The other week I wrote about Crunch, a software and services offering operating out of Brighton. I re-posted the piece on IT Counts with some minor variations. Imagine my horror when I found out that Michael Rose (I’m assuming of Crunch) wrote the following comment on the IT Counts site:
Hi Emily Crunch is designed to handle all the paperwork for Ltd companies including VAT returns and year-end. Crunch act as agents for VAT, PAYE and Corporation Tax. The company currently deals with Freelancers, Contractors and Independent Consultants and we advise them to form a Ltd Company (if not already) and business and personal tax are kept separate – most users, therefore, don’t need to file separate personal assessment forms. You can get a guided tour of the system at http://www.crunch.co.uk/join/index.html to see how the online software works.
[My emphasis added.] As Emily Coltman correctly points out:
Wrong I’m afraid – all company directors, unless the company is dormant, MUST file personal tax returns every year.
Do I take it that Crunch don’t offer that service, then?
If you don’t, then you should warn your clients that they need to get it done elsewhere.
It gets curiouser. The person who identified himself as ‘Michael Rose’ also posted a comment to my post here saying:
I loved this piece and, as someone who uses Crunch, I feel happy to be part of something that’ll shake up the industry a little.
As for ‘face time’ Crunch agents are available to me via phone and email which I think I prefer to having to make an appointment with a real live accountant.
If I had huge turnovers and complex arrangements and deals then obviously I’d require detailed, personalised information from time to time but, as a freelancer with typical clients, costs and a simple structure why should I pay through the nose for advice that can be built into an online, automated system?
Hang on. Is it too much of a coincidence that two people with the same name might be singing the praises of a service: one acting as part of the business and another acting as a client? That sounded fishy to me so I did a bit more digging. This person clearly wants to remain anonymous because the email address is bogus. A search on the commenter’s IP address reveals a PO Box in Amsterdam. It’s not as mysterious as it sounds as the IP address is an aggregation of those offered by a telco in the UK.
That prompted me to call up Crunch and ask for Michael Rose. He came on the phone, I asked his status – he is both a contractor and someone who freelances for Crunch. I then asked why he was giving misleading information about the tax status of directors. He said he wasn’t really doing so but answering Emily’s question. I then read out to him what he said, asking why he is giving advice when he clearly doesn’t know what he’s talking about. Remember that Mr Rose is someone who can be contacted by clients through Crunch’s listed phone number. Remember also that he’s a contractor – presumably working through a limited company of his own. It begs the question whether he is filing personal assessment forms if, as seems to be the case, he believes he doesn’t have to do so.
It also raises the fundamental question about the quality of governance Crunch is operating when hiring freelancers to act on its behalf. Then there is the question about what kind of advice the firm is giving. On the basis of Mr Rose’s response, Crunch could be putting clients at risk.
The reputational problem is that Crunch is listed as a firm in the ICAEW’s listings. Crunch uses its status to slap ICAEW’s logo on its site. To the uninitiated, this will look like an endorsement by ICAEW or that the firm enjoys a certain status. While ICAEW does not endorse any firm, Crunch is within its rights to apply the logo. Indeed, ICAEW believes that membership confers a differentiated reputational status to members. That’s important both to members and the public.
Given that Crunch is holding itself out as a software AND services provider,you have to ask: how much reliance can you place on firms that are moving in this direction and marketing themselves accordingly?
When I was advising FreeAgent Central I said that it was crucial the company form alliances with independent firms so that there would be a check on the information FreeAgent produces. That’s one of the reasons they have a range of partnerships. Xero does the same. That way, while it might be nice to think of these providers as reliable one-stop shops, their model recognizes the today’s reality. That is, software AND services is not ready for prime time. That was made obvious by the fact that according to Mr Rose, Crunch’s system spits out statutory information related to the company which he doesn’t check.
I’m aware that some of my readers bemoan the fact that firms of all sizes have become sloppy and do not provide best advice. This is exacerbated in the ‘new’ world where the co-mingling of software that is commoditizing the basic number crunching and services mean firms can outsource significant portions of the legwork required for clients to remain in compliance. Given the price pressures that exist in the market, it is only a matter of time before a firm cuts too many corners in the name of cost efficiency. This case points up some of the risks of which clients may be completely unaware.
As a profession, we have to do better. Unfortunately, ICAEW inspections rarely address this point, concentrating instead on practioiners’ compliance with paperwork standards.I suspect that will have to change.
UPDATE: Following Dave Turner’s comment (see below) I am clarifying what I am saying. One thing readers should understand. I am NOT saying that saas is inherently weak or risky but that when software AND services are mixed in this way then there needs to be clearly understood and documented governance in place to ensure that the right skills are being deployed for the right type of work. I also say that oversight is important but that we don’t have the mechanisms in place to ensure that happens. That should be a matter of public interest.
Related articles by Zemanta
- Abolition of financial reporting for SMEs: an opportunity (accmanpro.com)
- Small firms put off paying £2.5bn tax (guardian.co.uk)
- FD liability legislation is ‘disproportionate’ (accountancyage.com)