Do I need an accountant? — questions answered plainly

Direct Answer

No — there is no legal requirement to use an accountant for a UK limited company. The Companies Act 2006 permits directors to prepare and file their own accounts. However, accounts must meet specific accounting standards (FRS 105 or FRS 102), and errors in tax returns can result in HMRC penalties, interest charges, and enquiries. "Legally permitted" is not the same as "advisable."

Direct Answer

A one-man limited company must complete: monthly bookkeeping, quarterly VAT returns (MTD-compliant), monthly payroll/RTI submissions, a Self-Assessment personal tax return, year-end statutory accounts, a Corporation Tax return (CT600), and an Annual Confirmation Statement with Companies House. Seven distinct obligations — each with its own deadline, format, and penalty regime.

Direct Answer

Yes — but the accounts must comply with FRS 105 or FRS 102 accounting standards, and the CT600 must be filed in iXBRL format using HMRC-approved software. Most contractors who do their own accounts underestimate the complexity and miss allowable deductions. The time cost alone — typically 5–10 days per year — often exceeds the accountant's annual fee.

Direct Answer

Late accounts at Companies House attract automatic penalties: £150 for up to 1 month late, £375 for 1–3 months late, £750 for 3–6 months late, and £1,500 for more than 6 months late. These penalties double if you file late two years in a row. There is no appeal process for lateness — the penalty is automatic on the day the deadline passes.

Direct Answer

Missing the Corporation Tax payment deadline (9 months and 1 day after year end) incurs interest at the Bank of England base rate plus 2.5%. Late Self-Assessment returns trigger an immediate £100 penalty, rising to £300 or 5% of tax owed after 3 months. Late VAT returns attract surcharges starting at 2% of unpaid VAT. PAYE/RTI late submissions cost £100 per month per scheme.

Direct Answer

Making Tax Digital (MTD) requires digital record-keeping and electronic filing for tax returns. MTD for VAT has been mandatory since April 2022 for all VAT-registered businesses. MTD for Income Tax (MTD for ITSA) will require self-employed people and landlords with income above £50,000 to file quarterly digital returns from April 2026, with lower thresholds following. A contractor accountant ensures you are compliant now and ready for upcoming changes.

Direct Answer

Full-service contractor accountancy typically costs £75–£150+VAT per month. Autobooks charges £89+VAT/month, which includes all seven annual obligations plus IR35 guidance and tax optimisation advice. Always check the engagement letter for what is and is not included — cheaper options often exclude Self-Assessment, Confirmation Statements, or advisory services.

Direct Answer

For most contractors, yes — significantly. At £89+VAT/month, the fee is covered by 2–3 days of contracting work per year. A good contractor accountant typically saves far more than their fee through salary/dividend optimisation, pension contribution timing, VAT scheme advice, and expense maximisation. The value is not just compliance — it is active tax planning specific to your situation.

Direct Answer

A full-service package should include: monthly bookkeeping, quarterly VAT returns, monthly director payroll, Self-Assessment tax return, year-end statutory accounts, Corporation Tax return, and Confirmation Statement filing. It should also include salary/dividend/pension optimisation advice, IR35 guidance, and direct access to your accountant. If any of these are listed as extras, the headline price is misleading.

Direct Answer

A general accountant serves a broad range of clients — retailers, landlords, sole traders — and may have limited knowledge of IR35, salary/dividend optimisation, or the off-payroll working rules. A specialist contractor accountant works exclusively with limited company contractors and understands the specific tax planning opportunities and compliance requirements that apply to your situation. The specialist knowledge often generates savings the generalist misses entirely.

Direct Answer

RTI (Real Time Information) is the HMRC system requiring employers to submit payroll data every time they pay an employee — including director salaries. Even if your director salary is the minimum (£12,570/year paid monthly), you must submit an RTI return to HMRC each month. Missing RTI submissions triggers automatic penalties of £100 per month per scheme. Your accountant handles this as part of director payroll.

Direct Answer

Accounting software helps with bookkeeping and MTD-compliant VAT filing — but it does not replace an accountant. Software cannot prepare your year-end statutory accounts, file your CT600, complete your Self-Assessment, advise on salary/dividend optimisation, or guide your IR35 position. Software plus a specialist accountant is the best combination. Software alone is not sufficient for a limited company.

Direct Answer

A contractor accountant handles your entire compliance obligation: monthly bookkeeping review, quarterly VAT returns, monthly payroll RTI, year-end statutory accounts, Corporation Tax return, Self-Assessment, and Confirmation Statement. Beyond compliance, a specialist contractor accountant actively advises on your salary/dividend/pension mix, flags IR35 risks, optimises expense claims, and models pension contributions to reduce your corporation tax bill.

Direct Answer

Look for an accountant who specialises exclusively in limited company contractors — not a generalist who also does contractors. Check that their fee includes all seven annual obligations. Ask whether IR35 guidance and salary/dividend optimisation are included, or whether they charge separately. Read reviews from other contractors specifically. Avoid firms that push you towards umbrella arrangements unless IR35 genuinely applies to your situation.

Direct Answer

Ask: Is Self-Assessment included in the monthly fee? Is Confirmation Statement filing included? Do you provide IR35 guidance as standard? Will you advise on salary/dividend/pension optimisation? How do I contact you when I have a question, and what is your response time? Are there any other fees I might be charged? The answers reveal quickly whether the package is genuinely all-inclusive or whether extras will appear throughout the year.

Direct Answer

For most outside-IR35 contractors: (1) salary of ~£12,570/year (personal allowance threshold — minimal NI), (2) dividends up to the basic rate band, and (3) employer pension contributions for any remaining profit you do not need personally. This minimises Income Tax, avoids excess NI, and uses pension contributions for corporation tax relief. Your accountant should model the exact figures for your profit level annually.