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.

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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.

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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

 

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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>>>

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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 recent professional negligence case of Mehjoo and Harben Barker has effectively endorsed the advice I have been giving for years.

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

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>>>

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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 than variations on their headline were being repeated as fact: “Judge says accountants must help clients avoid tax”. The truth, as ever, is somewhat more nuanced.

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

The law 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.

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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:

 

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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!

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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

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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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