How do I check my accountant's P&L for errors?

To check a P&L, compare it with what you know about the business: does turnover match your invoices, do materials look right against your merchant accounts, are there any big round numbers, duplicates or personal costs, and does the bank balance agree with Xero? Most errors that cost tax are missing bills, duplicated sales and money in or out posted as income or expense.

Why should you check it if you pay an accountant?

Because the tax is yours. HMRC says everyone has a responsibility to take reasonable care over their tax affairs, and if you use an adviser you must do everything you reasonably can to prevent inaccuracies. A careless error can carry a penalty of up to 30% of the extra tax, which can come down to nothing if you tell HMRC before they find it.

The other reason is money in your pocket. An error that overstates profit means you pay tax on money you never made.

A P&L can look tidy and still be wrong line after line. If you're making decisions from it, those decisions are built on the same errors.

What are the most common errors in a trade firm's P&L?

Five come up again and again. All of them are visible to an owner who knows the business, even without accounting training.

1. Supplier bills missing. A merchant account bill never reached the bookkeeper, so materials are understated and profit is too high.
2. Sales counted twice. A deposit invoice and a final invoice that both include the deposit, or a payment received but also posted as a new sale.
3. Money in that isn't sales. You lent the business money, or moved funds from another account, and it was posted as income.
4. Card and payment fees missing. Payouts from Stripe or SumUp land net of fees, and the gross sale was recorded without the fee as a cost.
5. Personal costs posted as business. A family shopping order on the business card coded to materials. This understates profit, and it's a personal cost claimed as a business one.

What do the errors add up to?

Here's a worked example for a 6-person heating firm, a limited company, with a year-end P&L showing £44,400 of profit. The owner spent 30 minutes with it and found five problems.

Worked example

Five errors in a heating firm's P&L

Profit as first drafted	£44,400
Merchant bill for a cylinder job never enteredprofit too high	−£2,340
Deposit invoice duplicated in the final invoiceprofit too high	−£6,000
Card payment fees not recordedprofit too high	−£640
Director's loan into the company posted as salesprofit too high	−£4,200
Personal shopping coded to materialsprofit too low	+£180
Corrected profit£44,400 − £13,000	£31,400
Corporation Tax on the draft19% × £44,400	£8,436
Corporation Tax corrected19% × £31,400	£5,966
Tax saved by checking	£2,470

The £180 of personal shopping is the one that matters most to HMRC, even though it's the smallest: it understates the tax due, which is the direction penalties for inaccuracy are aimed at.

The 30-minute owner's P&L check

Run this before your accountant files, and again each quarter if you can. You need the P&L, your bank statements, your invoice list and your merchant statements.

The last check finds the most. If materials fell from 38% of sales to 27% and your prices didn't change, bills are missing somewhere. For which costs belong in the P&L in the first place, see tax-deductible overheads.

How do you raise errors with your accountant?

List each error with the evidence: the merchant statement line, the duplicate invoice numbers, the bank transfer. Send it in one email rather than several calls, and ask for a revised P&L. Ask them to confirm each change in writing.

If the books are in Xero, give your accountant their own login rather than sharing yours, so every change they make shows in the history. See giving your accountant access to Xero safely.

How do you stop errors getting in?

Most P&L errors start with a bill or payment that arrived somewhere nobody looked: the merchant's email, the counter, a photo on an engineer's phone. Getting every bill into Xero when it arrives, matched to a job, prevents the most expensive error of all. Job costing works from the same records, so once the bills are in, you can see which jobs made money as well.

Reconcile the bank feed weekly rather than at year end. A week of transactions takes ten minutes to check; a year takes days, and by then nobody remembers what the £1,200 transfer in March was for.

N

Where Nexley fits

Nexley is the AI back office for UK trade firms: five AI assistants run your tenders, quotes, buying, scheduling and invoicing. It connects to the tools you already work in, you run it all from WhatsApp, and you approve everything. £799 a month.

Nexley pulls supplier bills and receipts into your accounts as they arrive, matches them to jobs, flags duplicates and amounts that don't look right, and asks you on WhatsApp when something might be personal. It also checks card payouts against invoices after fees. Your accountant still prepares and files the accounts; the books they start from are complete.

Start 7 days freeSee cashflow and Xero

Common questions

Sources

1. GOV.UK: Compliance checks, penalties for inaccuracies (CC/FS7a)
2. GOV.UK: Self Assessment, if you need to change your return
3. GOV.UK: Company Tax Returns, making changes
4. GOV.UK: Corporation Tax rates
5. GOV.UK: Directors' loans
6. GOV.UK: Expenses if you're self-employed

Every rule, rate and date above was checked against these sources on the date shown at the top.