"It's more important to be different than it is to be better"

I was speaking at the CIMA members in practice annual conference last week about ‘Making more money from your tax work – without fancy tax schemes‘.

Also speaking at the conference was my old friend Chris Frederiksen of the 2020 group. Elements of my presentations have been inspired by Chris over the years – indeed ever since I first heard him speak some 15 plus years ago.

One of the many key points that Chris shared last week was a quote he attributed to Jeremy Harbinson:

“It’s more important to be different than it is to be better”

It struck me that this reinforces a similar point I have been making in various posts on this blog recently.

Even if you are ‘better’ than your competitors, very few prospective clients will be able to judge this – especially before they have engaged you. If you are ‘different’ however, you can stand out, be remembered, recommended and retained.

When Chris asked the audience few of them were able to express REAL differences in ways that would be understood by and appeal to prospective clients. What about you?

Like this post? You can now obtain my ebook containing loads more insights, short-cuts, tips and advice aimed specifically at accountants who want to STANDOUT and become more successful. You can buy the book or download a summary for free here>>>

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“It’s more important to be different than it is to be better”

I was speaking at the CIMA members in practice annual conference last week about ‘Making more money from your tax work – without fancy tax schemes‘.

Also speaking at the conference was my old friend Chris Frederiksen of the 2020 group. Elements of my presentations have been inspired by Chris over the years – indeed ever since I first heard him speak some 15 plus years ago.

One of the many key points that Chris shared last week was a quote he attributed to Jeremy Harbinson:

“It’s more important to be different than it is to be better”

It struck me that this reinforces a similar point I have been making in various posts on this blog recently.

Even if you are ‘better’ than your competitors, very few prospective clients will be able to judge this – especially before they have engaged you. If you are ‘different’ however, you can stand out, be remembered, recommended and retained.

When Chris asked the audience few of them were able to express REAL differences in ways that would be understood by and appeal to prospective clients. What about you?

Like this post? You can now obtain my ebook containing loads more insights, short-cuts, tips and advice aimed specifically at accountants who want to STANDOUT and become more successful. You can buy the book or download a summary for free here>>>

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Ten top tips to avoid professional negligence claims

I created this list recently for a forthcoming article in the professional press. It’s drawn from my talk, How to avoid tax related professional negligence claims, which I have been presenting all over the UK for the last few years.

1 – When providing tax advice always state the known facts on which your advice is based – in writing;

2 – Equally state any assumptions you have made – in writing;

3 – Create contemporaneous notes of all material advice and of the assumptions you provide during meetings and telephone conversations;

4 – When advising, ask yourself whether you’d be happy for a close friend or family member to rely on the advice. If you’re not sure, do additional research, get a second opinion or involve a tax specialist colleague or trusted third-party (such as a member of the Tax Advice Network)

5 – When advising clients of forthcoming deadlines, focus their attention on the date that you need to the information to beat the statutory deadline;

6 – Avoid under-pricing work and introducing time-pressure that could exacerbate mistakes;

7 –Stick to what you know. If a client requires or requests advice on subjects outside of your comfort zone, involve a tax specialist colleague or trusted third-party (see above!);

8 – Stop working for those clients who are more trouble than they are worth. These are the clients who resist paying decent fees, don’t contribute to the growth of your practice and who are most likely to complain, given half a chance.

9 – Manage client expectations and avoid over-promising and under-delivery. Remember that a client’s perception of these may be very different from yours.

10 – Keep uptodate – eg: with the free weekly email containing practical topical tax tips for accountants in general practice from the Tax Advice Network.

I have written a 10,000 word ebook drawn from my talk on How to avoid professional negligence claims, containing tips and risk management advice for accountants in practice. You can buy the book or download a summary for free here>>>

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Networking groups are a waste of time – or are they?

I’ve heard plenty of accountants express such views. Equally I’ve heard plenty of accountants extol the virtues and benefits of the networking groups to which they belong. Is it a question of luck, who else is there or is the reason for the differing views more a question of the accountant’s attitude and approach?

A friend of mine, Andy Lopata, who is a networking strategy consultant, recently shared the following story:

I have seen people turn up to networking events without any focus, they’ve had no idea as to why they are there. As a result, they’ve achieve nothing. I’ve even seen an accountant stand up at a BRE meeting for his 60 second presentation, only to say ‘I’ve got nothing to say this week’!!! That’s what a lack of strategy, a lack of planning, a lack of focus will bring you.

Now I know that there are plenty of accountants who attend regular breakfast meetings of networking groups like BNI, BRE (now BRX), BoB and the like. If you’ve tried one and considered it was a waste of time, have you thought through why you felt that?

Did you have realistic expectations or did you expect people to immediately ask you to take over their accounting and tax affairs? Did you expect them to take your card, know who you could best help, why you were special and different to the other accountants they already know and then to refer their family and friends to you?

In my own case, I know that BNI meetings are not for me. I do enjoy NRG meetings however – they are mid day events, include a useful seminar and a lunch with other professional people. They are right for me and I have realistic expectations as to what benefits I can hope to achieve by attending them.

What about you?

PS: I have written a 10,000+ word book specifically for accountants who want to Network more effectively. Click here for full details>>>

If you would like to book me to speak on the subject at your in-house conference or training session, do get in touch. There’s an outline of my talk on ‘How to ensure your networking activity is successful’ here>>>  

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Confidence – inside you or through others’ views of you

In 2001 after I joined WJB Chiltern, an independent tax consultancy that later inspired me to establish the Tax Advice Network, I became head of the Tax Support for Professionals (TSP) team.

The main backbone of the TSP service was a telephone helpline service. Each day a different member of the team was allocated to answer the phones. Calls came in from accountants wanting advice on all aspects of tax. I recall sharing my admiration of the guys in my team who had the confidence to pick up the Taxline phone. On one occasion I said to John (an older member of the team) that I didn’t think I had a deep enough knowledge across the tax spectrum to answer the Taxline myself. I’ve long remembered his reply as he was evidently quite shocked:

You’re being harsh on yourself Mark. You invariably suggest additional points when we debrief on the calls of the day. And I’ve heard you on the phone often enough to know that you do have a broader knowledge of tax than you give yourself credit for. You wouldn’t have got to where you are otherwise.

John’s comments were not intended to have a long lasting and powerful impact. They were simply his instinctive response to my apparent reluctance to man the Taxline. That, in turn, was partly a reflection of a lack of inner confidence – a common enough feeling for many of us. I’m well over that now! Indeed John’s words have stayed with me and helped force a change in the way that I subsequently described my tax knowledge.

In some respects that conversation was also a catalyst for the creation of the Tax Advice Network. I used to have a good broad knowledge of the tax system but  I haven’t given anyone tax advice for years now. Instead I refer anyone who asks me for tax advice to members of my Tax Advice Network.

One of the most powerful factors that affects whether an accountant will refer tax queries to us is the level of confidence that they have. Are they

  • Rightly confident that they know enough and that there is little chance of being wrong?
  • Over confident and reluctant to seek a second opinion?
  • Lacking in confidence and worried that clients will think less of them if they admit what they don’t know? (They’ll certainly be unhappy if the accountant gets it wrong, that’s for sure. Most clients recognise that their accountant is like their GP and that sometimes there is a need to go to a specialist);

What about you?

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Confidence – inside you or through others’ views of you

In 2001 after I joined WJB Chiltern, the tax consultancy now owned by BDO Stoy Hayward, I became head of the Tax Support for Professionals (TSP) team.

The main backbone of the TSP service was Taxline, a tax telephone helpline service. Each day a different member of the team was allocated to answer the phones. Calls came in from accountants wanting advice on all aspects of tax. I recall sharing my admiration of the guys in my team who had the confidence to pick up the Taxline phone. On one occasion I said to John (an older member of the team) that I didn’t think I had a deep enough knowledge across the tax spectrum to answer the Taxline myself. I’ve long remembered his reply as he was evidently quite shocked:

You’re being harsh on yourself Mark. You invariably suggest additional points when we debrief on the calls of the day. And I’ve heard you on the phone often enough to know that you do have a broader knowledge of tax than you give yourself credit for. You wouldn’t have got to where you are otherwise.

John’s comments were not intended to have a long lasting and powerful impact. They were simply his instinctive response to my apparent reluctance to man the Taxline. That, in turn, was partly a reflection of a lack of inner confidence – a common enough feeling for many of us. I’m well over that now! Indeed John’s words have stayed with me and helped force a change in the way that I subsequently described my tax knowledge.

In some respects that conversation was also a catalyst for the creation of the Tax Advice Network. I may well have a good broad knowledge of the tax system but I’m not confident that I am uptodate sufficiently to give advice on which accountants or anyone else can rely. I know sufficient about what’s going on to comment on developments, to write and to lecture but I’m no longer interested in giving definitive advice myself any more. So now I refer anyone who asks me for tax advice to members of my Tax Advice Network.

One of the most powerful factors that affects whether an accountant will refer tax queries to us is the level of confidence that they have. Are they

  • Rightly confident that they know enough and that there is little chance of being wrong?
  • Over confident and reluctant to seek a second opinion?
  • Lacking in confidence and worried that clients will think less of them if they admit what they don’t know? (They’ll certainly be unhappy if the accountant gets it wrong, that’s for sure. Most clients recognise that their accountant is like their GP and that sometimes there is a need to go to a specialist);

What about you?

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Services that accountants outsource within the UK

Funny how some topics become topical. A couple of weeks ago I wrote a piece ‘Outsourcing – doesn’t have to mean an overseas call centre’. Then last week I noted that a new debate has started on AccountingWeb: “We believe British Accountants can only benefit from growth in outsourcing.”

For those who don’t visit that site let me repeat here much of what I posted by way of an early comment in the debate:

To my mind, ‘outsourcing’ means sourcing suppliers of work that will be performed OUTside the firm and that would otherwise be done by employees INside the firm.. As Steve mentions, outsourcing OVERSEAS is not the only way to outsource.

So let’s move away from the preconceptions that outsourcing is synonymous with off shoring.

In recent weeks alone I have come across firms who outsource (within the UK) the following:

– Bookkeeping for clients (indeed, some weren’t even previously offering the service to clients);
– Payroll services for clients;
– Company secretarial work for clients;
– Tax planning and support (in effect avoiding the cost of having high level tax expertise in house and on tap 5 days a week);
– Provision of credit to clients who want time to pay their fees (why act as a bank by allowing clients extended credit terms – often at no charge?)
– Typing and transcription services;
– Telephone answering;
– Writing newsletters for clients;
– Tax return preparation work in the UK.

To my mind all of the above constitute outsourcing. I suspect however that the focus of this debate is intended to be of the outsourcing of accounts preparation, tax return compliance an similar services to offshore suppliers in places like India, Israel and South Africa.

The tax planning and support operation to which I refer is of course my Tax Advice Network (Register your name and email address on the site to receive our free weekly practical tax update, written especially for accountants in general practice). Beyond that, if any readers of my blog would like further details of the suppliers of any of the above services please let me know I’ll be happy to effect an introduction.

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Why don't accountants like to earn commission?

I realised recently that this is the unasked question behind a number of approaches I have received in recent months. Such approaches tend to come from business service providers who want my views as to how they can best work with accountants.

Invariably they start from the premise that accountants would want to promote the new service and the provider to their clients as there’s a healthy commission in it for the accountants. Easy money. And yet the service provider is struggling to generate interest among the accountants they know, let alone the ones they have yet to approach.

In this connection I was recently asked an interesting question:

Does the offer of money for referrals dilute the proposition of a partnership?
In my view few accountants will make a referral purely because of a possible referral fee/reward. Some will have no interest in one at all. Others are more commercial and can see it makes sense especially if they’ve saved the service provider spending as much on more direct marketing costs. However I also think that the ‘offer’ can undermine the prospect for a longer term relationship if mentioned too early.

What do you think?

Of course, when it comes to regulated financial services advice there are specific regulations and rules with which qualified advisers must comply. I guess that for some people that’s more hassle than they think it might be worth.

Equally I’m aware of statistics suggesting that most accountancy firms could generate at least 20% more turnover (if not profit) by providing financial services to their client base.

I’d value your views and comments on this post.

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Why don’t accountants like to earn commission?

I realised recently that this is the unasked question behind a number of approaches I have received in recent months. Such approaches tend to come from business service providers who want my views as to how they can best work with accountants.

Invariably they start from the premise that accountants would want to promote the new service and the provider to their clients as there’s a healthy commission in it for the accountants. Easy money. And yet the service provider is struggling to generate interest among the accountants they know, let alone the ones they have yet to approach.

In this connection I was recently asked an interesting question:

Does the offer of money for referrals dilute the proposition of a partnership?
In my view few accountants will make a referral purely because of a possible referral fee/reward. Some will have no interest in one at all. Others are more commercial and can see it makes sense especially if they’ve saved the service provider spending as much on more direct marketing costs. However I also think that the ‘offer’ can undermine the prospect for a longer term relationship if mentioned too early.

What do you think?

Of course, when it comes to regulated financial services advice there are specific regulations and rules with which qualified advisers must comply. I guess that for some people that’s more hassle than they think it might be worth.

Equally I’m aware of statistics suggesting that most accountancy firms could generate at least 20% more turnover (if not profit) by providing financial services to their client base.

I’d value your views and comments on this post.

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Are accountants as 'stupid' as lawyers?

I recently listened to a podcast by professional services guru, David Maister. It was a recording of a presentation he had given to a group of lawyers in which he accused them of being ‘stupid’. Vividly, loudly and sincerely. When he explained why he had levelled this accusation at them they had no choice but to agree.  Listening to this exchange I realised that David was making the same point as one that I highlight during my talks and training courses on Making more profits from your smaller clients.

To an extent I also paraphrased my advice on this point in a recent post on this blog: First focus on what you have – before you try to win new clients

What David did was to ask the lawyers how they got most of their new valuable work. The most common response was that such work typically came from word of mouth personal introductions and referrals. I tend to get a similar response when I ask accountants the same question. Is it true for you too?

During my talks I highlight the often quoted statistic that it typically takes ten times as much time and effort to secure valuable work from a new contact as it does to get similarly valuable work from or through an existing client. TEN TIMES.

Now let’s consider how you allocate your non-billable marketing and networking time. Do you or your bosses or colleagues sanction time spent preparing adverts and marketing events? What about attending those events, networking meetings and external functions? If you’re like most accountants looking to grow their practices you will make time for many such activities.

What about your existing clients? Again, if you are like many accountants, and certainly those in larger firms, you will be encouraged to record all time spent with clients as potentially billable. Irrecoverable time costs are frowned upon so best avoided. What behaviour does that approach, that VERY COMMON approach, discourage? In effect it acts as a disincentive to spend time building and developing relationships that could, indeed should, help you to win more valuable and profitable work than your more general and unfocused networking and advertising.

So tell me, are accountants as ‘stupid’ as lawyers?

PS: I have written a 10,000+ word book specifically for accountants who want to Network more effectively. Click here for full details>>>

If you would like to book me to speak on the subject at your in-house conference or training session, do get in touch. There’s an outline of my talk on ‘How to ensure your networking activity is successful’ here>>>  

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Are accountants as ‘stupid’ as lawyers?

I recently listened to a podcast by professional services guru, David Maister. It was a recording of a presentation he had given to a group of lawyers in which he accused them of being ‘stupid’. Vividly, loudly and sincerely. When he explained why he had levelled this accusation at them they had no choice but to agree.  Listening to this exchange I realised that David was making the same point as one that I highlight during my talks and training courses on Making more profits from your smaller clients.

To an extent I also paraphrased my advice on this point in a recent post on this blog: First focus on what you have – before you try to win new clients

What David did was to ask the lawyers how they got most of their new valuable work. The most common response was that such work typically came from word of mouth personal introductions and referrals. I tend to get a similar response when I ask accountants the same question. Is it true for you too?

During my talks I highlight the often quoted statistic that it typically takes ten times as much time and effort to secure valuable work from a new contact as it does to get similarly valuable work from or through an existing client. TEN TIMES.

Now let’s consider how you allocate your non-billable marketing and networking time. Do you or your bosses or colleagues sanction time spent preparing adverts and marketing events? What about attending those events, networking meetings and external functions? If you’re like most accountants looking to grow their practices you will make time for many such activities.

What about your existing clients? Again, if you are like many accountants, and certainly those in larger firms, you will be encouraged to record all time spent with clients as potentially billable. Irrecoverable time costs are frowned upon so best avoided. What behaviour does that approach, that VERY COMMON approach, discourage? In effect it acts as a disincentive to spend time building and developing relationships that could, indeed should, help you to win more valuable and profitable work than your more general and unfocused networking and advertising.

So tell me, are accountants as ‘stupid’ as lawyers?

PS: I have written a 10,000+ word book specifically for accountants who want to Network more effectively. Click here for full details>>>

If you would like to book me to speak on the subject at your in-house conference or training session, do get in touch. There’s an outline of my talk on ‘How to ensure your networking activity is successful’ here>>>  

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Tax support from an accountancy firm or independent tax advisers?

I received a letter today (in error I suspect) from an accountancy firm that provides services to other members of the accountancy profession.

Funny that. It’s what the Tax Advice Network does too. And we’re not an accountancy firm so are not perceived as being in competition with the accountants who refer work to our members. No amount of assurance re a ‘non client poaching policy’ is going to change that perception. Especially as the fear is not that the accountant will poach the client but that the client will want to move.

These accountants tell me that they:

‘specialise in high level tax compliance (eg: company sales, reorganisations, employee share schemes, EIS etc) and sophisticated tax planning work (eg: corporation tax mitigation, profit extraction etc)’.

Funny that. Members of the Tax Advice Network provide all of those services too although I would question whether profit extraction and the like is necessarily ‘sophisticated tax planning’.

The letter tells me that the accountancy firm has a number of partners who have previously worked at top twenty firms. Is that attractive to smaller firms of accountants? I’m not sure. It’s one of the reasons why we allow our users to choose which of our members they want to approach.

These accountants claim to offer a ‘very personal service’ (is there any other kind?) and suggest that this helps other firms by protecting their clients from larger predatory firms.

Over the last few years I have been surveying smaller firms and asking them what factors are important to them when it comes to outsourcing tax work and engaging with specialist tax advisers. The vast majority wouldn’t go to another firm of accountants for fear of the competition. And who can blame them?

That’s one of the reasons why I established the Tax Advice Network. Somehow I think that our tax support offering will continue to be more attractive to most smaller firms than the alternative of using tax advisers who are partners in an accountancy firm.

What do you think?

Like this post? You can now obtain my ebook containing loads more insights, short-cuts, tips and advice aimed specifically at accountants who want to STANDOUT and become more successful. You can buy the book or download a summary for free here>>>

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Sky+ adverts provide great example of my advice

Have you seen or heard the current advertising campaign by BSkyB to promote the Sky+ personal video recorder? It includes TV ads that feature celebrities including Michael Parkinson, David Gower, Felicity Kendal, Ross Kemp and Mariella Frostrup talking about the benefits of Sky+. I have also seen poster adverts that include simple quotes from the same celebrities highlighting how beneficial they find the Sky+ facility.

On my way home the other evening after travelling to Cornwall to present a full afternoon talk about How to make more profits from your smaller clients I saw one of the ads and realised that they reinforce one of the points I highlight towards the end of the talk. It’s also a subject about which I have posted extensively on this blog in the past. The power and importance of Testimonials.

Rather than repeat myself let me simply refer you back to these 5 earlier posts from last year:

The value of testimonials (part one)

Client testimonials: Why they are important (part two)

Client testimonials: How to get them (part three)

Client testimonials: Which ones to use? (part four)

Client testimonials: A key mistake to avoid (part five)

To my mind the adverts for Sky+ are very effective. And vastly more so than would be anything written by BSkyB or a conventional advert.  The key point is that most advertising contains mere assertions by the provider/supplier and mere assertions are rarely compelling.

If you are a regular reader of this blog you will have seen previous cross references to my Tax Advice Network website. Let’s assume you have yet to go and have a look. Here’s a couple of genuine testimonials copied from our promotional leaflet:

“I will certainly be using Tax Advice Network again – it’s just what small practitioners have been waiting for!” – Geoff Booth, Tax Savers Direct 

“Many thanks for your brilliant emails. This is now the only newsletter I read regularly and I pass it to my staff” – Ray Baxter, Baxter Associates

And they are probably far more compelling than anything I could write myself.

Don’t you agree?

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Do you tell clients to: “Arrange a review of your taxation affairs”?

I was reading a recent tax briefing published by one of the larger firms yesterday.

I tend to think that such publications are a good way to evidence to clients that you are upto speed with current tax developments and that you want to help them avoid paying more tax than is absolutely necessary. Having said that I would never encourage a smaller firm to draft such a newsletter or tax briefing from scratch. Better to outsource this and simply to top and tail the briefing – after ensuring that you understand everything that it contains!

Back to the one I was reading yesterday. Overall it was very impressive, helpful and well written, however I was amused to see the following at the end of the ‘welcome’ paragraph:

“Because of the significant changes made in the 2008 Budget we would suggest that you speak to either your usual contact at [XYZ – the firm] or a member of our tax staff to arrange a review of your taxation affairs.”

Why do you think this amused me?

There are a couple of reasons. These may be familiar to anyone who has heard the full half day version of my talk “How to make more profits from your smaller clients.” In it I talk about the need to spell things out to clients and not to assume that they think like accountants.

So why did that sentence in the briefing amuse me? It’s not the fact that the size of the firm means that they can’t be specific about who clients should talk to (“your usual contact”). Let’s also ignore the fact that the message implies that the ‘usual contact’ may not be capable of arranging a review of the client’s tax affairs – why else is the option given to going to a member of the tax staff?

No. My amusement is in part due to the absence of clarity in the suggestion that the reader should ask for ‘a review’ of their taxation affairs and the open-ended nature of such a request. But also the fact that the firm could be implying that it is simply reactive as distinct from pro-active. That sentence is all but saying ‘We’re here if you want to talk to us, but don’t expect us to raise any of these subjects with you’.

How much better if the sentence had included the following sentiments:

‘We’d like to talk with you about the impact of these changes on your tax position as there may significant tax savings to make and tax traps to avoid. Please speak with your usual contact here to arrange a convenient time and place’.

We have to remember that what we consider to be obvious is not always viewed in the same way by clients. We need to be careful to say what we mean and to avoid the opportunity for clients to draw their own (incorrect) conclusions.

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Outsourcing – doesn't have to mean an overseas call centre

When you hear someone talking about outsourcing, you probably immediately think about those annoying call centres based overseas. But there is much more to outsourcing than a call centre.

Recently I was told about a great piece of business advice:

Most people worry about what they’re not good at. Don’t. Concentrate on what you are good at. You can outsource what you’re not good at.

I agree. Indeed that is exactly the maxim I adopted when I established the Tax Advice Network last year. As a result I have no staff at all. I have outsourced the telephone switchboard and all other support services are on a pay as you go contract basis.

As professional advisers many of us are used to the idea of contracting for specific ad-hoc support services. When we need regular help though we can (as I have done) outsource this by engaging a third party to provide the services for and on behalf of our business. This can be a particularly cost effective approach for smaller businesses that should not feel obliged to take on staff when outside contractors or outsourcing is a viable alternative.

In this context I am very pleased with the company to whom I have outsourced my telephone answering service and would happily pass on their details to anyone who is interested in doing the same thing. It is exceptionally cost effective and ensures I never miss a call. I used to think that everyone would leave a message if my phone goes to voicemail. Statistically however this is the exception rather than the norm.

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Outsourcing – doesn’t have to mean an overseas call centre

When you hear someone talking about outsourcing, you probably immediately think about those annoying call centres based overseas. But there is much more to outsourcing than a call centre.

Recently I was told about a great piece of business advice:

Most people worry about what they’re not good at. Don’t. Concentrate on what you are good at. You can outsource what you’re not good at.

I agree. Indeed that is exactly the maxim I adopted when I established the Tax Advice Network last year. As a result I have no staff at all. I have outsourced the telephone switchboard and all other support services are on a pay as you go contract basis.

As professional advisers many of us are used to the idea of contracting for specific ad-hoc support services. When we need regular help though we can (as I have done) outsource this by engaging a third party to provide the services for and on behalf of our business. This can be a particularly cost effective approach for smaller businesses that should not feel obliged to take on staff when outside contractors or outsourcing is a viable alternative.

In this context I am very pleased with the company to whom I have outsourced my telephone answering service and would happily pass on their details to anyone who is interested in doing the same thing. It is exceptionally cost effective and ensures I never miss a call. I used to think that everyone would leave a message if my phone goes to voicemail. Statistically however this is the exception rather than the norm.

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Are you at least 'reasonably competent'?

There has been an interesting discussion on AccountingWeb as to whether an accountant could be held to be negligent for not advising clients about ‘advanced tax planning’ (ie: tax avoidance strategies).

As I explain when I present sessions on How to avoid tax related negligence claims, the standard of care to which you will be held is that of a ‘reasonably competent accountant’. I also stress that there is more to this than simply having a good defence.  You really want to avoid the claims being made as it’s a rotten process to go through – even if you are exonerated at the end.

Assume for a moment that an (ex) client alleged that their accountant had been negligent for not mentioning certain ‘advanced tax planning’ ideas, what would that claimant need to evidence to win their claim?

1 – That the accountant owed a duty of care – the client/accountant relationship probably satisfies that.

2 – That there was a breach of that duty of care (I’ll come back to that in a moment); and

3 – That the client has suffered a loss as a direct result of that breach.

As indicated above, the defence would be that the the accountant did nothing less than a reasonably competent accountant would have done. Is it a breach of the duty of care to choose NOT to mention ‘advanced tax planning’ ideas? in my view it is not (in general). And I say that in the capacity of someone who has acted as an expert witness in cases involving the alleged professional negligence of accountants.

In my view there is a material difference between ‘everyday’ tax planning, that most decent accountants would address and ‘advanced’ tax planning ideas.

Of course, if a client’s circumstances changed materially, (eg they stood to realise an enormous capital gain) or they ASKED for more sophisticated advice and did not get it then a claim might subsequently succeed. However the client would need to prove that there was a ‘scheme’, technique or facility by which they could have reduced their tax bills and that they would have been prepared to undertake the necessary transactions and pay the related fees. If they can prove that THEN there might be a case against an otherwise reasonably competent accountant.

Although not completely beyond doubt it is important to appreciate that a reasonably competent accountant probably complies with the Guide to Professional Conduct for those working in tax. It’s the same Guide for all of the professional bodies. It includes a requirement to seek expert support or help if clients want tax advice that goes beyond your comfort zone. If an accountant chooses to not give the required advice rather than outsource it they could be held to be negligent.

I have written a 10,000 word ebook drawn from my talk on How to avoid professional negligence claims, containing tips and risk management advice for accountants in practice. You can buy the book or download a summary for free here>>>

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Are you at least ‘reasonably competent’?

There has been an interesting discussion on AccountingWeb as to whether an accountant could be held to be negligent for not advising clients about ‘advanced tax planning’ (ie: tax avoidance strategies).

As I explain when I present sessions on How to avoid tax related negligence claims, the standard of care to which you will be held is that of a ‘reasonably competent accountant’. I also stress that there is more to this than simply having a good defence.  You really want to avoid the claims being made as it’s a rotten process to go through – even if you are exonerated at the end.

Assume for a moment that an (ex) client alleged that their accountant had been negligent for not mentioning certain ‘advanced tax planning’ ideas, what would that claimant need to evidence to win their claim?

1 – That the accountant owed a duty of care – the client/accountant relationship probably satisfies that.

2 – That there was a breach of that duty of care (I’ll come back to that in a moment); and

3 – That the client has suffered a loss as a direct result of that breach.

As indicated above, the defence would be that the the accountant did nothing less than a reasonably competent accountant would have done. Is it a breach of the duty of care to choose NOT to mention ‘advanced tax planning’ ideas? in my view it is not (in general). And I say that in the capacity of someone who has acted as an expert witness in cases involving the alleged professional negligence of accountants.

In my view there is a material difference between ‘everyday’ tax planning, that most decent accountants would address and ‘advanced’ tax planning ideas.

Of course, if a client’s circumstances changed materially, (eg they stood to realise an enormous capital gain) or they ASKED for more sophisticated advice and did not get it then a claim might subsequently succeed. However the client would need to prove that there was a ‘scheme’, technique or facility by which they could have reduced their tax bills and that they would have been prepared to undertake the necessary transactions and pay the related fees. If they can prove that THEN there might be a case against an otherwise reasonably competent accountant.

Although not completely beyond doubt it is important to appreciate that a reasonably competent accountant probably complies with the Guide to Professional Conduct for those working in tax. It’s the same Guide for all of the professional bodies. It includes a requirement to seek expert support or help if clients want tax advice that goes beyond your comfort zone. If an accountant chooses to not give the required advice rather than outsource it they could be held to be negligent.

I have written a 10,000 word ebook drawn from my talk on How to avoid professional negligence claims, containing tips and risk management advice for accountants in practice. You can buy the book or download a summary for free here>>>

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