The 5 key social media risks to your practice

This post adopts a different approach to usual. In it I share 5 key social media risks and offer pragmatic advice to help you manage the inherent risks.

1 – Posts on behalf of the firm 

The biggest risk here is of boring your intended audience! Social media encourages interaction. This happens less frequently when the posts are not attributable to a specific person.

If you or a social media manager post in the name of the firm, you just want to ensure they don’t give, share or repeat dubious advice. You should give them clear guidance by reference to your firm’s strategy – and this will probably vary across different platforms. I’ve addressed this on previous blog posts.

I would also discourage you from saying “I” in any messages posted in the firm’s name. Will anyone know who “I” is?

2 – What you post yourself

Keep it professional and only give advice in direct personal messages to clients. You probably don’t owe a duty of care to strangers who might see and act on your advice posted on social media. But you want to avoid having to defend any allegations they might make that your advice was wrong.

You also want to avoid getting into public arguments over the advice or views you have shared on social media. Beware of the potential impact on your reputation. Keep it positive if you can.

Over the years I have become used to receiving feedback in respect of advice I share online. I tend to be very careful to avoid giving definitive advice as so much depends on context. This also means that I can generally diffuse any challenges I receive by accepting that another view may be valid in certain circumstances. What I never do is get into public arguments. If someone seems determined to pursue an argument I will allow them to have the last word. I prefer to allow my professional approach to speak for my reputation than my desire to have the last word and, in so doing, to encourage trolls.

You will also want to avoid breaching client confidences, sharing details of client meetings (that identify the client) of the advice you have given them. Remember that some social media platforms tag your messages with your location. So avoid posting anything from a client’s premises (or anywhere nearby) if you don’t want them to be identified.

3 – What staff and colleagues post

The same principles apply here as for your own posts of course. You will want to encourage professional behaviour, for everyone to accept responsibility and to be accountable for what they post online.

I also encourage accountants to consider whether they want everyone in the firm to be consistent in their descriptions and references to the firm, services and the nature of their roles on their social media profiles (especially Linkedin).

4 – What third parties post

More and more people use social media to complain about poor service. Would you want to know if someone is trashing your firm’s reputation?

Fortunately it is less likely to happen if you aren’t a big well known brand. But anyone (including ex-members of staff) could post a message of dissatisfaction about you or your firm. There’s rarely anything you can do to stop this. But you can reduce the impact by considering whether or not to reply in real time. This means reviewing any such references.

You can set up automated alerts to notify you when your firm’s name is referenced online (e.g.: google alerts). You can also set up a standard search on twitter to check every day or so.

If anyone has posted something negative you can then decide if it’s best ignored or if a comment/reply would be appropriate.

5 – Absence of social media policies

The more people there are in your firm the more likely you will want to establish social media policies for staff and partners.

Absence of policies and guidelines make it more difficult to take action if someone does something stupid. The normal employment rules apply as regards the actions you can and cannot take by reference to staff use of social media.

There is little point in just imposing social media policies without discussion. You need everyone to accept that the policies make sense and are practical. If they are onerous, impractical or unreasonable your policies could cause more problems than they solve.

Social media policies should address acceptable and unacceptable behaviour on social media generally. And then specifically: recruitment, bullying, defamation, data protection and privacy.

by

Ten practical tips to avoid negligence claims

So much has changed over the last ten years. On the other hand the essentials of good advice are largely unchanged. I first created the list below in 2008 by reference to elements of a talk I had presented over the preceding few years.  I am now presenting an updated version of the talk as part of the ICAEW Practitioners’ Essentials Roadshow on ‘Practice Protection‘. These ten practical tips bear repeating:

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 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 specialist colleague or a trusted third-party;

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 weekly practical topical tax tips for accountants in general practice from the Tax Advice Network.

by

How confident can you afford to be?

Not all accountants are full of confidence. And some of those who come across as confident are not – or should not be.

There’s an understandable desire to come across as confident in our profession. After all, who would want an accountant who seems unable to give confident replies to questions and requests for information?

In my experience accountants exhibit one of 3 different types of confidence:

1  Justifiably confident – Where they have the requisite experience and the knowledge. And they know what they don’t know and have the confidence to recognise this. I don’t know if it was ever reasonable to expect an accountant to know everything. These days it is more important than ever to manage client expectations. You may have some specialist knowledge and expertise but just like a GP, you sometimes need your clients to speak with a consultant or specialist – or you can do it on their behalf.

2  Overly-confident – Where they have an ability to cover up their lack of knowledge and in so doing take the risk that their client will find out after things go wrong (which they will)

3 Self delusionally confident – Where they exhibit confidence that is not warranted but are not consciously aware of their lack of knowledge.

And, of course there are also those accountants who lack self-confidence – Where they do not inspire confidence in their abilities and advice. Sometimes this attitude and approach can contribute to the perception that an accountant is boring.  An accountant’s lack of confidence is often most apparent, ironically, when they are perceived to be reluctant or hesitant to discuss fees.

When clients need or ask for advice that is outside your comfort zone (eg: on customs related issues) do you bluff it? Might you be overly confident? Or worse, self-delusionally confident? Both carry the risk of you providing negligent advice to clients.

One tip here; it won’t always work but it can help reduce the number of occasions when you take such risks: Imagine that the client whom you are advising is your mum, dad, brother, sister or close friend. Someone you really care about. Would you be prepared for them to act on the basis of your ‘confident’ views? If not, perhaps you should get a second opinion before giving definitive advice. And if you want a second opinion on tax matters, you’ll find a convenient vetted expert source through the TaxAdviceNetwork.co.uk

 

by

How to reveal all to the taxman

I was reminded recently of an article written a few years ago by Mike Thexton and published by Taxation magazine.

In the article Mike explained how he helped a friend who needed his help to ‘come clean’ re undisclosed earnings.

Mike said it all started with “the dreaded question”. This happens when someone asks for help in resolving a tax problem that requires knowledge and experience way outside your comfort zone. As Mike says, it’s because people tend to assume that accountants know about all things tax, just like they assume that doctors know about all things medical.

When I read this my mind immediately went back to a key paragraph in the’Guide to Professional Conduct in Relation to Taxation’:

“A member must not undertake professional work which he is not competent to perform unless he obtains help from an appropriate specialist.”

Mike complied with this advice and sought the input of a friend who chaired the tax investigation service at Baker Tilly, a top ten firm of accountants.

I’ve summarised below some of the key lessons drawn from Mike’s article:

  • “Do not do this by yourself if you have no experience” – This accords with the Guidance above and a key lesson from the recent professional negligence case of Mehjoo v Barker;
  • “Find someone who knows what to do. The client may baulk at the level of fees, but it is likely to be worth it in reduced trouble and penalties”
  • “What was unfamiliar to [Mike] was routine to someone who works in investigations.”
  • You need to address the underpayment of Class 2 NICs totally separately to the underpaid income tax and Class 4 NICs which were to be covered by the main settlement.
  • The relative speed of securing a full settlement with maximum mitigation of penalties when you know what you’re doing.

For others faced with similar situations I would suggest that the independent tax investigation specialist members of the Tax Advice Network should be your first port of call. 😉

I have also 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>>>

by

Watch out General Practitioner Accountants!

This salutary item is drawn from my talk and ebook on risk management and how to avoid professional negligence claims. The 2013 professional negligence case of Mehjoo and Harben Barker effectively endorsed the advice I had already been giving for years –  even though many other commentators believed otherwise.

Assume for a moment that a client is dissatisfied with your work. Maybe you’ve made a simple mistake. Maybe it was more complex. Maybe you’ve been negligent (allegedly).

If the client brings a formal claim against you what is the standard of care against which your work and advice will be judged?

Does it make any difference whether you hold yourself out to be a specialist or a generalist? It seems not.

If a general practitioner undertakes a task for which specialists are often engaged, the question to be asked is: Why wasn’t a specialist engaged on this occasion?

The chances are that the generalist will be judged as to the standards expected of a specialist because of the explicit obligation on all of us to only do work ourselves that we have sufficient experience and knowledge to undertake. To take one example – The guide to professional conduct for those advising on tax explicitly tells us that we should seek assistance if a client needs help or advice as regards an issue that we are not competent to deal with ourselves.

The lesson is clear: If a client needs help and you’re not confident that you have the necessary knowledge and experience to give definitive advice, don’t wing it. Find someone else in your firm or elsewhere who does have the necessary experience and knowledge to confidently give definitive advice.

When I was in practice I kept in mind the old maxim: Would I be happy to encourage my parents to act on my advice? If I wasn’t sure I got someone else’s input. I believe all ambitious accountants should do the same thing.

Readers of this blog are welcome to seek specialist tax advice and support from members of the UK’s largest network of independent tax advisers: The Tax Advice Network 

by

What the High Court really said accountants must do

No sooner had The Times reported on the High Court case of Mehjoo v Harben Barker in 2013 than variations on their headline were being repeated as fact: “Judge says accountants must help clients avoid tax”. The truth, as ever, was and remains somewhat more nuanced.

At the time I wrote a detailed piece for AccountingWeb analysing the decision from the perspective of general practice accountants. In my 1,500 word article I also explained the rationale for my conclusions which I have copied below for readers of this blog

The law had and has not changed. There is no new obligation on accountants to advise on fancy tax schemes. Nor is there any requirement for them to understand complex tax schemes. Thus there is no need to protect accountants from such a dubious obligation (as one commentator has demanded).

  • The judge did NOT criticise the accountants for failing to advise on a complex tax scheme.
  • They were also NOT held liable for failing to advise on such scheme.
  • There was NO suggestion that all accountants need to be tax experts.
  • And there was NO suggestion that the accountants should have been aware of fancy tax planning schemes. On the contrary.

The key issue is that in 2004/05 any reasonably competent accountant would have given a non-dom client the same advice. The accountants in question failed to do this and, crucially, they failed to refer their client to someone who had the necessary expertise to provide, what was, ‘standard’ advice at that time.

For most conventional clients the position would have been far less clear cut. The question would always have been – what would a reasonably competent accountant have advised? And was there a generally agreed ‘solution’ that anyone who really understood the situation would have advised be undertaken? Very few tax avoidance schemes would satisfy these tests.

In recent years very few reasonably competent accountants would give clients positive advice to get involved in a fancy tax avoidance scheme. Thus, as I have long argued, there is no serious prospect of anyone being successfully sued for failing to do this.

In the High Court the judge explicitly confirmed the advice in para 2.5 of the Guide to Professional Conduct for those working in tax. This forms part of the members’ handbook of most, if not all, of the major accountancy and tax bodies in the UK

The Judge  stated that the defendants were “reasonably competent generalist accountants” and that they therefore “had a contractual duty or concurrent tortious duty to advise the Claimant….that he should take tax advice from [specialist tax advisers].”

This is a long established and uncontroversial conclusion.

This case is however a topical reminder of the dangers of trying to go it alone. And of course allows me to remind readers that I established the Tax Advice Network in 2007 specifically to help general practice accountants.

You can choose any of the members of this independent Network to obtain specialist tax advice. And, as the Mahjoo case shows, you should seriously consider doing this whenever your clients have tax issues, challenges or situations that may require tax expertise beyond your day to day experience.

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

What do you do when clients are divorcing?

Two husbands withholding information have been jailed in recent divorce cases.  David Thursfield, previously head of Ford, went down for 2 years* and Scot Young for 6 months.   So failure to cooperate in court proceedings can seriously mess up your life.

You may have clients whose marriages breakdown and where one party or the other wants help in tracking down and valuing the assets of the other one. Alternatively you may find yourself trying to assist a client who would prefer not to make full disclosure.

There will also be tricky situations where you have been acting for both parties to a marriage. It’s then crucially important to avoid breaching any confidences and to only do what you are authorised to do under the terms of your letter of engagement.

Friends of mine run a unique facility called Harmony House – where they help warring couples to resolve their issues and keep the marriage going. It’s open 24/7!

The same friends also run a discreet legal practice supporting one party or another in divorce proceedings. What is special about Penny Raby & Co, besides the fact that the two principals are friends of mine, is their unique combination of skills and expertise:

Mike Gordon FCMA is a forensic accountant and trained mediator. He is also an associate member of Resolution – the specialist family solicitors group and will shortly be receiving one of my INABA awards! Mike’s wife, Penny Raby,  is a senior solicitor with over 30 years’ experience. She has a formidable reputation for achieving great divorce deals by firm negotiation. Penny and I ski together each year, as Mike is more of a golf guy.

An accountant like Mike can advise both parties on the disclosure process and clarify the finances which will be looked at by a divorce court.  If you don’t have the experience to do this yourself you’re taking a big risk if you try to wing it with divorcing clients. And you’d be in breach of the ethical code. Experienced advisers however will often enable clients to reach a settlement saving thousands of pounds in legal fees and a great deal of time all round. Top advice will also help keep clients out of jail for non-disclosure.

You may be aware that there is a current drive to find alternative means of settling divorce without court proceedings. Mike and Penny offer expertise in examining the finances which will not be available in most mediation procedures.

Yes I know this blog post reads a tad like an advert for my friends. Why not? You can contact Penny and Mike at Harmony House or on 01386 555114 and 07710 418395.

Postscript: Mike tells me that David Thursfield was sentenced to 2 years he hasn’t gone down yet – they haven’t caught him!

by

Five key tips if you are the subject of a complaint

I had the privilege of attending the ICAEW Support Members’ annual conference yesterday. I was there in my capacity as vice-chairman of the ICAEW Ethics Advisory Committee.

I thought it would be helpful to share a few of the learning points that may be of interest and value to accountants who find themselves the subject of a complaint.

The following five tips were shared by the Head of Investigation at ICAEW, but are, I’m sure, equally relevant to members of other bodies:

  1. Don’t bury your head in the sand; seek help and support early on**
  2. Focus on the facts
  3. Engage with your professional body when they approach you re a complaint
  4. Try to remove the emotion and address things as objectively as you can
  5. Explain any mitigating circumstances as early as possible

**Members of the ICAEW who are the subject of a complaint are welcome to take advantage of the Support Members’ scheme. Full details here: www.icaew.com/support  The volunteer team of support members are always on hand to act as a listening ear and offer non-judgmental assistance for working or retired members. The service provides free confidential advice to provide independent support for ICAEW members.

From personal worries about health, money or family to work-related concerns about professional ethics, regulation and discipline – support members are ready to listen.

The following ICAEW helplines are, perhaps, not as well known as they might be:

Support members
+44 (0)800 917 3526

Advisory helpline
+44 (0)1908 248 250

Library enquiry helpline
+44 (0)20 7920 8620

Free legal helpline
+44 (0)845 567 6003

by

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:

by

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.

by

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]. 

 

by

Failed tax avoidance schemes and dissatisfied clients

How long does a client have to make a claim that they were missold a tax avoidance scheme that doesn’t work?

First of all, let’s remember that it can be many years before it becomes clear whether or not a tax avoidance scheme was effective. It may well have the benefit of Tax Counsel’s opinion that it is legal. That doesn’t mean it works. Tax Counsel will also have advised that, if all the facts in practice are in line with those in the ‘instructions to Counsel’, then “in his opinion” the hoped for tax savings should be achieved.  HMRC are likely to take a contrary view and the real position will only become known after the Courts opine on the matter.

The Court of Appeal recently pronounced on a tax scheme promoted by PwC TEN years ago. I am sure that back in 2001 or 2002 Tax Counsel gave the sort of advice I have summarised above.  Nevertheless this is the third time that the HMRC have won in the case of Howard Schofield v HMRC, as it has already been heard by the first tier and upper tier tax tribunals. The potential losses to the Exchequer, according to the media, were about £11m. (Actually the tax at stake was CGT on £10.7m).

It seems likely that around 200 other taxpayers who entered into the same scheme (being advised by PwC and Tax Counsel that it was LEGAL) will also be affected. The £100m or so of total tax they thought they had saved will now become payable plus interest. Whether they will be able to recover the fees they paid to PwC for the decade-old advice remains to be seen.

It would be naive to assume that all 200 taxpayers will now simply pay up the tax they thought they had saved. Some may look to claim that PwC did not give them adequate warning of the risks and caveats relevant to the tax planning involved in this scheme. The same thought will enter the heads of many other taxpayers who find out, in due course, that the Courts side with HMRC rather than agree with the Tax Counsel who blessed the tax avoidance schemes they paid a fortune to benefit from.

One tax specialist accountant I know now focuses on helping taxpayers who were missold tax avoidance schemes. The President of the CIOT recently indicated that he could see this day coming. It’s here already! Claims are being made against promoters and accountants (and financial advisers). Not just for negligent advice but also for retaining commissions contrary to the CCAB ethical guidelines.

The Spotlights page of HMRC’s website has long highlighted “tax planning advice to be wary of” (ie: where it seems to be too good to be true). And now we have HMRC’s latest publication: “Lifting the lid on Tax Avoidance Schemes‘. This confirms some of the points I have long been making re the risks inherent in certain aggressive avoidance schemes and the lack of certainty as to their effectiveness.

But let’s go back to my original question. How long do clients have to register a claim? The answer is ‘it depends’. It depends on their knowledge and experience. It depends on when they could reasonably have been expected to realise that their adviser had been negligent. A three year time period runs from that date. In the case of the PwC scheme referenced above, the three years may well have run out by the time of the Court of Appeal decision. This is probably academic as I am not suggesting that PwC were negligent. But clients may still allege negligence in the hope of recovering the fees they paid for the scheme.

I am doubtful that many dissatisfied clients will be able to recover the tax they now have to pay by alleging the scheme promoters were negligent. And this will be the same with almost all failed tax avoidance schemes. The reason is simply that the client is no worse off than they would have been had they not undertaken the tax scheme planning in the first place. Their only loss is probably the fees they paid for the advice and maybe the excess of the late payment interest they have to pay HMRC, over the investment return they achieved by holding onto the money in the meantime.

If you have clients who are waiting for the outcome of court decisions as to the effectiveness of tax avoidance schemes you may want to consider carefully how you advise them. And, indeed, whether you are competent to advise on this. And that brings me back to the Ten things accountants need to understand about tax schemes.

 Related posts

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>>>

by

Accountants discouraged by ICAEW from advising on aggressive tax schemes

Although Tax Avoidance is no longer headline news we continue to see the repercussions of recent media stories. Last week I referenced the comments of the CIOT President. He suggested that there may be a need to consider toughening up the financial services mis-selling rules to attack the promoters and sellers of tax schemes that have no real prospect of working. I wrote about this here under the title: Is tax scheme advice comparable with investment advice?

Now it is the turn of the CEO of the ICAEW. Michael Izza has posted on his blog the most forthright comments I can recall on the subject. His words will shock some members of our profession. Although I would suggest that in the main these will be:

  • that minority who have been active promoters of tax avoidance schemes; and
  • those naive followers who enjoyed the commissions they earned and who have yet to realise that their blind faith in the promoters’ promises may not be justified.

Two years ago I wrote what turns out to be a prophetic piece on this blog.  It included the following:

“There are plenty of people who will tell you that you can generate a good commission whenever you persuade a client to ‘invest’ in a structured tax avoidance scheme. They are right. Such schemes are (usually) legal and fully disclosed to HMRC. So what’s the problem?

Let’s start with the need, for most qualified accountants, to comply with their professional body’s fundamental ethical principles. These include acting with integrity, objectivity and professionalism. Clearly this means only advising on things you understand and being clear that the prospect of commission is not uppermost in your mind when advising clients.  Of itself this does not preclude you from advising clients to consider structured avoidance schemes.”

I then set out seven key points that it is too easy to overlook when presented with an otherwise compelling proposition by an enthusiastic promoter of such schemes. You can read the full post here. Last week’s posts covered related points: Why weren’t all accountants promoting those tax schemes? and Ten things accountants need to understand about tax schemes.

It is now six years since I chose to give up being a tax adviser. One of the reasons I did so was an increasing concern I had re tax avoidance schemes and the ‘moral’ issues. Rather than impose my views on anyone else I simply stopped advising on tax issues. I therefore welcome Michael Izza’s recent comments and I was absolutely delighted to see such a clear statement from the ICAEW.  You can see the original here but I have copied it below to encourage debate here as well:

“I believe that there is no place for our profession in the creation or maintenance of these sorts of tax schemes.

As ICAEW Chartered Accountants, our code of ethics, which is the foundation for how we behave, is clear that we must do nothing to bring our profession into disrepute. Any members involved in aggressive tax planning through the sorts of schemes highlighted by The Times are doing exactly that, and are risking the reputation of the vast majority of our members who provide valuable and honest support to businesses and individuals and who want nothing to do with such schemes.

Looking at it through the public’s eyes, people find it hard to appreciate, let alone condone, the difference between avoidance and evasion, especially given the sums involved and the current economic situation. Anyone behind the type of tax schemes outlined in The Times must be aware that what they are dealing with is beyond the bounds of what is reasonable and responsible tax planning – all the more so if the schemes cannot be set out fully in writing or rely on information being conveyed orally.

In my view, taxpayers will increasingly want to be reassured that their tax affairs are dealt with in a responsible and professional way. ICAEW Chartered Accountants should be trusted to abide by our Code of Ethics and in the coming weeks we will be looking at what more can be done to reinforce that trust.

In these difficult times, any ICAEW Chartered Accountants who are engaged in the kinds of schemes highlighted in The Times need to look at themselves in the mirror and ask – am I upholding the honour and reputation of ICAEW Chartered Accountants and am I seen to be doing that? If the answer is no then they need to ask themselves whether they want to belong to our profession or not?”

As implied, I feel that my long-held views on the subject are vindicated and that the pressure on accountants to promote such schemes should reduce. Of course there will continue to be some grey issues and I know plenty of people will miss the point of Michael’s statement. It’s not anti tax planning. It’s not anti tax avoidance. It’s anti aggressive tax avoidance schemes.

I’d welcome your views and comments below.

by

Is tax scheme advice comparable with investment advice?

The CIOT has published a press release which I would encourage all accountants to read. It is titled: CIOT President suggests there may be a need to target promoters of dodgy tax schemes under mis-selling laws.

I welcome this statement as I have had similar thoughts myself. Many tax schemes require clients to make some form of investment. In effect they are making a judgement call (often not based on full information) that the scheme will produce a beter return than a conventional investment.

We know that financial regulations preclude us from recommending specific regulated investments. This is part and parcel of evidencing our independence – hence the further restriction on recommending tied investment advisers. Our professional ethics, which apply to those of us who are members of CCAB professional bodies, require us to disclose to clients all commissions and introductory fees etc that we earn from investment advice or from any other activity.

These same ethical principles also apply when it comes to advising on tax schemes. Commissions etc are disclosable to clients and we have a duty to evidence our independence.

The issue that has started to exercise my mind is why there is no commensurate restriction on our ability to promote unregulated investments – which would include loans, mortgages and funding providers as well as tax schemes.

Patrick Stevens, in his statement yesterday, suggests that

“there may be a need to consider toughening up financial services mis-selling rules to attack the promoters and sellers of tax schemes that have no real prospect of working.”

In my view this is only a step away from requiring accountants and tax advisers to be as cautious when recommending tax schemes as when recommending investments.

What do you think?

 

by

Ten things accountants need to understand about tax schemes

In the light of media reports related to ‘selebs’ tax affairs and their use of K2, icebreaker and other ‘legal’ tax avoidance schemes, some accountants may find the ten facts highlighted below to be of value.

As I explained in my last blogpost, (“Why weren’t all accountants promoting those tax schemes?“) the media reports are misleading when they imply that structured schemes are pretty straightforward or ‘easy’. The only other people who perpetuate this myth are either investing a fortune in developing the schemes or earning a commission by promoting them. Either way they can hardly be relied on to be objective.

Implicit in most of the recent media reports about the use of ‘abusive’ tax avoidance schemes is the idea that they are only for the wealthiest of taxpayers. This is partly due to the level of fees payable before a client can utilise the scheme. Leaving this to one side there are ten things accountants need to understand and remember about tax avoidance schemes:

  1. Accountants should only promote such schemes if they are comfortable doing so and are confident that they understand ALL of the risks and consequences for their clients;
  2. Accountants do NOT have to advocate structured tax avoidance schemes;
  3. Accountants who promote such schemes honestly will find that typically less than one in ten clients will proceed once they understand all of the risks and downsides;
  4. Accountants do NOT have to notify all clients that such schemes exist;
  5. Accountants are NOT at risk of successful negligence claims if they fail to alert clients to structured ‘abusive’ tax avoidance schemes;
  6. Encouraging a client to undertake a specific structured tax avoidance scheme is much like encouraging them to make a specific investment – is it something a professional accountant can do if integrity and independence are important qualities;
  7. It takes a fair amount of time to get to grips with all of the relevant details of a structured tax avoidance scheme and even longer to compare one with another;
  8. HMRC may announce a change in the law at any moment – leading to rushed (and perhaps botched) attempts to revise the scheme by the promoters. It is only a matter of time before the long-threatened retrospective changes are introduced to negate the hoped for tax advantage;
  9. Even after an accountant has committed loads of time to learning about a scheme they must still resist any temptation to act unprofessionally and to persuade a client to ‘invest’ if they might not otherwise choose to do so;
  10. If, some years later, the scheme is ultimately held not to work the client may sue the accountant for failing to adequately highlight the associated risks.

Together these ten facts should provide support for those accountants who choose not to advise clients on structured avoidance schemes. This list is an updated version of such lists that were previously published on the TaxBuzz blog.

I’d be very happy to explain or expand on the ten facts above and also to receive and debate comments below if you have a different view.

Related posts about tax avoidance schemes can be found on the TaxBuzz blog:

– Tax avoidance schemes – a simple guide
– Naive promoters of tax avoidance schemes

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>>>

by

Why weren’t all accountants promoting those tax schemes?

I imagine that some accountants are concerned that clients may have complaints in the light of the latest media stories about tax avoidance schemes. Such complaints will rarely be justified and would only arise due to some of the misleading reports of the way that Jimmy Carr, Take That and other celebrities have used the K2 and icebreaker tax schemes to avoid tax.

This blog post is intended to clarify two distinct issues.

Firstly if these schemes are legal why haven’t all decent accountants recommended them to their clients?  And secondly, if these legal schemes are abusive, why have they not been blocked by HMRC or by the Government?

Why weren’t all accountants encouraging clients into such schemes?

Contrary to the mystique that the promoters of such schemes like to create, these schemes are not as simple or as straightforward as media reports imply. The schemes are sophisticated and complicated. The promoters of the schemes promised their clients that the arrangements are legal. This is VERY DIFFERENT TO PROMISING THAT THE SCHEME IS EFFECTIVE.

The key issue is that as long as the scheme is legal no one can ever justifiably criticise the client for EVADING tax. All they have done is to AVOID tax as the scheme relies on a justifiable interpretation of the relevant tax laws. This is often not the only interpretation however (see below) and it may well be both artificial and contrived. When clients understand the consequences, risks and downsides of schemes like this they typically decide it’s not something they want to do.

Jimmy Carr explained: “I met with a financial advisor and he said to me: “Do you want to pay less tax? It’s totally legal.” I said: “Yes.”  Many people have intimated that they would have done the same thing and that’s perfectly natural. But there’s more to it that that as such decisions have consequences that need to be understood too.

If someone tells you that there is a legal way you could reduce your tax from 40% to 5%, would you jump through all of the hoops of a tax avoidance scheme? If it were that simple then of course most accountants would encourage their clients to do so. No one wants to pay more tax than is absolutely necessary.

The question is whether Jimmy and other investors in the scheme were provided with sufficient information to make an INFORMED decision. Many accountants know that clients in possession of the full facts rarely decide to proceed with such schemes. I know not whether Jimmy later changed his mind or if he invested without being provided with sufficient advice as to the nature of the scheme. I have however repeatedly explained on my TaxBuzz blog (see below) that these schemes are risky and carry various downsides. The list of these now needs to be supplemented by reputational risk if the media find out!

I have long maintained that accountants should NEVER encourage clients into sophisticated tax avoidance schemes unless they are able to explain all of the risks and downsides to the client. When this is done properly only a tiny percentage of taxpayers decide to proceed with the scheme. And because of this, very few accountants, these days, spend much time trying to keep up with the ever dwindling number of tax avoidance schemes that are being promoted. And, as I have explained ad nauseum on the TaxBuzz blog this is a perfectly rationale approach to adopt. It is also professional, credible, independent and commercial.

Let’s also remember that the upfront cash costs of entering into such schemes often mean they are only even worth considering for the wealthiest of clients who are prepared to gamble the sums involved. Then there’s the time it can take to determine whether or not the client wants to jump through all the hoops. And so on.

Why haven’t these legal but abusive tax schemes been blocked or stopped?

Readers will recall that the Chancellor, in his Budget speech, spoke of his disdain for tax evasion and aggressive tax avoidance, describing both as “morally repugnant”. David Cameron and Nick Clegg have made similar observations more recently. So why don’t they do something to stop these schemes?

Quite simply the media reports of how ‘selebs’ are avoiding tax through LEGAL tax avoidance schemes do not tell the full story. The ‘selebs’ may THINK they have avoided tax. The promoters of the scheme may CLAIM they have avoided tax BUT until HMRC conclude their enquiries the REAL outcome is not known.  Of course, as long as Tax Counsel has confirmed the scheme was LEGAL the taxpayer will not be prosecuted for tax evasion.

All of the schemes referenced in recent media reports are already or will now be challenged by HMRC. Media reports of HMRC investigating the K2 scheme and the Icebreaker scheme insinuate that this is only happening due to the media attention. What rot!

Our tax system has inbuilt delays in it when it comes to challenging someone’s tax position. Take That, for example are reported to have invested in the Icebreaker tax shelter in 2010. This would have been in the tax year 2010/11. HMRC enquiries into those tax returns didn’t start until they were filed (probably in January 2012). HMRC often highlight their concerns re schemes like these on the Spotlights page of their website. But until the Courts confirm HMRC’s view, as distinct from that of the promoter’s of the scheme HMRC cannot do much more. They often hold back from adding further complexity to our tax system unless they genuinely fear that the scheme works. In such cases they may recommend that new tax rules be introduced immediately to block such schemes. However HMRC often still challenge them in case all the steps and paperwork were not properly completed. This is another of the risks that taxpayers run. The scheme works in theory but only if all necessary steps are taken in precisely the right order, adequately evidenced and truthfully represent the underlying transactions. Often this is not the case and the hoped for ‘legal’ tax savings have to be repaid.

The interpretation of tax law on which a scheme depends for it’s success and legality will often be the subject of lengthy debate and legal hearings.  These challenges often drag on and on.There are some promoters of schemes who claim to have never lost a case in the courts. However when they make such claims it is rarely clear whether all avenues of challenge by HMRC  have yet started, let alone been exhausted.  Regardless of what the promoters assert, there are always risks of failure and of the hoped for tax savings being denied even when a scheme is LEGAL. And many years may pass before we learn whether or not the scheme was EFFECTIVE and the tax savings were permanent. So, the alleged tax savings enjoyed by Jimmy Carr and Take That may yet need to be repaid to HMRC.

EDIT 20 July 2012: We now have contemporaneous evidence in support of the above explanation. The Court of Appeal has just pronounced on a tax scheme promoted by PwC ten years ago. The case, Howard Schofield v HMRC, has already been through the first tier and upper tier tribunals and this is the 3rd time HMRC have won. This case alone involved potential losses to the Exchequer of about £11m. It seems likely that around 200 other taxpayers who entered into the same scheme (being advised by PwC that it was LEGAL) will also be affected. The tax they all thought they had saved will now become payable plus interest. Whether they will be able to recover the fees they paid to PwC for the decade old advice remains to be seen.

Related posts on the TaxBuzz blog:

by

A brave accountant admits he needs help and asks for it.

An accountant approached me last week to ask whether any of the members of my Tax Advice Network would be willing to work with his practice on a regular basis? The answer was ‘yes’.

The background to this accountant’s question was not uncommon. What I admired however was his desire to address the issue. And I was pleased he had chosen to ask for my input.

It wouldn’t be appropriate to identify the practice but the following broad summary suggests his situation is far from unuusal:

  • He is in his forties and has built up the practice over the last few years
  • He has a broad range of mostly business clients
  • His in-house (part-time) tax manager knows her stuff but is not someone to put in front of clients. And her letters and reports always need to be rewritten
  • He fears that some clients may be missing out and paying too much tax due to his reluctance to initiate conversations about anything beyond the most basic of tax planning; but he doubts many would be interested in ‘aggressive’ tax schemes
  • He has realised the practice needs higher level tax expertise but cannot afford to invest in a full-time person with appropriate level and breadth of knowledge. This also means he is unwilling to approach recruitment agencies
  • He has no idea how to go about finding someone appropriate or whether such a role would appeal to anyone good enough
  • He is concerned that he could end up with someone who is simply more expensive but otherwise similar to their existing tax lady.

Firstly I confirmed that I know there are plenty of independent tax advisers who work with accountancy firms like this one. In each case the parties agree an arrangement that suits them. This could include:

  • Weekly or bi-weekly visits
  • Flexible visiting arrangements
  • Ad-hoc telephone/skype and/or email help and support
  • Working as part of the firm or as an external consultant. Some accountants say their clients know the accountant is taking things seriously when he refers to his tax expert. (ie: Clients take the same attitude as patients do when their GP recommends a consultant).

Fee arrangements can also be flexible and may involve:

  • A weekly or monthly retainer – against regular invoices
  • PAYE for regular work as a part-time employee (with consideration of overtime arrangements if required)
  • Hourly invoiced rate for support provided by phone, email or face to face
  • Fees invoiced to the firm or to specific clients (the latter is only common for outsourced tax investigation cases or other situations involving substantial fees)
  • Or any other arrangement that suits both parties and reflects the arrangements between them. These may need to be reviewed after a few months

To proceed I suggested that the accountant use the simple search facility on the Tax Advice Network website to identify those advisers who are comfortable advising on ‘business tax’ issues. And then to add his postcode to sort the advisers and to show those located closest to him. He can then contact them by email or phone and have a chat.

Starting with our website means that the accountant is dealing with someone I have vetted as to their technical experience, is committed to undertake sufficient CPD and has a reasonable level of PI cover. Many general practitioner accountants might be less well prepared and yet it is important to check all such elements when recruiting tax support (whether to be on staff or only on a consultancy basis). Having said that every accountant needs to make their own assessment of the suitability of the tax people they engage directly whether or not they are found through the Tax Advice Network website.

by

Do you ensure your clients get the best advice or just your advice?

Accountants are naturally cautious about involving third party advisers. They don’t want to be forced to bill their clients more than last year. They also don’t want to bear the cost of seeking a second opinion.

This atitude means that some accountants muddle along and avoid admitting to clients that they have limited experience in certain areas. They allow and even encourage clients to assume that their accountant can advise on all areas of finance, business and tax. In taking this approach the accountant may take the risk of advising on specialist matters outside of their day-to-day experience.

Other accountants simply avoid advising on such issues even if they suspect that these could be to their clients’ benefit. And, despite the risk of negligence claims and of being reported to their professional body, this approach appears to pay off.

Few clients are aware of the ‘better’ advice they could be receiving. Few clients will know that their accountant’s advice is untested and based on out of date knowledge. And even fewer will be aware that their accountant actually has no first hand experience of dealing with similar problems or issues for other clients.

Why do so many accountants feel that it is a sign of weakness or incompetence to admit that they require specialist help? By way of analogy no one expects their local GP to be an expert in all areas of medicine and health. Indeed we would be pretty worried if a GP suggested we hop up on the bed so that they can open us up and have a look inside to see what’s troubling us. We expect to be referred to specialists and to different specialists for different ailments.

The best accountants operate on a similar basis. They ensure that their clients know the limits of their expertise. They have built up trust so that their clients are happy to talk to a specialist when necessary. And they have made clear to their clients that extra work and extra advice means additional fees.

What’s your approach?

I will continue this theme in my next blog post. In the meantime, if you want to get in touch with specialist tax advisers who can help you when issues arise outside of your day to day experience – simply go to the Tax Advice Network.

The above comments are taken from my contribution to a report, ‘GRF is killing the profession‘,  published by Bob Harper in 2011. He says it contains contributions from “leading thinkers, advisers and consultants to the accounting profession.”  (Ron Baker, Bob Harper, Dennis Howlett, Mark Lee, Mark Lloydbottom, Michael McKerlie, Finola McManus, Steve Pipe and Paul Shrimpling)

by

7 steps to resolving client complaints

Towards the end  of my talk last night on How to Handle Difficult Clients, I summarised a seven step process that I have not previously shared on this blog:

1 Listen to the client They won’t listen to you until you have listened to them.

When their mouths are open, their ears are closed.

2 Offer EMPATHY first.

Do not start with

“It wasn’t my fault”

Make clear that you appreciate their position.

Eg: “I can understand why you must be upset by that.”

Repeat if necessary.

[You are empathising, not sympathising and not agreeing that you, or anyone else, has done something wrong]

3 Ask questions

Upset people tend to start in the middle

Ask questions so that you can get the whole story and are able to understand their problem.
4 Pause Make clear that you’re not offering some ‘pat’ prepared response.  What follows needs to evidence that you have been listening to what they’ve said.
5 Explain what YOU can do for them Outline what YOU can do.

If it’s not what they want, explain your reasons without BLAMING them.

Take responsibility for the follow up action

6 Keep your promise Do whatever you said you would do and ensure that anyone else involves does so too  (as far as you can anyway).

Don’t simply delegate or dump it.

7 Go one step further This makes the difference between quite good service and excellent service.

Contact the client afterwards and ask if they are happy with the solution.

If they pause before saying ‘yes’ – they aren’t really happy. Go through the loop again.

by

Ever been tempted to be “too helpful”?

During my talks on “How to avoid professional negligence claims (or worse)” I explain that sometimes the cause is wanting to be ‘too helpful’. In such cases the accountant unwittingly oversteps the mark due and renders themselves liable to prosecution – which is clearly worse than being subject to a negligence claim.

I was reminded of this when I saw a report of a case about an (unqualified) accountant from South Tyneside who was jailed for his part in a £2.24m loan scam.  Paul Robertson provided forged documents from his South Shields offices to mortgage broker Martin Watson. Mr Watson used this documentation to falsify over 20 application forms he submitted for unsuspecting clients. The loans in question amounted to around £2m and generated substantial commissions for Mr Watson.

Mr Robertson apparently asked his staff to produce pay slips and P60s for Mr Watson’s clients. When Mr Robertson heard that the police were investigating, he told staff they should deny ever having done this.

The report references the Judge’s acknowledgment that Mr Robertson had played a lesser role in the fraud and had been running his business successfully despite having no formal qualifications.  Apparently the judge told him: “You say you were fearful of your co-accused, but you did have a choice to refuse his requests for false documentation.”

I wonder how often accountants do what they can to help a client only to find that they have started down a slippery slope?

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>>>

by

How sure are you that you’d survive a negligence claim?

Most people prefer to avoid thinking about this. Everyone does their best of course – though a little thought often reveals that they are taking more risks than they would choose to do so. And the public are getting more litigious – especially if making a claim enables them to avoid paying for advice they didn’t like.

When I present my talks on ‘How to avoid negligence claims‘ I often start by asking the attendees if the thought of a PI claim ever keeps them up at night. Most say ‘no’, others reply ‘sometimes’ and a few answer ‘yes’ and add further comments:

  • Convinced my knowledge is not as uptodate as it should be but working on it
  • Anyone doing a proper job will be sued at some point in time;
  • Could lose everything;
  • Failure to recognise a claim or a potential claim;
  • Fear of getting it wrong;
  • I have discovered some ‘Donald Rumsfeld’ type “unknown unknowns”;
  • I know I don’t know everything!
  • Because even though conscious of PI issues I am always prone to human error;
  • Due to the ever-changing laws, regulations and the purposive construction of the law;
  • In case I do something wrong that I’m not aware of.
  • Lack of internal controls;
  • Professional image, loss of clients, disciplinary issues with the Institute;
  • Reputational impact and interpretation of advice;
  • Some clients may misinterpret the advice we gave them;
  • Sometimes – if I know I have made a mistake.
  • The law is changing very rapidly and it’s difficult to keep up to date;

I accept that there is little point worrying about something over which you have no control. Remember the old adage: Worry is like a rocking horse; it gives you something to do but doesn’t get you anywhere.

The key point I am driving at when I ask the question during my talk though is whether you are aware of the risks you run in your practice and are taking an appropriate amount of precautions to limit the downside. As some of the respondents implied above, you cannot be in practice, whatever your profession, and not run the risk of making a mistake that costs a client money or of a dissatisfied client alleging that you have been negligent. Equally you cannot operate effectively if you are constantly worried about these risks.

In my talk about How to avoid professional negligence claims I encourage attendees to recognise that the risk of problems arising can be distinguished between those likely to have a big impact and those that will have little impact. Equally some problems are more likely to occur than others. Your response to different risks should depend upon their potential likelihood and their potential impact.

I have also 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>>>

by

Common sense required – you can’t blame your SatNav

A driver who drove his car to the edge of a 100ft drop after he “slavishly” followed its SatNav instructions has become one of the first motorists to be convicted for placing too much trust in his SatNav.

When I noted this news story today I was reminded of a comment I make during my talks about how to avoid professional negligence claims. It’s in the context of evidencing ‘good practice’. One way of doing this is to comply with your professional body’s Membership Handbook. In normal circumstances you might expect that if you can show that your actions were in accordance with the guidelines contained in the Handbook you would have a strong defence against allegations of professional negligence. But this is not the whole picture.

During my talks I focus more on the practical and commercial issues  than on the legal ones as I have an accountancy and tax background rather than a legal one. In this context I make the point that, whilst the position is not free from doubt, slavishly following guidance that is patently wrong may not be a good enough excuse. There is some precedent for this in the world of medical negligence.

We need to recognise that some of the guidelines in membership handbooks may be out of date – and that the Courts will expect professional advisers to apply common sense. The test will be what would a reasonably competent accountant have done in the circumstances. If this would differ from the membership guidelines then you should have done so too. It seems the same is true for drivers – is it reasonable to follow your SatNav instructions if they are clearly wrong? The report today suggests the answer is ‘no’ – and you can’t get off by blaming your SatNav.

I don’t imagine that the recent ‘SatNav’ case will figure in future courses about professional negligence but it is a useful reminder that we are all expected to apply common sense rather than slavishly following generic guidance that may be out of date, irrelevant or dangerous.

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>>>

by

Engagement letters for accountants

It’s almost a year since the professional bodies published their updated guidance on engagement letters for tax work. This was the culmination of a thorough review by a working party that I was proud to chair on behalf of the contributing bodies: ICAEW, ICAS, ACCA, CIOT, ATT, IIT, CIMA.

I wrote a number of articles on the subject for the professional press and online forums. eg: AccountingWeb and Tax Adviser (March 2008). I also explained our approach in a posting on the TaxBuzz blog.

And most of the bodies published the updated guidance on their websites for members. More recently this has been updated to reflect one last schedule that we added for those who want to advise on tax credits. (Incidentally I’ve explained elsewhere on this blog why I think it’s important to at least cover the basics on the subject of tax credits).

The reason for this post now is that for whatever reason I have started to receive more requests for links to the online guidance. And some people are asking for guidance as regards non tax related issues too.

Rather than keep cutting and pasting content I though it would help to put all of the links in one place.

I have also included  a link here back to a recent piece I wrote about disengagement letters as this may also prove useful.

by

What is it that can go wrong?

Over the years I have collected dozens and dozens of stories of what it is that has led to problems for accountants. Such examples help inform my talks about how to avoid negligence claims. It’s also worth recognising how easy it is for things to go wrong; after all they do say that forewarned is forearmed.

So here is a selection of real life situations that have led to negligence claims against accountants. Don’t get caught out yourself:

  • Unexpected obligations to overseas tax authorities
  • Difficulties with liquidators due to auditors being officers of the company
  • Failing to provide all relevant information to successors
  • Failure to evidence independent advice as a trustee
  • Difficult clients not providing all relevant information
  • Nightmare clients who are not clear as to what they want
  • Continuing responsibilities after ceasing to act for a client
  • ‘bad’ partners in the firm
  • Counter claims when pursuing outstanding fees
  • Going beyond agreed scope of work and level of own competence
  • Failure to spot employee fraud
  • Clients who lose confidence due to poor communication
  • Lack of clarity re scope of work and responsibilities
  • Adverse media reports after disgruntled client leaves
  • Casual relationships
  • Third party (or interested party) putting pressure on client to complain
  • Failing to spot technical issues
  • Valuation related work when subsequent sale suggests a very different figure
  • Clients looking for someone to sue

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>>>

by