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Contractors warned to stick with specialist accountants
Posted Jun 30, 2009
Contract workers are being urged to be careful when seeking advice from high street accountants, as a survey suggests that mainstream firms are often unaware of contractor-specific legislation and compliance issues.
A recent 'mystery shopper' survey, conducted by Aberdeen-based contractor services company Freelance World, suggests that not only do most high street accountancy firms lack a detailed knowledge of the legislation which affects freelancers disproportionally (IR35, Managed Service Company legislation, etc.), many also had a "worryingly vague attitude to the need for compliance with the legislation".
The firm says that contractors who entrust their affairs to non-specialist accountants may find themselves faced with large HMRC fines, and even placed on a credit blacklist.
Alasdair McGill, MD of Freelance World, explained:
"We have been genuinely alarmed at the poor advice being given by some firms to prospective clients. It is like going to a GP for treatment when you really need to see a specialist consultant. It is quite clear that many high street accountancy firms simply do not have the expertise to advise contractors on key legislation, compliance and management of their specific requirements.
"One accountant offered an off-the-shelf incorporation service - a practice that is prohibited by the Managed Service Companies legislation of 2007. Another told a researcher that they 'didn't need to worry about (IR35' - the key legislation that revolutionised the contracting industry and meant contractors can be taxed as employees.
"One responder told us that IR35 had 'died a death'. That kind of advice could cost a potential client a lot of money and years of credit problems, this is because since the 2009 budget, HMRC can now place people on a tax avoiders' blacklist for non-compliance."
Further resources
For a wealth of advice on contractor accountancy issues, try some of our popular guides:
- How to choose a contractor accountancy firm
- Typical contractor accountant duties
- Contractor accountants - things to avoid
- Our contractor accountancy firm directory
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