The short answer: when a care home should switch
Switch when your accountant cannot name the welfare VAT exemption, the sleep-in minimum wage rule or CQC Regulation 13 without looking them up, because each of those gaps quietly costs a care home real money every month. A generalist who treats your home like any other small company will file accounts that are technically correct and commercially blind. That gap is the whole reason to move.
Three triggers tend to bring it to a head. The first is growth: a second home, a registration, an acquisition, or a jump in beds, where suddenly the numbers carry weight with the Care Quality Commission (CQC), the regulator that registers and inspects every care provider in England. The second is a nasty surprise: an irrecoverable VAT bill on a refurbishment, a payroll query about sleep-ins, or a margin that has slipped without anyone explaining why. The third is simple frustration, the sense that you are paying for compliance and getting nothing that helps you run the business.
None of those means your current accountant is bad at their job. It means care is a specialism, and specialist work needs a firm that already understands your sector. That is what our healthcare and social care accountants do all day, and moving across is what the switching accountants service exists to make painless. Below are the signs to look for, what a specialist actually does differently, and exactly how the handover runs.
Five signs your generic accountant is costing your care home money
The five clearest signs are welfare VAT handled wrong, sleep-in shifts underpaid against the minimum wage, occupancy and voids never modelled, agency staff costs left unmanaged, and CQC Regulation 13 financial viability never mentioned. Recognise three or more and you are almost certainly leaving money, or compliance, on the table.
1. Welfare VAT is handled wrong
Care provided by a CQC-registered home is a welfare service, and welfare services are exempt from VAT under HMRC VAT Notice 701/2. So far so simple. The catch sits on the other side: because your fees are exempt, you cannot recover the VAT on the costs that relate to them. A generalist who has never run a care home will sometimes treat that VAT as recoverable, or worse, push you toward registration you do not need. On a £200,000 refurbishment the irrecoverable VAT alone can run past £30,000, and we cover the detail in our guide to care home VAT and when you are exempt.
2. Sleep-in shifts are underpaid against the minimum wage
From April 2026 the National Living Wage is £12.71 an hour, and every hour a worker is engaged must clear it. Sleep-in night cover is where homes get caught, because pay is often averaged across a long shift in a way that drops the effective hourly rate below the floor on the active hours. Get the averaging wrong and you are exposed to arrears and penalties. A generalist runs your payroll; a specialist checks the payroll is compliant. Those are not the same service, and we set out the trap in full in our piece on sleep-in shifts and the minimum wage.
3. Occupancy and voids are never modelled
Occupancy is the single biggest driver of a care home's numbers, and most generalist accounts never show it. A three-bed void in a 30-bed home is roughly ten percent of your fee income gone, yet it appears nowhere in a standard set of accounts. A specialist tracks occupancy against your fee income month by month, so a dip shows up while you can still act on it rather than at the year end when it is history.
4. Agency staff cost is left unmanaged
Agency cover is the number that quietly decides whether a home makes money. When permanent recruitment is tight, agency spend balloons, and a generalist will book it as a single staff-cost line with no commentary. A specialist benchmarks agency as a percentage of payroll and flags the month it starts eating your margin, because in this sector it is usually the difference between a healthy home and a struggling one.
5. CQC Regulation 13 financial viability is never mentioned
CQC Regulation 13 requires a provider to take all reasonable steps to remain financially viable. From July 2025 the CQC streamlined how this is evidenced at registration: you no longer submit a formal statement of financial viability, but you must still show the business is financially sustainable. A generalist will not know that rule changed last year. A specialist builds your figures so they answer the regulator's question before it is asked, which matters most at registration, on acquisition, and any time the CQC probes sustainability.
What a specialist does that a generalist does not
A care home specialist reconciles your CQC fee income against bank, models occupancy and voids, checks sleep-in pay against the minimum wage, keeps the welfare VAT position clean, and prepares figures the CQC will accept, work a generalist simply does not do. The difference is not effort or honesty. It is whether the firm already carries the sector in its head.
Take fee income. Care home revenue is a blend of local authority rates, NHS-funded placements and private payers, each with its own timing and its own paperwork. A specialist reconciles what you billed against what landed in the bank and flags the gap, because in this sector the gap is where cash quietly disappears. A generalist books the deposits and moves on.
Take the regulator. A specialist knows that the CQC reads financial sustainability through the lens of Regulation 13, knows the July 2025 change to how viability is evidenced, and shapes your management accounts so they answer that question on demand. When you come to register a second home or buy one, the figures are already in the right shape, which is exactly the work behind our guide to the CQC cashflow forecast for registration.
Here is how the three common approaches actually compare for the things that move a care home's numbers:
| What a care home needs | DIY / bookkeeper | Generic accountant | LOYALS care specialist |
|---|---|---|---|
| Knows the welfare VAT exemption and irrecoverable VAT trap | ✗ | ● If asked | ✓ Built in |
| Checks sleep-in shifts against the £12.71 minimum wage | ✗ | ✗ | ✓ Every payroll |
| Models occupancy and voids against fee income | ✗ | ✗ | ✓ Monthly |
| Prepares figures for CQC Regulation 13 viability | ✗ | ● Generic accounts | ✓ Registration-ready |
| Benchmarks agency staff cost against margin | ✗ | ✗ | ✓ Flagged early |
| Handles the switch and stays open Mon to Sat | ✗ | ● Mon to Fri 9 to 5 | ✓ 10am to 7pm Mon to Sat |
This is why care home operators who outgrow a generalist tend to move to a sector specialist rather than another high-street firm.
How switching accountants actually works, step by step
Switching is mostly handled for you: you tell your current accountant, the new firm sends a professional clearance letter, you sign a form 64-8 or authorise online, your records transfer, and the new firm files from the next deadline, usually within two to four weeks. It is far less disruptive than most owners fear, and it is designed so nothing is missed.
The professional clearance letter is the heart of it. Your new accountant writes to the outgoing firm to confirm there is no professional reason not to act, and to request the handover information: HMRC references, the Companies House authentication code, prior accounts, and your VAT and payroll history. Your previous accountant cannot withhold statutory records or company documents, so the paperwork moves even if the parting is awkward. The form 64-8, or the equivalent online authorisation through HMRC, then lets the new firm act on your tax affairs.
Timing is the one thing worth planning. The cleanest moment to switch is just after a year end, because the incoming firm starts a fresh accounting period and there is no half-finished work to untangle. That said, a mid-year move is routine, and if your sleep-in pay or welfare VAT is wrong today, there is no case for waiting twelve months to fix it. Payroll in particular transfers cleanly between firms, so a home moving in the middle of the tax year keeps every pay run on schedule.
One reassurance for care owners specifically: switching accountant has nothing to do with your CQC registration. You do not notify the regulator, and your rating is untouched. What changes is the quality of the figures sitting behind your Regulation 13 position, which only ever helps.
What switching costs and what it saves
Switching itself costs nothing with a LOYALS monthly plan, and specialist support runs from £349 a month for a single home up to 30 beds, set against savings that usually run into thousands once welfare VAT, sleep-in compliance and occupancy margin are handled properly. The fee is not the number to focus on. The number to focus on is what a generalist's blind spots cost you over a year.
Put rough figures on it. Irrecoverable VAT mishandled on a single refurbishment can be a five-figure error. Sleep-in arrears across a team of night staff, if the averaging is wrong, can reach well into the thousands plus penalties. A three-bed void left unflagged for a quarter is tens of thousands of fee income you never chased to fill. Against those, specialist support at £349 to £699 a month is small, which is the whole point of moving: the home pays for advice that actually changes the result.
What this typically costs at LOYALS
- Care home, single site up to 30 beds (bookkeeping, payroll, VAT, year-end): from £349/month
- Care home, multi-site or 30+ beds: from £699/month
- CQC cashflow forecast for a new registration or acquisition: from £999 one-off
- Switching service (handover from your previous firm): no charge with any monthly plan
All quotes issued in writing within 24 hours, after a 15-min scoping call so we price your actual situation, not a guess. See full price list.
What this means for you: making the move
If your accountant has never mentioned welfare VAT, sleep-in pay or CQC Regulation 13, you are almost certainly the kind of home a specialist would save money, and the cleanest time to move is right after a year end. The practical steps are simple and mostly fall to the new firm, not to you.
- Run the five-sign check. Welfare VAT, sleep-in pay, occupancy and voids, agency cost, and CQC Regulation 13. Three or more gaps is a clear signal to move.
- Pick your moment. Just after a year end is tidiest, but do not wait if a live problem (a VAT bill, a payroll query) is costing you now.
- Have a short scoping call. Fifteen minutes on the size of the home, the bed count, your fee mix and your year end is enough for a specialist to price the work properly.
- Let the clearance process run. Sign the engagement, sign the 64-8 or authorise online, and the rest, including prising records out of the outgoing firm, is handled for you.
- Confirm the first filing. Agree which deadline the new firm picks up so payroll, VAT and accounts continue without a gap.
You can check your home's position in a free call with LOYALS, and if the timing is not right, you will leave the call knowing exactly which gaps to watch. That is the honest test of a specialist: even before you move, the conversation tells you something your current accountant has not.