The depressing view of final-year students

There was a depressing piece of news in the November 2012 issue of Economia (The ICAEW’s replacement magazine for ‘Accountancy’). President Mark Spofforth reports on research undertaken by Oxford Brookes University that contains some salutary lessons for anyone promoting the accountancy profession as a career choice:

“Accountancy is boring, offers little intellectual stimulus and makes virtually no contribution to society.”

“Accountants are not seen as ethical or associated with sustainability issues and are dismissed as bean-counting nerds”

“Even maths students think their skills could be better used elsewhere”

This is a summary of the outcome of a recent survey that invited final-year students at eight top-class UK universities, including  Oxford, Imperial and Durham, to explain how they made their career decisions.  The ICAEW commissioned the research to find out what influences graduates to opt for an accountancy career. In a separate reference to the results last month, Mark Spofforth noted that it’s time to dispel the myths:

“…we have failed to dispel the traditional myths about us – boring male beancounter nerds with accountancy degrees. Worse, they think life as a lawyer would be more exciting.”

Not all the students’ perceptions about accountancy were negative, although the positives tended to be incidental to the job rather than intrinsic to it, such as having a professional qualification and job security.

As Mark Spofforth notes this month:

“The research suggests areas we could tap into to improve our image. Students’ perceptions are shaped most strongly by work experience and internships. So views about auditing being a dull, desk bound job disappear when they go out on client visits and see that social interaction is a crucial part of audit work”

When I say that ‘Boring is Optional’ some people suggest I am wrong to focus on this issue. They say that by doing so I am perpetuating a negative image of accountants. If I thought that were true I would stop. But this latest research confirms that the stereotyping needs no help from me. This is also evident simply from my tracking of references to “boring accountant” on twitter. There are new posts every day, many from young people, hundreds of whom seem convinced that all accountants are boring.

We really need to change this perception. I have my own ideas. But what do YOU suggest?

Like this post? You can now obtain my ebook containing loads of valuable insights, short-cuts, tips and advice for accountants who want to STANDOUT and speed up their success. You can buy the book or download a summary for free here>>>

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Ten tax mistakes that could result in professional negligence claims

  1. Omitting to consider the VAT implications of significant property transactions;
  2. Loss of tax credits as entitlement not claimed early enough – eg: when unincorporated business client suffers a loss;
  3. Missing the deadline to claim research and development tax credits or property related capital allowances;
  4. Omitting to reorganise group companies to reduce ‘avoidable’ tax charges;
  5. Failure to advise clients to correct their payroll procedures so as to reduce penalties;
  6. Omitting to provide ‘standard’ tax planning advice on arrival or departure from UK, on mergers, on acquisitions, pre sales;
  7. Ignoring consequential adverse implications leading to avoidable tax liabilities (eg: VAT, SDLT, IHT, NICs, Customs duties etc) when giving commercial or ‘basic’ tax advice;
  8. Omitting to compute and report the tax consequences of transactions such as disincorporation;
  9. Failure to ensure that all relevant criteria are satisfied to facilitate a claim for specific reliefs (eg: Enterprise Investment Scheme);
  10. Assuming that there would be no liability to inheritance tax and failing to advice as to how the real liability could be reduced;
The above list forms part of the material covered in my regular talks for accountants and tax advisers on the subject of ‘How to avoid professional negligence claims’.
To keep in touch with tax changes from your perspective as an accountant in practice, do sign up for complimentary copies of the Tax Advice Network’s weekly newsletter here >>.
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>>>

NB: This is not a top ten list – indeed you may have other suggestions. Please add them as comments below:

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When I'm wrong, I admit it

This post is a post-script to a couple of posts I originally wrote for the TaxBuzz blog. As I no longer update that blog I have to comment here. And, yes, I HAVE to comment. Two people with whom I worked some years ago have been found guilty and imprisoned for their part in a fraudulent tax scheme. And I think there are lessons here for ambitious accountants in practice.

Three years ago, in October 2009, I set out my views on reports that: Vantis tax advisers to face charges of “cheating” re tax scheme. I admit that I doubted that Messrs Perrin and Faichney had done anything different to dozens of other promoters of tax schemes. I felt sure that HMRC were taking the case to act as a deterrent. I doubted that the accused had done anything beyond promote an aggressive scheme supported by “Counsel’s Opinion”.  As is well known, I am no fan of such schemes but equally, having worked with Perrin and Faichney, I found it hard to believe that they would do anything fraudulent.

I wrote two follow up pieces along similar lines: Wives of promoters of Vantis tax scheme also facing charges and Tax and financial advisers in court again re ‘failed’ tax scheme.

Well, in the light of the latest reports, I have to accept that, unless there has been a miscarriage of justice, “Faichney, who was managing director of Vantis Tax, worked with his deputy David Perrin to share £4.5m in profit from a fraudulent tax scheme“.

So, I was wrong and I admit it. I am shocked that two ex-colleagues bent and broke the rules to the extent now found proven in Court. When I worked with them I trusted them. Neither was a qualified accountant. I played bridge with David Perrin who was very bright and very commercial when it came to quoting fees for tax planning work. I worked more closely with Roy (Robert) Faichney who promoted me shortly after I joined WJB Chiltern in 2001. Both were involved in my recruitment to the firm.  (I should add that I have neither seen nor spoken with either of them for many years).

During my 4 years at the firm I attended many seminars at which Perrin and Faichney lectured to accountants about tax planning ‘opportunities’. Many of the more detailed technical arguments were beyond me but I was satisfied that their claims were supported by Tax Counsel and arguable interpretations of the law. Or so I thought at the time. And they clearly won over many accountants in practice too.

Now I am wondering. How robust were their technical arguments, really? Did they win me over with their charm and confidence? Did their plans, even then, go beyond the parameters of legal but aggressive tax planning? How many of the tax schemes that they put in place for clients really worked? By which I mean, how many such schemes, have been accepted as effective by HMRC after having been challenged? I wonder how many are still being negotiated? And I wonder how many accountants in practice were suckered into promoting the fraudulent tax scheme to their clients. Reports suggest that it was promoted via a network of contacts to over 600 clients including “an Oscar winning film executive, a celebrity psychiatrist, senior City bankers, top barristers and company directors.” I wonder how many other schemes devised and promoted by Perrin and Faichney have or will also be successfully challenged?

Faichney and Perrin were first interviewed by HMRC in 2006 in relation to the tax scheme in question which had been promoted some years earlier.  It has taken six years for HMRC to get a successful prosecution. Similar (and longer) time lags are commonplace when it comes to disputed tax schemes.

So what are the lessons for ambitious accountants? I would suggest just three:

  1. The fact that someone, whether a colleague or a client, seems to be honest when you first form a judgment as to their character, does not mean they will always resist temptation. Whilst we cannot go through life being suspicious of everyone, we should keep an open mind. We should not allow our faith in someone we trust to blind us to the possibility that they have overstepped the mark.
  2. Following on from the above, if a tax planning opportunity seems too good to be true, it probably is. Ask yourself whether fraud could be alleged – over and above any refusal by HMRC to accept the tax consequences of the scheme? If ANY element of the scheme involves a nudge-nudge, wink, wink, undisclosed agreements or arrangements, or any deliberately misleading statements, beware.
  3. And remember what happened to Perrin and Faichney. The fact that the promoters of any tax scheme seem credible and have a strong background of ‘success’ is no guarantee that all will be well in the future. Perrin and Faichney had loads of experience and their credibility was boosted by them working for one of the (then) top accountancy firms, Vantis Tax. Any promoters who approach you could seem just as credible but may themselves have got greedy. How would you know?

 

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When I’m wrong, I admit it

This post is a post-script to a couple of posts I originally wrote for the TaxBuzz blog. As I no longer update that blog I have to comment here. And, yes, I HAVE to comment. Two people with whom I worked some years ago have been found guilty and imprisoned for their part in a fraudulent tax scheme. And I think there are lessons here for ambitious accountants in practice.

Three years ago, in October 2009, I set out my views on reports that: Vantis tax advisers to face charges of “cheating” re tax scheme. I admit that I doubted that Messrs Perrin and Faichney had done anything different to dozens of other promoters of tax schemes. I felt sure that HMRC were taking the case to act as a deterrent. I doubted that the accused had done anything beyond promote an aggressive scheme supported by “Counsel’s Opinion”.  As is well known, I am no fan of such schemes but equally, having worked with Perrin and Faichney, I found it hard to believe that they would do anything fraudulent.

I wrote two follow up pieces along similar lines: Wives of promoters of Vantis tax scheme also facing charges and Tax and financial advisers in court again re ‘failed’ tax scheme.

Well, in the light of the latest reports, I have to accept that, unless there has been a miscarriage of justice, “Faichney, who was managing director of Vantis Tax, worked with his deputy David Perrin to share £4.5m in profit from a fraudulent tax scheme“.

So, I was wrong and I admit it. I am shocked that two ex-colleagues bent and broke the rules to the extent now found proven in Court. When I worked with them I trusted them. Neither was a qualified accountant. I played bridge with David Perrin who was very bright and very commercial when it came to quoting fees for tax planning work. I worked more closely with Roy (Robert) Faichney who promoted me shortly after I joined WJB Chiltern in 2001. Both were involved in my recruitment to the firm.  (I should add that I have neither seen nor spoken with either of them for many years).

During my 4 years at the firm I attended many seminars at which Perrin and Faichney lectured to accountants about tax planning ‘opportunities’. Many of the more detailed technical arguments were beyond me but I was satisfied that their claims were supported by Tax Counsel and arguable interpretations of the law. Or so I thought at the time. And they clearly won over many accountants in practice too.

Now I am wondering. How robust were their technical arguments, really? Did they win me over with their charm and confidence? Did their plans, even then, go beyond the parameters of legal but aggressive tax planning? How many of the tax schemes that they put in place for clients really worked? By which I mean, how many such schemes, have been accepted as effective by HMRC after having been challenged? I wonder how many are still being negotiated? And I wonder how many accountants in practice were suckered into promoting the fraudulent tax scheme to their clients. Reports suggest that it was promoted via a network of contacts to over 600 clients including “an Oscar winning film executive, a celebrity psychiatrist, senior City bankers, top barristers and company directors.” I wonder how many other schemes devised and promoted by Perrin and Faichney have or will also be successfully challenged?

Faichney and Perrin were first interviewed by HMRC in 2006 in relation to the tax scheme in question which had been promoted some years earlier.  It has taken six years for HMRC to get a successful prosecution. Similar (and longer) time lags are commonplace when it comes to disputed tax schemes.

So what are the lessons for ambitious accountants? I would suggest just three:

  1. The fact that someone, whether a colleague or a client, seems to be honest when you first form a judgment as to their character, does not mean they will always resist temptation. Whilst we cannot go through life being suspicious of everyone, we should keep an open mind. We should not allow our faith in someone we trust to blind us to the possibility that they have overstepped the mark.
  2. Following on from the above, if a tax planning opportunity seems too good to be true, it probably is. Ask yourself whether fraud could be alleged – over and above any refusal by HMRC to accept the tax consequences of the scheme? If ANY element of the scheme involves a nudge-nudge, wink, wink, undisclosed agreements or arrangements, or any deliberately misleading statements, beware.
  3. And remember what happened to Perrin and Faichney. The fact that the promoters of any tax scheme seem credible and have a strong background of ‘success’ is no guarantee that all will be well in the future. Perrin and Faichney had loads of experience and their credibility was boosted by them working for one of the (then) top accountancy firms, Vantis Tax. Any promoters who approach you could seem just as credible but may themselves have got greedy. How would you know?

 

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An easy way to avoid giving negligent advice

One of the pressures that all ambitious accountants endure is the need to advise on issues that do not arise every day. The more experience you have the more confidence you gain to know whether or not you have enough knowledge to give the advice without double checking it’s right.

Double checking might simply involve checking the rules in a book on the shelf, online, asking a colleague or going outside the firm to an independent specialist.  There is no shame in not knowing. You cannot know everything and it’s a mistake these days (and probably always was) to claim to be the font of all knowledge on any accountancy or tax related subject. None of the real experts would make such a claim so why should a ‘generalist’ feel it necessary to do so?

If you’re not sure though, here’s a simple solution.

Pretend the client seeking your advice is a close family friend, your mother, brother or someone else you really care about.  Would you be happy for them to act on the basis of the advice you are giving?  If you’d want to double check before letting them follow your advice then you know you should double check regardless.

I’ve addressed related points in previous posts on this blog:

And if you don’t know where to turn when you require specialist tax input, I’d have to recommend the Tax Advice Network.

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To LLP or not to LLP? And Limited Liability Partnership agreements

Limited Liability Partnerships are now well established as one of the four main alternative ways in which to structure a business in the UK. Indeed it is alost 10 years since the facility to operate as an LLP became a reality in the UK on 6 April 2003.

A few years back I explained: Why aren’t more accountants talking about LLPs with clients?  Has much changed in the interim? Well, tax rates have moved up and down and there has been a steady increase in the number of businesses and professional firms that are choosing to operate as LLPs.  While some accountants stick slavishly to the idea that all small businesses should operate as a limited company, the choice is rarely that clear when you consider all of the relevant factors – a fact I consistently made clear when delivering talks at seminars and conferences for accountants.

I no longer speak on such technical topics as I left private practice in 2006.

[Edited 2014 – The remainder of this blog post has been removed to avoid confusion. It linked to an LLP related project that is no longer operational]. 

 

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