to check the bookkeeping balances which they should have done before sending their first draft.

Since I'm not profitable I don't really like the idea of wasting this money but I think I probably need to just sever my tie with this accountant right?

Should I just accept that I have lost that money or can I maybe ask the bank to reverse charge them somehow because they haven't done the work?

Does anyone have any other suggestions for what I should do?

Thanks for any help.

- Robert

 

[Truemanbrown]

The first thing I would do is have a look at the letter of engagement that they should have agreed with. In that letter should be a section of how complaints are to be dealt. Try that first.

If you are still having problems, find out which accountancy body the accountant belongs and contact that body and tell them the situation.

If there is no accountancy body, that you can go to then you are probably dealing with an unqualified accountant. You will probably have no chance of getting your money back unless you are prepared to go to the Small Claims Court.

 

[RobertB]

Thanks for the suggestions / thoughts.

They simply sent an invoice through with a summary that said:

Annual accounts service
Including review of depreciation and director loan account

(with the later being a very vague nod back to the two issues I described when I emailed them about doing my end of year accounts)

The invoice then specified one item of work for £172.80 with the description of "Quickfile Yearend Services - (M)"

From their website they would normally just charge £75 to do the end of year accounts for an extra-small startup like mine but I just accepted that it was easier for them to bump it up to being as if I was a [M]edium company to account for the 2 questions I had.

Unlike last year though where I effectively booked them via Quickfile's directory, I went to them directly this year, and then just paid them via Stripe.

There was no more specific contract that we agreed to - just the initial email I sent and then the much more vague invoice description.

So yeah, probably pretty naïve of me to go ahead with such an informal agreement but I had sort of assumed that since they had seemed legitimate the first year that it would be reasonable, and convenient to go with them again. Even last year there was no specific contract that was agreed.

They are highly reviewed on the Quickfile directory and their website at least claims "We are UK licenced accountants from the Association of Accounting Technicians".

I can't find any reference as to any kind of complaints process that's open to me as part of my engagement with them.

Looking through the AAT website I did find: https://www.aat.org.uk/membership/standards-requirements/complaints so maybe I can try using that process.

 

[RobertB]

As a quick follow up here...

I ended up sending an email explaining that I can't just continue waiting for an unknown amount of time for this work to be finished (2 months so far) and to ask for a partial refund.

I got some helpful context in the response that helped me better understand their current situation and they were apologetic about how their service has been badly affected recently (mainly a rush of work combined with catching Covid recently, which I think they are now recovered from).

I am giving the benefit of the doubt and choosing to give them another chance while it looks like they are prepared to try and follow through on completing this work with a higher-priority now.

They have given some clearer responses to my questions about how my sales/royalties are being accounted for as well as given clearer assurances about synchronizing my bookkeeping with the end of year accounts (including the owed directors salary).

I'm currently feeling optimistic that this might get completed in relatively short order now and hopefully it won't be necessary to pursue a more formal complaints procedure.