For busy business owners, giving your bookkeeping and financial admin to a Bookkeeping Virtual Assistant is a no brainer.
It makes a lot of sense to get rid of all that and to focus on what you do best.
Before you relax and heave a sigh of relief – here’s something you (and your VA) need to know.
Your VA may be keeping your books illegally.
Are they registered for bookkeeping?
The Money Laundering Regulations 2007 require anyone providing accounting services (which includes bookkeeping) to register with HMRC. This does not apply if they are a member of an accountancy or bookkeeping professional organisation.
Some Virtual Assistants are also qualified bookkeepers and members of an appropriate professional body. But most are not.
When does a Bookkeeping Virtual Assistant need to register?
A VA needs to register if s/he:
- Advertises bookkeeping services
- Receives referrals for bookkeeping services
- Aims to make a profit when providing this service
- Does so with reasonable continuity
Micro VA exception from 2019
After much pressure from many VA organisations and coaches, HMRC have made a small concession on VA registration.
VAs with:
- a turnover of less than £30,000 a year
- with less than 5% (£1500) of the turnover being generated by bookkeeping
- whose work is reviewed by an accountant or boookeeper who is registered
can apply by email to HMRC to be exempt from registration if they need this criteria.
Many VAs are advertising bookkeeping or financial administration services. This falls squarely within ‘accountancy services’, even though they are not accountants.
VAs who type up invoices (unless they are generated in accounting packages such as Xero) or help with general finance admin do not need to register if that is all they do.
Should you care if your VA is registered?
There are three types of VAs providing bookkeeping services who are not registered:
- VAs who don’t know they need to register
- VAs who don’t care
- VAs who have notified HMRC that they don’t need to register
You can take the view this is a problem for your VA (and they can handle the fines!). But it is also a potential problem for you if you are using an unregistered accountancy service provider.
If your VA is not up to speed on their own obligations, can you be sure they are doing the right thing to help you comply with yours?
If you end up with a penalty from HMRC because of some mistake – will their professional indemnity insurance pay up if they are not properly registered?
Most insurers will not pay up for unregulated activity that should have been reported. It is usually in the small print of the policy.
HMRC rules are not really up to date!
Many conscientious VAs are in a muddle about whether they need to register. It’s hardly surprising when you realise that these regulations were written before automation and cloud accounting became so popular.
The idea behind the regulations is that there is a line between administration and bookkeeping. That line is increasingly hard to draw in the age of the mobile app and automated transfers of data between one programme and another!
When is administration not ‘accountancy services’?
We work with many Virtual Assistants (helping them to contract properly with their teams and clients)
So we asked HMRC – “What are ‘accountancy services’?”
“Accountancy services cover recording, reviewing, calculating and reporting on financial information for other people”, said HMRC in an email to us.
They also told us that “typing an invoice” is not covered in this definition. Nor is credit control, provided no record of payment is being entered by the VA.
Many Virtual Assistants charmingly describe their services as financial administration rather than bookkeeping. But it doesn’t matter what they call the service, it matters what is done.
If your VA is entering data into the the books (recording data), they are covered by the registration rules, even if someone else is reviewing the information.
There is no way of checking your Bookkeeping Virtual Assistant is registered!
HMRC maintains a register. But you don’t have the right to inspect or check it!
Your VA should give you their registration number (if they have one) along with their terms of trade.
There is no general legal requirement for Bookkeeping Virtual Assistants to carry professional indemnity insurance. But it is a good idea to find yourself one who is insured. The cost of HMRC penalties for under-declaring income or getting your records wrong can be high.
What are your options?
If you want to use someone to keep your books (whether a VA or a bookkeeper), be aware that they will need to check your ID before they start work. They are also under a legal obligation to report ‘suspicious transactions’ to the authorities (just as your accountant already is).
Whoever you pay to do your books
Set yourself up right for all that cloud accounting, security and administration too. Check out our Virtual Assistant and/or Bookkeeper Agreement for people who pay freelancers – it’s just £55 (+VAT). For more information check here.
