There’s a huge difference between appointing a general accountant and a specialist pharmacy accountant. Shreem Team has worked on this blog to provide you with all the necessary information on what accountant works best if you are a pharmacy owner. And if you think every accountant is the same, whether general or specialist. We will help you with your perspective.
Did you know that if your accountant makes any mistake in your books, it’s you, the owner, who has to take full responsibility in the UK? So, if you think a pharmacy owner can blame an accountant to avoid fines, then you are completely wrong. In the end, it’s your company, so you have to bear the loss and fines. Even though, in some cases, you find the accountant guilty, the person might end up serving jail time, but the damage falls on your shoulders.
£1 Million Pharmacy Fraud by a Bookkeeper
Have you heard about the bookkeeper who was jailed by Avon and Somerset Police for £1 million pharmacy fraud? Darren Mackezie, who worked for Max Punni’s(John Ware Ltd) chain of pharmacies, stole more than £1.3 million. The 41-year-old spent all the money on luxury holidays, home renovation, and designer goods. Owner Mr Punni mentioned that he has sustained a financial loss of more than £1 million. He also said that he had to cut staff hours worked extra hours to reduce staffing costs. Mr Punni said that he was not able to settle down and start a family of his own. “I have endured personal suffering and misery,” he continued.
Common Accounting Mistakes Pharmacy Owners Make Without Specialist Advice
Pharmacy owners often struggle with accounting and tax rules when they lack specialist accounting advice. Some of the frequent accounting mistakes a pharmacy owner makes are:
Misclassifying Tax and VAT Items
Handling pharmacy accounting can be complex, especially when you have a mix of exempt, zero-rated, and standard supplies to manage on a daily basis. Treating NHS prescriptions without proper understanding of exempt or zero-rated supplies can ruin partial exemption calculations. Even though different prescription supplies can have different VAT rates, pharmacy owners put all NHS prescription income into the same category. This leads to pharmacy owner calculate their partial exemption incorrectly. They either reclaim too much or too little VAT on their expenses.
Getting the Partial Exemption Wrong
Simply, Partial Exemption is a rule that decides how much VAT a pharmacy is allowed to reclaim when they make both taxable and exempt supplies. A pharmacy can have two types of sales: Taxable supplies (VAT recovery is allowed) and exempt supplies (VAT recovery is not allowed). But often some expenses are used for both types, which are called shared/residual overheads. Some pharmacies claim to pay VAT more than they actually do . This can create an HMRC liability. And some pharmacies might claim too little VAT, leaving legitimate VAT recovery unclaimed.
Mixing Personal and Business Funds
What happens if you mix your personal and business funds? Answer: You create severe compliance, cash flow, tax confusion, and complications with HMRC. Using a pharmacy account as a personal bank can trigger the Section 455 Tax and benefit-in-kind rule. A director’s personal spending or cash withdrawal without paperwork must be repaid to the company within 9 months and 1 day. If the loan is not paid by the deadline, the company must pay Section 455 tax via HMRC form CT600A at 35.75% for loans made on or after 6th April 2026.
Is it illegal to use a single account for business and personal? No, it’s not, but it’s not recommended. Speak with our accounting and tax expert at Shreem. You can also sit down for a free consultation with our team; just dm us via WhatsApp.
Mishandling NHS Cash Flow and FP34 Reconciliations
You might be aware of the lag in payment from NHS reimbursement. The cash in the bank tells you how much money you have in your account today. But FP34 reconciliation tells you whether the NHS has paid the right amount or not. This distinction is very important for pharmacy accounting & this is where a regular accountant fails. If your accountant fails to reconcile the FP34, you might be missing NHS income flow, incorrect revenue, and incorrect debtor/creditor balances.
Shreem’s Specialist Pharmacy accountant understands how pharmacy accounting actually works. Most importantly, how NHS payments work. A regular accountant may understand general bookkeeping, but may not understand the unique pharmacy cash flow cycle. A regular accountant might miss NHS underpayments, but Shreem Accountant identifies missing NHS income, incorrect payments, and balances. At Shreem, we are not just focused on compliance but improve profitability and cash flow as well.
Poor Inventory Control
One of the most common errors made by in-house pharmacy accountants or regular accountants is that they misclassify inventory types, causing confusion in VAT or, worst face HMRC penalties during audits. As we know, medicines have strict expiry dates, and general accountants often fail to track slow-moving stocks. As previously mentioned, the complexity of NHS requirements and poor tracking means your pharmacy might underclaim or lose money owned by the NHS.
A professional pharmacy accountant from Shreem can correctly track and isolate zero-rated dispensing stock from standard retail stock. We can maximize your VAT recovery and maintain strict HMRC compliance. A specialist pharmacy accountant can monitor your stock turnover ratio, reconcile NHS FP34 submissions accurately, and manage VAT rules correctly.
Track Receivables/Payables
Regular accountants process the bank statements weeks or months later rather than matching real-time data. Rather than breaking down dispensing fees, advances, and clawbacks from NHS Business Service Authority (NHSBSA) FP34 payments, they treat it as a simple lump-sum deposit. Professional pharmacy specialist accountants apply predictive cash flow forecasting to map out future HS reimbursements, wholesale payments, and operational costs for smooth cash flow. Regular accountants miss the specific lag between dispensing medicines and receiving NHS reimbursements.
Paper-based ledgers
Spreadsheets rely on retrospective data entry, which means you, as an owner, will see your true financial health after months, delaying financial visibility. Manual data entry can cause frequent errors. Even though there aren’t exact statistics on the number of UK pharmacy accountants who do not use accounting services. At Shreem, we have many new pharmacies onboard that were still using paper-based ledgers and previously handing the data over to external accountants.
Why outsource your Pharmacy accounting to Shreem Accountants?
As a Pharmacy owner, you must understand that accounting for a pharmacy is not the same as for other businesses. Hiring a regular or in-house accountant does not solve the accounting hassle for your pharmacy. At Shreem, we go beyond what a regular accountant is capable of. We don’t want to be just your accounting partner; we want to grow you financially so that you can focus more on the growth of your business. Hope now you have an idea of how traditional accounting practices is different from pharmacy accounting. To learn more about what Shreem’s team can bring to your pharmacy, you can contact us for a free consultation.
