Working With Care Home Accountants to Meet Regulatory Standards

Governance, financial management and regulatory compliance are just as essential to the care sector as the quality and standards of the care delivered. This is why our care home accountants specialise in this complex and high-scrutiny space and provide comprehensive accountancy and financial advisory support.

For many care homes, there is a need to strike a fine balance between ensuring residential homes and facilities continue to be financially viable and generate profitability for care home owners. Contrastingly, they may also need to invest in staffing, amenities, and resources that adhere to stringent mandatory requirements and help their businesses stand out as providers of choice.

In this guide, we explain our work as an expert accountancy team, the sector-specific services we provide care home clients, and the pressures on care companies operating in one of the most closely regulated sectors nationwide.

Financial Management and Care Homes: The Regulations

We’ll start by recapping the role of the Care Quality Commission from a financial perspective. We should note that the CQC is also tasked with inspecting care standards such as safeguarding, respect for residents and service users, and protection of the welfare and needs of vulnerable care recipients.

Although the financial side of the inspection process is often overlooked, it is impossible to exaggerate the reputational and business-critical damage poor outcomes can have.

Care home operators rely on trust, professionalism and rigorous policies, all of which can be called into doubt if there is any indication of financial impropriety.

Regulation 13, enforced by the CQC, means that care and nursing home services must:

• Take ‘all reasonable steps’ to ensure they have the financial infrastructure to deliver services that are safe and appropriate.
• Showcase they have the resources necessary to continue to deliver services to the required standard.
• Hold sufficient insurance and indemnitees to cover any possible liabilities linked to property loss or damage, financial risks and injuries or deaths.

The CQC cannot prosecute a care centre for a breach of the financial standards but can refuse to allow a new business to register or take punitive regulatory action against the company or its ownership.

Further, reforms to the CQC’s guidance mean inspectors must assess the financial viability of all new CQC registrants and require assurance, which can be a letter or statement from an accountancy team, financial service provider or bank, attesting to the security and liquidity of the care business.

Accountancy Services and Support We Provide as Care Home Accountants and Financial Advisers

As in many sectors, our accomplished business advisers work closely to meet care home owners specific needs, which often extend far beyond the basics of preparing mandatory accounts and submitting accurate, timely tax declarations.

Cost management and efficiencies are paramount in the care home industry and can present daily challenges. A strong level of oversight, budgetary control, forecasting, and tax management is necessary to ensure care homes and domiciliary care providers utilise their resources wisely.

General care home accounting services cover tasks such as preparing annual profit and loss statements, balance sheet reporting, or collating management accounts.

These services provide valuable insights into the financial health of the business and can pinpoint opportunities for investment or expansion, or whether there are areas where costs are exceeding budgets and need to be carefully managed.

However, the real value of in-depth knowledge applies to the more complex areas of care home finances. These could include scenarios where an owner needs to ensure they have secure exit strategies in place for resale plans, wants to ascertain the right funding options to stabilise cash flows, or recognises that there are tax relief opportunities they have yet to take advantage of.

Tax Planning and Management for Care Homes

Care home accounting requires varied tax management, from payroll submissions to corporation tax returns. For many, reducing future taxation through the correct application of tax reliefs, allowances, and exemptions can make a sizeable impact while ensuring care home owners budget accurately for ongoing tax liabilities.

It may also be important to analyse capital allowance claims, a tax relief that is widely unclaimed but remains available for care homes. Allowances may apply, for instance, against the costs of investing in accessibility equipment such as lifts, purpose-made fire alarms, safety devices and commercial catering units.

Care Home Acquisition and Sale Planning

Leaving the valuation of a care home business until a planned sale date is never wise. Preparing quarterly management accounts to keep track of current profitability, revenues, and rising operational costs gives owners ongoing oversight to ensure they understand the value and sustainability of their business as it evolves.

Whether a client is investing in their first care home business, requires help developing their exit strategies, or wants guidance on scaling and maintaining their business, professional advice from an experienced team of specialist accountants is beneficial.

Focusing on Care Home Financial Regulatory Compliance

Detailed reporting, budgeting, and forecasting helps care homes maintain regulatory compliance and best practice standards and ensures owners understand the latest sector developments that may influence their plans.

This area of accountancy support could impact areas such as budgeting for higher tax burdens, adapting to changes within the wider social and healthcare sector, or simply ensuring that care homes stay up to speed with all filing and reporting deadlines.

Assessing the core revenue streams that care and nursing homes rely on and understanding reforms, such as the contributions made by local councils or the funding structures introduced by the government, provide the advance planning that is often essential.

Resource Allocation and Financing for Care Homes

Cost controls and financial performance analysis are always integral to care home management. With often limited resources, regular reviews of funding arrangements, financing options to support onward plans, and resource and staffing audits are important.

A well-managed, fully compliant, high-quality, and financially secure care home is undoubtedly more appealing to prospective service users, local families, and funding partners.

By working with a team of qualified, experienced care sector accountants, our clients at James Todd & Co have the peace of mind that their financial management is taken care of while they take that same level of care of their residents.