accountant problem

dannybbb

My accountant charged me to set up payroll 5 years ago - I recieved a bill for the last 5 years of running payroll - im a one person company, he had never set out ricing or send any invoices in the last 5 years and now wants £2000.

one thing is that it feels very unfair / unreasonable to be charged for services i know nothing about over sucg a long time, the other is that it seems high at 35 PM + other costs. Is tide a good wayto run payroll - any other good solutions?

dannybbb

by the way the inly invoice was for thr setting up of payroll, which i paid at the time. He also tried to guilt me into paying by saying no other clients had an issue with the 5 year charge coming in at once

QrizB

dannybbb said:

My accountant charged me to set up payroll 5 years ago - I recieved a bill for the last 5 years of running payroll - im a one person company,

You're the sole director of a limited company that you're also an employee of? If your company has employees (even if it's only you), you need a payroll system.

dannybbb said:

he had never set out ricing or send any invoices in the last 5 years

Payroll is for paying staff. It's unrelated to (p)ricing or invoicing.

dannybbb said:

... and now wants £2000.

What does your contract with your accountant say re. payment for payroll services?

dannybbb said:

 it feels very unfair / unreasonable to be charged for services i know nothing about over sucg a long time,

Has he been running your payroll over that period? If he has, you've known about the service.

dannybbb said:

the other is that it seems high at 35 PM + other costs.

There's an article here that suggests £20-25 per month person employee:

https://www.accountingweb.co.uk/community/industry-insights/how-much-should-you-be-charging-for-payroll

£35 isn't entirely unreasonable?

Grumpy_chap

dannybbb said:

My accountant charged me to set up payroll 5 years ago - I recieved a bill for the last 5 years of running payroll - im a one person company, he had never set out ricing or send any invoices in the last 5 years and now wants £2000.

one thing is that it feels very unfair / unreasonable to be charged for services i know nothing about over sucg a long time, the other is that it seems high at 35 PM + other costs. Is tide a good wayto run payroll - any other good solutions?

It is not unusual that operating a payroll system has an initial, one-off charge for setting up the Ltd Co. and for each employee added or removed from the system plus a monthly charge for each payroll processed.

What did the original agreement / fee proposal state when the payroll was set up 5 years ago?
If that agreement indicated that a monthly fee applied, and that monthly service has been provided but not invoiced by the Accountant, then the Accountant can invoice now and the sum is due to be paid.  Your Ltd Co. has then benefitted from 5 years of interest free credit.

I assume that the £2k invoice is inclusive of VAT, so the actual invoice value to your business is £1,666 + VAT.  That makes the actual monthly charge £27.75 + VAT, not the £35 you state.  Obviously, if your business is not VAT-registered, then the VAT-inclusive amount is more important to you.

If you establish that the past fees are due to be paid as agreed 5 years back, then they need to be paid.  If the service / rate charged does not represent good value going forward, you can seek to negotiate with the Accountant or find an alternative provider or bring the process "in-house".

silvercar

You could do all this yourself for free, using the hmrc’s own basic paye tool. It’s a bit clunky, but it works. Hmrc have videos and run webinars on how it works. Once you are used to it, it only takes a few minutes a month and that includes updating hmrc, generating a payslip and paying hmrc any tax due. Obviously the year ends, generating P60s and creating the new tax year take longer, but it’s perfectly feasible to do it yourself. 

That said I don’t think that price is unreasonable. Payroll companies charge the same sort of amount.

If you feel it unreasonable to pay that amount in one lump sum, and I agree you should have been issued invoices at least annually, then negotiate a payment plan. If you feel that the service should have been included with the accountants annual fee for producing your accounts, then that’s a different conversation to have.

dannybbb

fees were never set out,  I appreciate that payroll services were provided but at no point over the last 5 years was I made aware that this would incur additional costs apart from the initial invoice and all subsequent invoices i have recieved and paid, i didnt I receive any other billing I’ve never had the chance to even assess or question the cost. I dint think its a professional way to go about things and feels unfair

Savvy_Sue

It may feel unprofessional, it may feel unfair, but the question you haven't answered is: 

Grumpy_chap said:

It is not unusual that operating a payroll system has an initial, one-off charge for setting up the Ltd Co. and for each employee added or removed from the system plus a monthly charge for each payroll processed.

What did the original agreement / fee proposal state when the payroll was set up 5 years ago?
If that agreement indicated that a monthly fee applied, and that monthly service has been provided but not invoiced by the Accountant, then the Accountant can invoice now and the sum is due to be paid.  Your Ltd Co. has then benefitted from 5 years of interest free credit.

How many people are on payroll? If it's just you, or some other very small number, then HMRC Basic Tools will do the job, or I use BrightPay: https://brightsg.com/brightpay-cloud-payroll-software/#pricing - I've found it really easy to deal with sick and other statutory pay situations, it copes well with auto-enrolment, and the support system is really responsive - ALWAYS a sensible answer by the end of the next working day, in my experience, even if I've asked a really dumb question. 

(DH uses Basic Tools. Only one of us was cursing and struggling with the April payroll run, at the start of the new tax year. He was finding it really slow to move on to 2025-26, I was done in a jiffy.)

silvercar

dannybbb said:

fees were never set out,  I appreciate that payroll services were provided but at no point over the last 5 years was I made aware that this would incur additional costs apart from the initial invoice and all subsequent invoices i have recieved and paid, i didnt I receive any other billing I’ve never had the chance to even assess or question the cost. I dint think its a professional way to go about things and feels unfair

I agree. From an accounting point of view, you would want to have accounted for these payroll costs in the year that they were incurred and therefore the accountant in preparing your accounts should have realised if part of their fee was missing. Maybe this is something you could bring up in a discussion? As it is now, this £2000 will allow fall in your current accounting year, which is odd.

Grumpy_chap

dannybbb said:

fees were never set out,  I appreciate that payroll services were provided but at no point over the last 5 years was I made aware that this would incur additional costs apart from the initial invoice and all subsequent invoices i have recieved and paid, i didnt I receive any other billing I’ve never had the chance to even assess or question the cost. I dint think its a professional way to go about things and feels unfair

What you appear to understand about no fees ever being set out does not seem logical.
Five years ago, you paid a fee for a payroll service to be set up.
The payroll is then operated monthly.
Whatever the basis of the initial fee, it really cannot possibly have been for setting up the payroll and operating the monthly payroll for ever...

I can see a basis where the initial fee covered the first 12 months of payroll submissions.  Even a structure where the initial fee was, effectively, zero subject to the first 12 months being paid in advance.  But not an initial fee that lasts forever.

silvercar

Grumpy_chap said:

dannybbb said:

fees were never set out,  I appreciate that payroll services were provided but at no point over the last 5 years was I made aware that this would incur additional costs apart from the initial invoice and all subsequent invoices i have recieved and paid, i didnt I receive any other billing I’ve never had the chance to even assess or question the cost. I dint think its a professional way to go about things and feels unfair

What you appear to understand about no fees ever being set out does not seem logical.
Five years ago, you paid a fee for a payroll service to be set up.
The payroll is then operated monthly.
Whatever the basis of the initial fee, it really cannot possibly have been for setting up the payroll and operating the monthly payroll for ever...

I can see a basis where the initial fee covered the first 12 months of payroll submissions.  Even a structure where the initial fee was, effectively, zero subject to the first 12 months being paid in advance.  But not an initial fee that lasts forever.

It depends what is in subsequent invoices. If they specifically say something like, “preparation and submission of annual accounts” then it suggests they don’t include payroll functions. If they are vague and say something like “accountancy services provided” then it is unclear.

I would argue that being responsible for the preparation of the annual accounts, requires at least a cursory glance that your own firms fees are included in the accounts.

Bookworm225

faced with the cost of living crisis your accountant is, like everyone else, looking for extra income and has "realised" they have been providing a service you are "not" paying for..

This whole thread comes down to what others have already pointed out: what services are listed in the original letter of engagement (contract) you have with the accountant.
If ongoing monthly payroll is not mentioned then you and the accountant now need to negotiate a fee and the invoice you have received is an opening gambit for that fee.