My accountancy fees went up

1. Check your engagement letter

Your engagement letter should say what work is included and how the fee is worked out. ACCA's code says the letter of engagement shall "set out in detail the actual services to be performed, the fees to be charged, or the basis upon which fees are calculated".¹ ICAEW's code says fee quotes or the basis of fees must be given in writing, normally in the engagement letter.²

Look for what the letter says about fee reviews, notice of changes and what counts as extra work.

2. Ask what has changed

A higher fee can have different causes. Ask which applies to you:

• The firm has raised its prices for the same work.
• Your business has more transactions, staff or complexity than when the fee was set.
• Your records arrived late or incomplete, so the work took longer.
• New work has been added, such as VAT returns, payroll or advice.
• The firm has been bought or restructured. See My accountancy firm was bought by a group.

3. Ask for a breakdown in writing

ICAEW guidance for its members quotes the ICAEW Code of Ethics: if a client asks for a fee breakdown, the accountant shall provide one, with enough detail for the client to understand how the fee was calculated, free of charge. Where a fee goes over an earlier quote or estimate, the code requires an explanation of the excess and how it was calculated.² These rules apply to ICAEW members. If your accountant belongs to another body, ask anyway.

4. Compare like for like

We have not found a reliable published source on how much accountancy fees have risen, so we do not give a figure here. The useful comparison is for your own business.

Write down what you get now: which accounts and returns, how often, whether bookkeeping, payroll, VAT or meetings are included. Ask other firms to quote for that same list. A lower quote that leaves out work you need is not cheaper. See How accountancy fees work.

5. Decide

• Accept it if the explanation makes sense and you are happy with the service.
• Change what you buy. Doing your own bookkeeping, or sending records earlier, may reduce the work. Ask whether it would change the fee.
• Move. You can choose to change accountant, subject to any notice period or other terms in your engagement letter. Our switching checklist sets out the steps.

If you dispute the fee

Raise it with the firm in writing first. ACCA does not set fees or charge-out rates, but its conciliation service will try to resolve fee disputes with its members where possible.³ ICAEW says it cannot investigate fee disputes, and for those it recommends taking legal advice.⁴