Changing your tax and accounting firm without a hitch

Many companies stay with an adviser that no longer suits them out of fear of the change: of missing a deadline, of losing papers, of leaving a tax matter half done. The fear is understandable but manageable. A change that is planned in order, and done at the right moment, is a routine task.

1Review the contract and give notice

Check the notice period, any minimum term and what is included in the service. Give notice in writing, in a way that leaves proof of receipt, stating the date from which the change takes effect. It is usually better to set that date at the end of a period (a month or a quarter) than in the middle of one. Ask the outgoing firm to confirm in writing which obligations it will still carry out until then.

2Ask for the documents and collect them

The firm will have in its possession part of your documentation. The Commercial Code requires businesses to keep their books, correspondence, documents and supporting records, properly ordered, for six years from the last entry in the books (article 30), and you are entitled to the originals or copies of what is yours. Ask for the accounting books and the trial balance, the annual accounts and their filing receipts, the tax returns of the last periods, the invoices and ledgers, the corporate books, the payroll and employment files and any electronic certificates the firm may be keeping.

As for personal data, an adviser that processes it on your behalf must, at your choice, delete or return all of it when the service ends, and delete existing copies unless the law requires them to be kept (article 28 of the General Data Protection Regulation). In Spain, it is the client who decides whether the data is destroyed, returned or handed to a new processor (Organic Law 3/2018, article 33). It is therefore reasonable to ask for the data to be delivered directly to the new firm.

3Change the authorisations and accesses

Before the old firm leaves, the new one should be in place. With the Tax Agency, representation is given through the register of powers (Registro de apoderamientos): the principal can revoke it at any time, and the revocation takes effect from the moment it is formally communicated, with a bulk option to revoke every power granted to the same person. Powers entered in the register last for at most five years. Also review the authorisations before Social Security (the RED system, through which registrations and contributions are reported), the Catalan Tax Agency and, if applicable, local authorities, as well as banking access and electronic certificates.

One point deserves special care. Companies are obliged to deal with the authorities electronically, and the electronic address to which notifications arrive may be linked to the outgoing firm. Make sure that notices will reach the people now in charge, and that nothing is left unread in someone else’s account: a notification not opened within ten calendar days is deemed rejected, and the deadlines continue to run.

4Choose the moment

The calendar is the heart of a clean handover. Quarterly VAT and withholding returns are generally filed in the first twenty days of April, July and October, and in January for the fourth quarter. For a company whose year ends on 31 December, the directors must prepare the accounts within three months, the general meeting must approve them within the first six months, and they must be filed in the Commercial Registry within the month after approval (Companies Act, articles 253, 164 and 279). Corporate income tax is filed within the 25 calendar days that follow the six months after the end of the tax period: for a December year-end, in the first twenty-five days of July (Corporate Income Tax Act, article 124).

The simplest moment is just after a quarter has been filed and, if possible, after the year-end accounts have been closed. That way the new firm takes on a period that is complete, with bank reconciliations done and an opening balance that matches the filed accounts.

5The first quarter with the new team

Ask for an initial review: that the opening balances match the annual accounts, that there are no overdue obligations, that the register of tax details (census data) is up to date, and that every deadline of the year is on a calendar. A good firm will also want to know what has been agreed with the Tax Agency and what is pending.

Sources. Commercial Code (article 30); Regulation (EU) 2016/679 (article 28); Organic Law 3/2018 (article 33); Companies Act, Royal Legislative Decree 1/2010 (articles 164, 253 and 279); Corporate Income Tax Act, Law 27/2014 (article 124); Law 39/2015 (articles 14 and 43); Tax Agency, register of powers.

At Pearson Specter, with our associates, this is part of the “Tax and accounting” service in the Corporate area.

This guide is for general guidance: each change is planned according to the company and its calendar.