Chapter 16: How to Tell When an Accountant Is a Risk
Key point: The absence of an accountant is not always the greatest risk. A more serious danger may be the appointment of an incompetent or irresponsible accountant whose work creates tax exposure while the client remains legally responsible for the return.
In many small-business circles, accountants are often found through friends, informal recommendation, or attractively priced advertisements. That approach carries obvious risk. If an accountant gets the tax wrong, HMRC will usually pursue the taxpayer, not the accountant. The accountant acts as agent; the legal responsibility remains with the client.
The question, therefore, is how to recognise the danger at an early stage.
Warning Sign 1: They Promise to Make Your Tax Bill Disappear Completely
If someone confidently says, "Give me your company and I will make sure you pay zero tax," that should be treated as an immediate warning sign. Legal tax planning and illegal evasion are not the same thing. Reckless promises of zero tax often rely on fabricated expenses, fake bookkeeping, or indefensible positions. When HMRC investigates, the accountant may disappear. You are left facing the bill.
Warning Sign 2: They Are Never Reachable
A good accountant should operate rather like a trusted professional adviser to the business. Where guidance is needed on a new vehicle purchase, payroll for a spouse, or the transfer of property interests, timing is often critical.
If your accountant only appears when it is time to collect fees, and vanishes when real advice is needed, that accountant is a liability, not an adviser.
Warning Sign 3: They Never Look at Evidence
If an accountant never asks for bank statements, invoices, receipts, or underlying records, and instead invites the client to estimate total income and total expenditure, that is not professional work in any meaningful sense. It creates latent risk. When HMRC later asks for supporting evidence, the taxpayer may discover that the return was built on unsupported approximations.
Warning Sign 4: They Hide Behind Vague Language
If you ask a specific question about moving rental property into a company, Section 24, SDLT, or pension carry forward and the answer is just, "It is complicated, but we will sort it out later in the accounts," that is a bad sign. A real professional should outline the tax consequences clearly, identify major risks, and show rough numbers.
Warning Sign 5: They Get Basic Rules Wrong
If your accountant misuses your Personal Allowance, misunderstands spousal rental allocations, or gives careless advice around the £100,000 allowance trap, that is not a small error. It is a warning about their overall competence.
Warning Sign 6: They Push Everyone into a Limited Company
Some accountants recommend a company structure to almost everyone because company work generates higher fees and continuing compliance income. But if your profits are still modest, the company may save little or no tax after compliance costs. If the advice feels automatic rather than tailored, be careful.
Warning Sign 7: They Refuse to Show You the Draft Tax Computation
Before anything is submitted, a competent accountant should show the draft figures and explain them. If the response is simply, "It is done, just pay this," and irritation follows any request for explanation, the client is effectively being asked to sign blind.
Conclusion
A strong accountant should be both technically competent and communicatively clear. They should understand the rules, explain the figures, and ensure that the client understands what is being submitted. Anything less creates avoidable financial risk.