Accountant's fees audited

PM writes: We have used the same accountants for years but they have recently told us that new tax rules, which came into effect this April, have put an enormous extra workload on all accountants, and we will have to pay higher fees to cover the extra work. Is there some rule-of-thumb for judging how much the increase should be? I suspect that some firms are trying to exploit the new rules to achieve excessive fees.

Answer

The new self-assessment rules for individuals and partnerships apply for the tax year that ended on April 5, 1997. This change is unlikely to affect the work done for companies but may affect work done on your personal tax. Thus you should ask your accountants to explain the extra work they anticipate. Your personal tax affairs may be in arrears, for instance, and need bringing up to date. There is no rule-of-thumb percentage increase but you could use the inflation rate as a starting point. Accountants, like other businesses, are affected by inflation and staff-cost increases. Before the work is done, ask for a fee budget for the tasks involved and the charge-out rates for staff involved and, if there has been a dramatic increase from last year, ask for an explanation. The different services you require from your accountant will, of course, determine the absolute level of the fees but will not affect the overall percentage increase. It would seem that, unless there is a specific reason, the proposed blanket increase may be an attempt to exploit the new law.