Are accountants the new bogeymen?

Were you as angry as I was at the headlines and media focus on a clearly misguided element of the latest report by the Public Accounts Committee (PAC)?

Committee chairman Margaret Hodge said accountants seconded to government represented a “ridiculous conflict of interest” that should be ended. She had clearly made up her mind based on no real evidence and was determined to use her position to grab a few more headlines and to make sure accountants become the new bogeymen (sorry – I cannot find a gender neutral word).

Hodge referenced just ONE (non) example to justify her sweeping criticisms. Despite the paucity of her arguments the media is gleefully repeating Hodge’s criticism of all the Big 4 firms and, implicitly, accountants in general. Re Hodge’s single ‘proof’, what really happened I suspect is this:

The last LABOUR Gov’t wanted to introduce a tax relief to reduce taxes for those who qualify for the patent box regime. To ensure the relief worked as intended they sought outside help (from KPMG). Could have been any of the Big 4.

Once the law was introduced, KPMG (and all the others) then helped promote the concept so that the regime (introduced by LABOUR) would be a success. There were no loopholes to exploit. The advice given to clients was to ensure they could benefit from the new regime – as the Government intended.

I listened to Mrs Hodge being interviewed on the Today programme on Friday and was frustrated by her outrageous slurs on our profession. The Treasury also disagreed with the criticisms saying the PAC’s analysis and conclusions:

“bear almost no resemblance to the reality of what government is doing or what is happening. In particular, as a matter of principle, the suggestion that government shouldn’t work with business, and indeed anyone affected by its policies, is totally absurd.”

Treasury Minister, David Gauke, was also critical of the report, saying:

“The idea that we shouldn’t make use of private sector expertise in developing a tax system that would bring investment and development to the UK is absurd. They’re not going out to advise clients on how to dodge the legislation, they’re going out to advise clients on how to abide by the legislation.”

As the FT noted, also critical of the ill-informed PAC report were ICAEW, CIOT and the trade union that represents senior staff at HMRC (The Association of Revenue and Customs). But of course most of the media have chosen to ignore such criticisms. They seem to like having someone new to criticise even if the facts do not support this. The media have got fed up of criticising MPs and the bankers.  I fear that accountants are to be identified as the new bogeymen. What do you think and what can we do about it?

ps: The other thing that worries me is that I know how biased and inaccurate Hodge and the PAC are on this matter. It makes me very cynical as to the reliability of other reports produced by the PAC and, indeed any Parliamentary committee. If this one can be so far off the mark, it’s likely that others are too. How much reliance should be placed on any of them?

Some of the recent headlines:

by

The end of accountants?

In early 2013 Professor Richard Susskind published a new book, ‘Tomorrow’s lawyers’. This included some updated observations of the views expressed in his previous book, published in 2008: The End of Lawyers? Rethinking the Nature of Legal Services.

As I share many of Professor Susskind’s views I thought I would pick out one theme for this blog. He has been suggesting that technology and standardisation would make lawyers less important. Even five years ago, in 2008, he felt that this was already having a major impact on the structure and future of law firms. Professor Susskind was clear that he thought the same principles would also apply to other service professionals. Could the same be true of accountants and tax advisers for example?

Professor Susskind effectively urges readers to ask yourself, with your hand on your heart, what elements of your current workload could be undertaken differently – more quickly, cheaply, efficiently, or to a higher quality – using alternative methods of working? The challenge we face is to identify what distinctive skills, talents and capabilities you possess that cannot, crudely, be replaced by advanced systems or by less costly workers supported by technology or standard processes, or by lay people armed with online self-help tools.

Professor Susskind’s view is that the market is unlikely to tolerate expensive advice that can be better provided through automation, low cost online facilities and the support of modern systems and techniques. I would agree. He also suggested that the legal profession will be driven by two forces in the coming decade:

  1. by a market pull towards the commoditisation of legal services, and
  2. by the pervasive development and uptake of new and disruptive legal technologies.

Again, similar changes have been impacting the accounting profession over the last five years. However I don’t think the changes have yet been as dramatic as Professor Susskind was predicting. But in essence I am sure he was right and that there lessons here for ambitious accountants.  I’m not sure that ‘technology and standardisation’ are making accountants less important but the role is evolving – in much the way that some accountancy commentators have been predicting for a lot more than five years.

As I have long maintained, most accountants evolve and change only when they absolutely need to do so. This often means that the extent of the changes are only obvious when we look back and think how different things were even just a few years ago. If you don’t think much has changed then perhaps your memory is playing tricks on you. Or are you resisting the impact of ‘technology and standardisation’? How much longer is that approach sustainable I wonder?

I am relieved that Professor Susskind believes that there will continue to be a market for bespoke advice and that many people will continue to be willing to pay for expert judgment, intuition and the application and communication of complex expertise. I was relieved to hear that in 2008 and I think it is still true now. After all, that’s just what the Tax Advice Network is all about!

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>>>

by

Portfolio careers for accountants

It’s now 7 years since I started the transition into a portfolio career and next month I will be speaking about this at an event organised by ICAEW.  Full details here>>>

Starting at 5.30pm on the evening of 13 May at One Moorgate Place in London, this event will be of use and value to other chartered accountants considering or planning a portfolio career. The areas being addressed by the 5 speakers include:

  • what a portfolio career is
  • how to identify what motivates you
  • how to effectively use networking to build your portfolio (This is my slot)
  • a detailed look at the role of a non-executive director
  • what it’s like working as an interim manager, and
  • how one member built a varied and very successful portfolio career

The evening concludes with drinks and light bites from 8.30 – 9.00pm

To book your place, please follow this link to the ICAEW website which contains full details. And do please come and say hello during the evening.

by

Why don't all accountants promote tax schemes?

I had to laugh when I saw this headline in the Times on Saturday: “Barrister loses dispute over tax avoidance”.  I checked it out and it’s true. A leading Tax Counsel has failed in his claims that a LEGAL tax avoidance scheme reduced his tax bill. In other words, it was ineffective.

Ten years ago Rex Bretten QC devised a tax scheme that was within the letter of the law and he sought to take advantage of this. HMRC were not happy and the dispute went to Court. As so often happens many years have passed since the tax planning was put into effect. Times have changed and the tax tribunal has disagreed with Mr Bretten’s analysis. He is not entitled to any tax relief for the £475,000 loss he was claiming would reduce his tax bill for 2002/03 by £190,000.

Shock; Horror. It seems Counsel’s opinion was wrong. Not for the first time. (That’s a comment re Tax Counsel in general). Sometimes their analysis holds up, sometimes it doesn’t. The one thing on which they are generally correct is when they confirm that it is legal to take part in such a scheme – assuming  that the taxpayer and the promoter of the scheme make full disclosure of all salient issues.

Last year I wrote a series of posts to which this latest development is effectively a postscript that endorses my views. In effect, tax avoidance schemes are risky and are rarely worth an accountant’s time and effort. Such schemes MAY be legal but this does not mean that the hoped for tax savings will be secured. And, if the scheme fails then, for most people, the final outcome will be worse than had they not undertaken the tax planning involved in the scheme.

As tax avoidance schemes are often over hyped and do not always work, these days it rarely makes commercial sense for professional accountants to devote time and effort to checking out each new scheme or variation that is promoted to them.

Related stories:

 

by

Why don’t all accountants promote tax schemes?

I had to laugh when I saw this headline in the Times on Saturday: “Barrister loses dispute over tax avoidance”.  I checked it out and it’s true. A leading Tax Counsel has failed in his claims that a LEGAL tax avoidance scheme reduced his tax bill. In other words, it was ineffective.

Ten years ago Rex Bretten QC devised a tax scheme that was within the letter of the law and he sought to take advantage of this. HMRC were not happy and the dispute went to Court. As so often happens many years have passed since the tax planning was put into effect. Times have changed and the tax tribunal has disagreed with Mr Bretten’s analysis. He is not entitled to any tax relief for the £475,000 loss he was claiming would reduce his tax bill for 2002/03 by £190,000.

Shock; Horror. It seems Counsel’s opinion was wrong. Not for the first time. (That’s a comment re Tax Counsel in general). Sometimes their analysis holds up, sometimes it doesn’t. The one thing on which they are generally correct is when they confirm that it is legal to take part in such a scheme – assuming  that the taxpayer and the promoter of the scheme make full disclosure of all salient issues.

Last year I wrote a series of posts to which this latest development is effectively a postscript that endorses my views. In effect, tax avoidance schemes are risky and are rarely worth an accountant’s time and effort. Such schemes MAY be legal but this does not mean that the hoped for tax savings will be secured. And, if the scheme fails then, for most people, the final outcome will be worse than had they not undertaken the tax planning involved in the scheme.

As tax avoidance schemes are often over hyped and do not always work, these days it rarely makes commercial sense for professional accountants to devote time and effort to checking out each new scheme or variation that is promoted to them.

Related stories:

 

by

Can you describe yourself using 3 adjectives?

If you had to choose, which three adjectives do you think best describe you, as a person, as an accountant? I doubt you would opt to include ‘Boring’ as one of the three.

It can be quite instructive to write down the three words you choose and then to ask other people how they would describe you too. Ask friends and family – people who will be honest with you; ask business contacts and colleagues too. But bear in mind that some people find it hard to be honest.

The words that appear on these lists of three adjectives will vary enormously. What happens when you compare these lists with your own choice of adjectives?

If no one has suggested the words or characteristics you have chosen then perhaps you need to reflect on the implications.  You could always ask people to indicate what they mean by each of the three adjectives they have chosen. Perhaps they have focused on the same characteristics as those you highlighted, but simply chose a different word to describe this.

You may be lucky and find that no one honestly thinks you are boring. That would be great. And, of course, you can’t please all of the people all of the time.  But if other people do consider you to be ‘Boring’ then you are the only person who can take action to change their perception of you. And it will take time.  Good luck!

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>>>

by

The only six ways accountants can increase their own profits

Over the years I have been refining my presentation (now called) “Make more profits from your smaller clients (without fancy schemes)”*

It seems that I have yet to include on this blog the opening summary in which I share what seem to me to be the only six ways in which accountants can make more money from their smaller clients:

You can:

  1. Increase your charges for doing the same work (which often means increasing the perceived value of what you do);
  2. Speed up the collection of your fees (this includes adopting more commercial billing strategies);
  3. Reduce the time you spend doing the work but keep the fees the same;
  4. Provide more services and charge accordingly for these;
  5. Encourage existing (good) clients to introduce new prospects (just like them);
  6. Sack the duff D-list clients who get in the way.

Of course this advice can be adapted to help clients make more profits in their businesses too. But it would be a shame to do this before applying the advice to one’s own practice wouldn’t it?

 * Variations on the same talk can be presented under a variety of titles, either in-house, at conferences or seminars, as required.

by

The world needs you to stop being boring – A message from Kid President

“Boring is Easy, everyone can be boring”.  Don’t take my word for it. Listen to this pep talk from Kid President:

Kid President is actually 9-year-old boy, Robbie Nova, who was born with Osteogenesis Imperfecta (“Brittle Bone syndrome”). His video has been seen by over 17 million people at the time of writing and is just one of many ‘Kid President’ videos produced by the people at Soul Pancake.

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>>>

by