An accounting practice can have plenty of client work and still have a capacity problem. Bookkeeping needs updating. Year-end accounts are waiting. Self Assessment files start arriving together. Corporation Tax work needs review. Payroll cannot simply be postponed, and VAT deadlines continue regardless of how busy the team becomes.

That is where accounting practice outsourcing can become useful. Outsourcing allows a practice to assign clearly defined accounting or tax work to an external provider while keeping control of the client relationship, review process and responsibilities that remain with the firm. ICAEW notes that accounts preparation, payroll and bookkeeping have been outsourced by accounting firms for many years.

But what exactly can a UK accounting practice outsource? And which responsibilities should stay firmly under the practice’s control? This guide looks at six common areas: bookkeeping, accounts production, Self Assessment, Corporation Tax, payroll and VAT returns.

What Does Accounting Practice Outsourcing Mean?

Accounting practice outsourcing means using an external team or provider to carry out agreed accounting, tax or compliance processes that would otherwise be completed by employees within the practice. It does not have to mean handing over an entire client engagement. A practice might outsource only:

• Transaction processing
• Bookkeeping
• Working-paper preparation
• Accounts production
• Draft tax-return preparation
• Payroll processing
• VAT-return preparation

while keeping technical advice, client communication and final review internally. The exact division should be documented before work begins. This is important because outsourcing changes who performs a task, but it does not automatically transfer every professional, regulatory or data-protection responsibility associated with that client.

1. Bookkeeping

Bookkeeping is one of the most established areas of accountancy outsourcing. ICAEW specifically identifies bookkeeping, alongside accounts preparation and payroll, as work that accounting firms have outsourced for decades. Depending on the agreed scope, an outsourced bookkeeping team may work on:

• Recording sales and purchases
• Bank reconciliations
• Processing invoices
• Maintaining ledgers
• Reviewing transaction coding
• Preparing bookkeeping records for VAT or year-end work
• Keeping accounting software records up to date

For many practices, bookkeeping is a logical place to start because much of the work can be organised into repeatable procedures.

What should the practice define first?

Before outsourcing bookkeeping, establish:

• Which software will be used
• How frequently records should be updated
• Who resolves unclear transactions
• What supporting evidence is required
• How review points will be documented
• When completed bookkeeping is handed to the next stage

If those rules are unclear, the internal team may spend as much time correcting and querying outsourced work as it would have spent completing the bookkeeping itself.

SHRM Tax Advisors’ published Outsourced Accounting Services currently include bookkeeping and bank reconciliations, which also makes bookkeeping directly relevant to the firm’s existing service offering.

2. Accounts Production

Accounts production is another established outsourcing area. ICAEW guidance recognises accounts preparation as work that can be outsourced, while also emphasising the need for appropriate quality controls around third-party work. An outsourced accounts-production process might include:

• Preparing working papers from completed bookkeeping
• Reconciling balance-sheet accounts
• Processing agreed year-end adjustments
• Preparing draft financial statements
• Preparing files for internal review
• Identifying incomplete information or unresolved balances

The external provider does not have to control the complete engagement. A practical model is: Outsourced team: prepares the accounts file and draft financial statements. Accounting practice: reviews technical treatments, resolves material issues, communicates with the client and completes its normal approval process.

ICAEW describes accounts preparation as a professional engagement in which financial statements are put together from the underlying information. For outsourcing to work effectively, the reviewer should be able to trace figures back through the working papers rather than rebuild the entire file.

3. Self Assessment Tax Returns

Self Assessment work can also form part of accounting-practice outsourcing, particularly where large numbers of relatively standard returns create seasonal pressure. ICAEW has specifically recognised tax compliance as one of the service lines accounting firms consider for outsourcing or offshoring. Depending on competence and the agreed engagement, outsourced support could include:

• Organising client records
• Preparing income schedules
• Preparing property or self-employment schedules
• Reviewing prior-year information
• Identifying missing records
• Preparing draft tax calculations
• Preparing draft Self Assessment returns for review

Complex matters should still be escalated appropriately. Examples could include unusual capital transactions, complex residence questions or cases where information conflicts with previous submissions.

What about filing with HMRC?

Preparation and interaction with HMRC are not necessarily the same thing. HMRC’s current agent framework covers Self Assessment and other tax services. Where a paid tax adviser interacts with HMRC on behalf of clients, HMRC registration requirements may apply, and client authorisation requirements also need to be followed.

A UK practice should therefore decide whether its outsourcing provider is: Preparing work only, with the practice reviewing and filing it; or Acting directly in the tax process, which may introduce additional HMRC requirements. The arrangement should never be left ambiguous.

4. Corporation Tax Work

Corporation Tax compliance can also be included within an accounting outsourcing arrangement. A provider may, depending on its expertise and the agreed scope, assist with areas such as:

• Preparing tax-computation working papers
• Preparing draft Corporation Tax computations
• Preparing supporting schedules
• Preparing draft CT600 information
• Reconciling accounts information to tax calculations
• Identifying matters requiring technical review

The internal practice can then review the calculation, resolve technical treatments and approve the final position. HMRC’s agent services cover Corporation Tax as one of the taxes professional agents can manage on behalf of authorised clients.

This reinforces an important principle: outsourced preparation should not be confused with unreviewed submission.

Technical judgement remains particularly important where a company has unusual transactions, losses, complex reliefs, connected-party matters or other circumstances that need specialist consideration. SHRM’s existing Outsourced Accounting Services page currently lists statutory accounts preparation and Corporation Tax returns among its published service capabilities.

5. Payroll

Payroll is another long-established outsourcing area within accountancy. ICAEW includes payroll among the functions firms have historically outsourced. Depending on the service arrangement, payroll outsourcing may involve:

• Processing payroll data
• Calculating employee pay
• Producing payslips
• Maintaining payroll records
• Processing information required for PAYE
• Supporting pension-related payroll administration
• Preparing routine payroll reports

HMRC’s professional-agent services include PAYE for employers. However, payroll has little room for an undefined workflow. Pay dates and statutory reporting obligations mean responsibilities need to be clear from the beginning. The practice should establish:

• When payroll data must be supplied
• Who approves payroll changes
• Who checks starters and leavers
• Who reviews unusual deductions
• Who submits required information
• What happens when client information arrives late

An outsourced payroll process should make deadlines easier to control, not create another layer of uncertainty.

6. VAT Returns

VAT work can also be outsourced. A provider might assist with:

• Reviewing bookkeeping records
• Checking VAT coding
• Preparing VAT-return workings
• Identifying incomplete or unusual transactions
• Preparing draft VAT figures
• Supporting Making Tax Digital processes where within scope

HMRC provides agent services for VAT, including processes through the agent services account. As with tax returns, there should be a clear distinction between preparing the VAT work and being authorised to interact with HMRC or submit information for the client.

The internal practice should also decide how unusual VAT treatments are escalated rather than allowing a routine processing team to make unsupported technical decisions. VAT returns and Making Tax Digital compliance are also explicitly included within SHRM Tax Advisors’ current Outsourced Accounting Services.

Should You Outsource the Whole Process or Only Part of It?

There is no requirement for outsourcing to be all-or-nothing. For many practices, a hybrid model is more practical. For example:

This allows routine processing to be separated from work requiring professional judgement. It also makes accountability easier to understand.

What Work Should Not Be Outsourced Without Careful Review?

The question should not simply be, “Can this task technically be outsourced?” A better question is: “Can this task be outsourced while maintaining the quality, security and professional oversight our practice requires?” A practice should be particularly cautious where work involves:

• Significant professional judgement
• Unusual tax positions
• Sensitive client disputes
• HMRC investigations
• Complex international tax matters
• High-risk AML concerns
• Work subject to independence or other professional restrictions

The appropriate treatment depends on the exact engagement and the professional obligations applying to the firm.

Outsourcing Does Not Remove AML Responsibility

An accounting practice should not assume that assigning work to another provider transfers its anti-money-laundering responsibilities. ACCA’s guidance for practices states that outsourcing creates AML considerations whether the provider is in the UK or overseas and, where the practice holds the client relationship, the practice retains responsibility for its AML compliance. Practices should therefore maintain appropriate:

• Client due diligence
• Risk assessment
• Escalation procedures
• Staff responsibilities
• Documentation

The exact requirements should be checked against the firm’s AML supervisor and circumstances.

Client Data Must Also Be Properly Controlled

Accounting and tax files contain substantial amounts of personal and financial information. Where an outsourcing provider processes personal data on behalf of the accounting practice, UK GDPR controller-and-processor requirements may apply.

The ICO explains that contracts between controllers and processors are important for defining responsibilities and must address relevant Article 28 requirements. The processor arrangement may need to cover matters such as security, confidentiality, sub-processors, assistance with data-protection obligations, audits and what happens to data when the contract ends.

If client data is made accessible outside the UK, international-transfer rules may also apply. The ICO states that organisations responsible for a restricted transfer need to ensure that an appropriate transfer mechanism is in place. For an accounting practice, data security therefore needs to be part of provider selection rather than an afterthought.

What Makes a Task Suitable for Outsourcing?

Before moving work outside the practice, ask whether the process is:

• Clearly defined

Can you explain exactly what the provider should do?

• Repeatable

Can the same documented process be followed consistently across similar client files?

• Reviewable

Can your internal reviewer easily verify the work?

• Securely transferable

Can information be shared and accessed through appropriate systems and controls?

• Within the provider’s competence

Does the provider have suitable experience for the work being assigned?

• Supported by a clear escalation route

Will the outsourced team know when to stop and refer a question back to your practice? A poorly defined process does not normally become better simply because it has been outsourced.

A Practical Starting Point for UK Accounting Practices

If your practice is considering outsourcing for the first time, there is rarely a need to transfer several service lines immediately. A more controlled approach is to start with one repeatable area, such as:

• Bookkeeping
• Straightforward accounts production
• A defined category of tax-return preparation

Document the workflow, set review standards and measure the quality of completed files. Once the process works reliably, additional workstreams such as payroll, VAT or tax compliance can be considered according to the practice’s needs.

How SHRM Tax Advisors Can Support Outsourced Accounting

SHRM Tax Advisors’ published Outsourced Accounting Services currently cover areas including bookkeeping and bank reconciliation, VAT and Making Tax Digital compliance, statutory accounts preparation, Corporation Tax returns, management accounts and payroll integration. For a practice or business considering outsourcing, the starting point should be a clear discussion about:

• The work you want supported
• The volume involved
• Your current software and processes
• Required turnaround times
• Review responsibilities
• Data-handling requirements

That makes it possible to establish whether an outsourcing arrangement genuinely fits the work rather than forcing every engagement into the same model.

Final Thoughts

So, what tax and accounting work can a UK practice outsource? Potential areas include bookkeeping, accounts production, Self Assessment preparation, Corporation Tax work, payroll and VAT returns. Professional guidance confirms that outsourcing is already established across several of these areas within accountancy practice. But successful accounting practice outsourcing is not simply about deciding which tasks can leave the office. The practice also needs to decide:

• Who performs the work
• Who reviews it
• Who communicates with the client
• Who interacts with HMRC
• How personal data is protected
• How AML obligations are managed
• How errors and technical questions are escalated

When those responsibilities are clear, outsourcing can become a structured extension of the practice rather than another process that needs constant supervision. Speak with SHRM Tax Advisors to discuss whether outsourced accounting support is suitable for your firm’s workload and current processes.

This article provides general information for UK accounting practices and does not constitute legal, regulatory or personalised tax advice. Firms should consider the requirements of HMRC, their professional body, AML supervisor and applicable data-protection legislation. Information checked against current HMRC, ICAEW, ACCA and ICO guidance in August 2026.