Bookkeepers in the United Kingdom face a number of legal issues. They must comply with the requirements of the Companies Act 2006, as well as other legislation relating to taxation, money laundering and data protection. In addition, they must also adhere to the ethical standards set out by professional bodies such as the Association of Certified Chartered Accountants (ACCA) and the Institute of Chartered Accountants in England and Wales (ICAEW).
The bookkeeping profession is also subject to regulation by the Financial Conduct Authority (FCA). All these regulatory requirements can make it difficult for bookkeepers to keep up with the latest developments in their field. However, failure to comply with the law can result in serious penalties, including fines and imprisonment. As a result, it is essential that bookkeepers stay up-to-date with the latest legal developments in order to avoid any potential problems.
A bookkeeper is likely to be subject to a variety of regulations, some of which will be particularly relevant to his or her work. You should be aware of the following key areas. Please be aware that this guide is not intended to be exhaustive.
What licences does a bookkeeper need?
ICB or IAB are professional bodies that supervise accountancy services providers under the Money Laundering Regulations. HMRC registration is required otherwise. On the Gov.uk website, you can find more information about the Money Laundering Regulations.
In order to offer bookkeeping services to clients, ICB members must apply for the ICB Practice Licence. A license fee is charged annually.
The Information Commissioner’s Office (ICO) may require businesses that keep computerised records of individuals’ personal details to register as data users. The ICO website has more information on this matter.
Money laundering regulations
Money Laundering Regulations should be familiar to you. They specify the following, among other things:
- Anti-money laundering systems you need to implement
- Procedures for identifying customers
- The records that you’ll need to keep
- The internal reporting procedures you need to set up
National Crime Agency (NCA – formerly Serious Organised Crime Agency or SOCA) should be notified of any suspicions of money laundering. Those procedures, as well as the law relating to money laundering, will also need to be trained in by your employees. A useful guide to complying with these regulations is provided by the International Association of Bookkeepers (IAB). You need to register with and be supervised by HMRC as an accountancy services provider if you’re not supervised by the IAB or the Institute of Certified Bookkeepers.
The HMRC guidance available on the Gov.uk website provides more information on the Money Laundering Regulations and supervision.
Preventing illegal working
If you provide payroll services, you’ll need to know how to verify a person’s right to work in the UK. You can find detailed guidance on the Gov.uk website.
Health & safety, fire
It is also important that you comply with all health and safety rules in your workplace as well as fire safety regulations.
Employment legislation
Employers are required to comply with employment laws. Legislation in the following areas is important:
- Recruitment and employment contracts
- Pay and pensions
- Working time: hours, leave, flexible working
- Employment policies
- Sickness and sick pay
- Maternity, paternity, and adoption
- Discrimination
- Managing home workers, remote workers, lone workers
- Discipline and grievance
- Dismissals and redundancies
- Employment tribunals
Insurance for a bookkeeper
It is necessary to have insurance coverage when starting a business. Your insurer will then recommend what cover you need based on how your business operates. The following might be included:
- Professional indemnity insurance
- Premises, premises contents
- Personal accident and travel
- Loss of earnings
- Business interruption
- Employer’s liability
- Public liability
- Motor insurance
Office Policies are offered by many insurance companies tailored to meet the needs of firms with an office. Bookkeepers’ associations and institutes offer special rates on professional indemnity insurance to their members.
Conclusion
Bookkeepers need to be aware of any protection legal issues that they personally or their business may come across this includes holding the adequate Professional Indemnity insurance incase a client wishes to make a claim against the practice. Bookkeepers also need to be mindful that the service they offer is regulated and as such need to be of the revisions to the Money Laundering Regulations (MLRs) in 2007 and again in 2017, as such if they do not hold a practice license they need to be licensed by HMRC.
Read more: Sector trends in the bookkeeping industry
Lee Jones is a seasoned Business Finance Specialist with over two decades of invaluable experience in the financial sector. With a keen eye for market trends and a passion for helping businesses thrive, Lee has become a trusted advisor to countless organizations seeking to navigate the complexities of finance.