Keen to recruit your first tax partner? 8 key questions

One of the most common questions I’m asked, often by recruiters, is if I know a prospective new tax partner for a smaller or mid-size practice.

Sadly I can rarely help directly – especially if, as is usually the case, the firm would like their new recruit to have a following (ie clients and fees).

In such cases I suggest that there are a number of  key questions the existing partners need to consider and to effectively promote;

  • What do you have to offer a partner with a following?
  • What do you offer to a frustrated senior manager/director who isn’t being made a partner at his present firm?
  • How can you be sure that someone who is prepared to move in the current environment is worth recruiting?
  • How attractive is your offering (across the board) as compared with that offered by the myriad of other firms keen to recruit the same people?

You have probably already considered the economics of bringing in a new partner. And that’s why you hope that they will have a following so that they can pay for themselves. For a while anyway. So, why should they bring their clients to your firm?  Be honest. And if you can’t convince yourselves you will simply waste an enormous amount of time seeking the holy grail.

There are other questions to consider too:

  • How much tax advice work will you and your partners really allow the new partner to deal with? Will you all be able to ‘let go’?
  • How much latent tax advisory work is there really in your existing client base? Is it that you’ve simply not been pro-active (perhaps due to a lack of tax technical knowledge) or would that not matter as your clients are largely risk averse and keen to keep their fees down?
  • Is it a salesperson you need? This make your ‘search’ even tougher. You want a personable tax partner, with good technical skills and an ability to ‘sell’ ideas to clients – to generate good fees. Such people are few and far between.
  • How wide does the new partner’s tax knowledge need to be? SME business tax? Private client tax? Trusts and IHT? SDLT? VAT? Everything? That’s a tall order too. Some firms find that the amount they spend on external tax specialists goes UP after they bring in their first tax partner. The simple reason is that he or she knows what they don’t know. And they tend not to want to take risks. And they know that quality specialist advice rarely comes cheap. The good news is that such additional fees tend to be covered by additional fees so they’re not usually a net cost to the firm.

So what to do?

My standard advice is to stop looking for the holy grail. Instead adapt your recruitment plan and find a very good senior manager who has the ability to become a tax partner but whose path is blocked in their present firm.

Another very underused solution is that of

arranging for an independent tax specialist to come into the office regularly to talk with partners and to review files for planning opportunities etc. This could be arranged on a weekly, fortnightly or monthly basis after an initial getting to know you session.

Best to think about how that initial session will work – do you want to make it a quasi interview (no charge) or are you going to do that over the phone and then expect constructive advice when he or she is on site?

The cost of this solution will always be far less than the alternative of bringing someone new in on a full time basis. We also tend to underestimate the time and time taken by briefing headhunters, interviewing and sorting out agreements etc.

In time such an independent could end up doing more and more work for you. They can even help with recruitment – especially as regards the tax technical side of interviewing tax staff at all levels.

For the record this was my considered advice long before I established the Tax Advice Network. But, yes, a number of our vetted tax adviser members are happy to provide tax advice clinics for local firms of accountants. One or two have even left us when they went full time in firms with whom they had built up strong relationships.


Accountants ‘just do the accounts and tax returns’

Today I quote selectively from the blog of one of the members of my Tax Advice Network, Jon Stow. I’ve added a few words of commentary of my own.

Most business owners will tell you what they think their accountants do: they prepare the accounts and do the tax return. They probably think of this as pretty much a process. There are two misunderstandings implicit in that sort of thinking; the first is there is a sort of sausage machine at work and that you put in the figures and get a certain result, and the second is that there is no room for manoeuvre.

How would your clients describe the services you provide?  Is it just preparation of accounts and tax? In most cases the answer is ‘yes’ although you may have a few clients where you focus on helping them to build their business. Is this because you have agreed additional fees for doing this or simply because they haven’t screwed your basic fees down and you feel you can afford to spend more time with them?

What business owners should expect from their accountants is not just the “doing”. Business owners should expect from their accountants some thinking in terms of the tax side of things. Most accountants will deliver this. Those that fail to do the thinking may be the larger firms who will use their junior staff to cut their teeth on “smaller” companies and who do not have the experience to think. Sometimes the very small firms are rushed off their feet to do all the accountancy work and are not able to think properly about the tax process beyond doing basic tax calculations.

This latter point being one of the reasons that so many firms sub-contract tax advice to independent tax advisers, like those who are members of the Tax Advice Network.  Members can help on ad-hoc matters or provide tax clinics and visit your office on a regular basis. Better you engage them than you leave your clients to source specialist tax advice that they assume is beyond you as you ‘just do the accounts and tax returns’.

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


Articulating specialisms – can you do it?

I spent last night in the company of numerous ex colleagues from WJB Chiltern. It Was great seeing do many old friends. What has prompted this post though is a realization I had part way through the evening
Almost without exception everyone of my Chiltern Alumni was working in onevof two types of firm.  Either they are Now part of a big accountancy or law firm or they are a key member of a niche practice. Indeed the majority were in such practices. The speciialisations ranged from Tax investigations to VAT on yachts to high net worth private clients to simple accountancy to trusts and estates work. I also met a number of ex colleagues who will shortly leave their current firm to establish a new niche practice. And good luck to them.
Every single one of the people I spoke to last night could articulate their area of specislism. None talked in generic terms if being a tax adviser or an accountant. They arexall successful and will remain so. They have a clear ficus and a niche. Do you?

Last week I spent a very enjoyable evening in the company of dozens of ex colleagues from WJB Chiltern. I left Chiltern over 6 years ago. Most of my ex-colleagues have also moved on – indeed what’s left of Chiltern is now owned by BDO.

It was great seeing so many old friends. What has prompted this post though is a realisation I had part way through the evening.

Almost without exception everyone of my Chiltern Alumni is now working in one of two types of firm.  A minority are employed by a big accountancy or law firm. The majority however are key members of niche accountancy or niche tax practices.  In each case they have a clear focus and  specialisation. These range from Tax Investigations to VAT on yachts to high net worth private clients to trusts and estates work. I also met a number of ex colleagues who will shortly leave their current firm to establish a new niche practice. And good luck to them.

Every single one of the people I spoke to last night could articulate their area of specislism. None talked in generic terms of being a tax adviser or an accountant. They are all successful and will remain so. They have a clear focus and a niche. Do you?

(Yes, some of those I spoke with last week will become members of the Tax Advice Network. After all, it’s a marketing portal for tax specialists and will increase the level of referrals they receive. Like my ex-colleagues, every one of the tax adviser members, who operate as independent specialists, has clear areas of expertise)

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


Do your prospects have an appetite for tax schemes?

Talking with a tax and financial adviser recently he told me that his firm is a heavy promoter of tax schemes. Not a great fan myself I said. His reply was almost the complete opposite of what I had expected:

“I’m not surprised” he said. “Few people actually go ahead and implement the schemes.”

“So why do you promote them so heavily?” I asked.

“Simple. It gets people through the door. We tell them what they could do and then when we explain the risks they just don’t have the appetite. But they like our approach and become clients anyway.”

This reply reminded me of the conversation I had in the Spring with the head of tax at a reputable tax consultancy. After he has explained the detail of a tax scheme to his clients they invariably say:

“Now I understand it properly, why would I want to go into a scheme like that?”

I explained this further in a post on the TaxBuzz blog: “Have a look at this scheme and tell me what you think”

Coming back to my tax advising IFA. Would you feel comfortable leading with a superficially attractive service offering if experience tells you that most prospects will reject it – albeit they may choose a different service?


Adverblog: Cost effective vetted tax support

I mentioned the Tax Advice Network in a recent post for the first time in ages. Newer readers of this blog who haven’t read the mini profile piece (top right), may be unaware of the Network.

Established in 2007 the Tax Advice Network is a resource and facility for accountants in practice. There’s no charge for sourcing an independent vetted tax adviser through the Network. You can do this whenever you hit a tax problem, challenge or situation that’s outside your comfort zone. Every accountant has such situations – occasionally at least.And the Network website enables you to quickly access a tax adviser with the relevant expertise and in the right area.

Perhaps even more relevant to readers of this blog is the weekly newsletter published by the Tax Advice Network. It’s free to register for this: Every Thursday you will receive the newsletter containing 3 practical, timely and commercial tax tips with advice and relevant links – written specifically for general practice accountants.  It’s unique and highly regarded by those who receive it.

Ok. Adverblog over. Back to conventional blog posts tomorrow.


In-house Tax Directors seek tax support from non-auditors

It seems that many in-house Tax Directors do not use their auditors for tax work and advice.This is one of the conclusions from Winmark’s third benchmarking survey of in-house Tax Directors.

Out of over 100 respondents to the Tax Director Network survey, only one-third use their auditors for corporate tax planning, and only a quarter use their auditors for international tax planning or even tax disclosures in the accounts.

Many Tax Directors also made clear why they prefer to obtain advice from other Big 4 firms. Tax Directors cite conflict of interest, the need to obtain audit committee approval and the level of fees involved. Higher costs arise when the auditors have to obtain second opinions where they cannot audit their own firm’s advice and that advice could have been obtained at lower cost elsewhere.

Two-thirds of the Tax Directors who responded to the survey use external advisers other than their auditors for corporate tax planning. Even more use other Big 4 firms for VAT advice and over half use other Big 4 firms for international tax planning.

When I was in practice, all the talk was of ‘cross-selling’ additional services to audit clients. Clearly this no longer a worthwhile use of time and effort – at least as regards larger corporates.

Are FDs in medium-sized companies (ie: those without in-house tax directors) as reluctant to seek tax input from their auditors I wonder?  If that were the case then what is the future for firms outside the Big 4  who expect to cross- sell to their audit clients? Should the focus be on other services rather than tax advice?

There is an ever increasing need for auditors to be seen to be independent. This survey suggests that the number who are able and willing to audit the impact of advice provided by their tax colleagues will continue to fall.

Copies of the executive summary of the survey report are available on request from Winmark Research. The full report will only be available to members of the Tax Director Network and to others who completed the survey.


How to boost the tax capability of a general practice

Every now and then I hear about general practice firms of accountants which have determined that they want to provide a higher level of tax service to their existing clients. This is often the case in more forward thinking practices where the partners recognise that they are limited in their own abilities and that they need someone else to check out their files for tax planning opportunities, to put tax advice in writing and to attend meetings with clients to provide a more tax focused service.

Provide tax schemes?
Boosting the firm’s tax capability can be a worthy objective although sometimes it’s a euphemism for offering tax schemes and products. I addressed this issue in a recent blog post: Selling tax schemes is NOT a route to riches.  If the partners do not understand this they WILL be disappointed.

Tax manager
Some firms recruit a tax ‘manager’ in the hope that he or she will fill the gap. And if the firm is lucky this may well happen. I always wonder however in such cases – How do the partners know that the tax specialist’s advice is correct? If there is no one else in the firm with the requisite expertise, this is a big risk, especially with a relatively inexperienced tax ‘manager’. Often they may feel under pressure to impress their new partners – especially if the carrot of ‘partnership’ depends on the partners’ perception of their performance. Again I addressed this in a recent post: Confidence is good – but not if it’s naive or deceitful.

If the new recruit causes a problem – which will often only become apparent down the line – either the partners will have to bear the loss or their PI policy will suffer a claim.

New recruits are also an expensive option. Over and above the recruitment costs and induction time it can be a while before they start to pay their way.

Merge with or takeover a tax only practice
I was asked my views about this possibility recently. I suspect it’s a dream that will rarely be realised. Tax only practices are generally set up specifically to avoid the distractions of providing accounting and auditing type services. Why would a successful tax practice want to merge with a general practice firm of accountants?

If such a merger or takeover occurs the tax specialists are likely to want to reduce the risks to the practice of general practice partners providing tax advice without it first being ‘checked’. This will often give rise to conflicts as the general practice partners are not used to having their advice double checked or to being constrained as to what they can advise on.

Merge or takeover a one-man band tax specialist
This idea suffers from much the same downsides as have already been mentioned. It can be worse however as there is the added risk of the individual retiring, dying, going sick or leaving shortly afterwards. Although such risks may be considered small the prospect of one of these may have been the prime motivation for the tax specialist agreeing to the deal.

The partnership will want to limit the upfront costs of recruiting a tax partner by requiring that the new person has a following. However very few tax specialists with a following would feel comfortable taking their clients into an environment that has not previously provided clients with specialist tax advice.

If the tax specialist or partner does join the firm their focus will be on their existing clients. What will motivate the specialist to make time to explore opportunities to provide tax advice to the firm’s existing clients?

Tax contractor support
In my view this is the best solution – at least as a first step towards building in-house tax expertise.

It will often be easy to identify someone who has the requisite expertise and is available to help out on a part-time basis. They remain self employed and provide their services to the firm on a contract basis, perhaps one day a week for a few months.  This option is also more cost effective for the general practice firm as they bear no employment related costs. In the event that any problems arise the relationship can be terminated quite quickly and any claims made will be against the contractors’ PI policy.

It may be that more then one such specialist can be identified – perhaps one to focus on IHT issues, one on VAT and one on corporate tax matters. (There are many other such topics too of course).

Multiple adviser tax support
Whichever route a firm follows they should appreciate that, these days, hardly any tax adviser can cover off and advise on all tax matters. If you have just one or two in-house  senior tax specialists, you should expect them to want to seek confirmation or support from a third-party ever now and then.

Tax Advice Network
This supportive network provides over 2,500 accountants with access to dozens of  vetted independent specialist tax advisers across the UK.  These tax advisers are categorised by their areas of expertise and location.

You can contact any of them for specific,  general or tax contractor support as described above.  And yes, as implied above, much of the time these independent tax advisers are providing second opinions and support to the tax specialist managers and partners in firms, as well as to general practice partners.


Selling tax schemes is NOT a route to riches

I recently blogged about the 5 things accountants can do to make more profits. Selling tax schemes was not on the list. Why not?

Quite simply because the idea is vastly over rated, over hyped and mis-understood. (Typically by non-tax specialists).

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. But it’s worth bearing in mind in the context of the following points:

  1. Encouraging a client to undertake a structured tax avoidance scheme is much like encouraging them to make a specific investment;
  2. It takes a fair amount of time to get to grips with all of the relevant details of a structured tax avoidance scheme;
  3. 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;
  4. Having committed all that time to learning about the scheme there may be a temptation to persuade someone to ‘invest’ even if they might not otherwise choose to do so;
  5. If, some years later, the scheme is ultimately held not to work the client may sue the accountant for failing to adequately highlight the risks.
  6. Accountants should only promote such schemes if they are confident that they understand ALL of the risks and consequences for their clients;
  7. Accountants who promote such schemes honestly will find that typically only around one in ten clients will proceed once they understand all of the risks;

And it is this last point that explains the principle reason why I say that selling tax schemes is NOT a route to riches. Perhaps things were different ten years ago, before DOTAS, before the Courts adopted a more principled approach to legislative interpretation and before HMRC started to adopt such an aggressive response to tax avoidance schemes.

These days though there is plenty of evidence that when clients are fully appraised of the risks and downsides of schemes, they say things like:

“Now I understand it properly, why would I want to go into a scheme like that?”

And, just as I concluded a few years back, there is a limit as to how much you can charge a client in such circumstances for the time and effort involved in reviewing, checking and advising on the scheme – especially if the client decides not to proceed. This is one of the reasons that promoters pay high commissions. It is partly to compensate for all of the conversations and meetings that do NOT result in a client signing up for the scheme.

If you are focused on generating more profits there are many more productive ways to spend your time than learning enough about tax schemes to be able to promote and sell them to your clients.

I have written more extensively about the risks and downsides of tax avoidance schemes on the TaxBuzz blog.


Disengagement letters

Let’s face it, few accountants have detailed procedures in place to ensure they do all they need to do when they lose a client. The simple reason for this is that it doesn’t happen often enough to warrant a detailed procedure and even when it does occur there’s rarely a problem.

The larger firms lose more clients across the board and tend to have procedures in place to reduce the prospect of problems arising down the line. One of these procedures is a proforma disengagement letter.

This is a concept that I frequently advocate during my talks on ‘How to avoid professional negligence claims and worse’. Simply stated the use of such letters can help minimise the prospect of continuing liability to ex-clients and also to those who do not reply to requests eg: for information required to complete tax returns or accounts.

What should be addressed in a disengagement letter? I suggest the following:

  • A summary of services provided up to the date of ceasing to act;
  • A note of any further action to be taken by the adviser;
  • A note of any outstanding matters that either the ex-client or the new advisers will need to address;
  • Details of any impending deadlines and the action required;
  • The adviser’s willingness or otherwise to assist the new advisers resolve outstanding issues with HMRC or others; and to provide copy papers to the new advisers or to allow them access to files;
  • If relevant, details of any outstanding fees; and finally
  • A note indicating that the adviser has told HMRC that he is no longer acting for the client and that until further notice all correspondence should be sent only to the taxpayer.

Anything else? Please share your veiws as comments on this blog post.


Do you treat clients like lab rats?

Probably the most sensible thing any adviser can do is to recognize their limitations.

Most accountants are like GPs. Great at dealing with day to day issues. Every now and then though when you visit the doctor they recommend you see a specialist. Indeed you’d be very worried if the GP suggested you hop up on the bed so that he can remove your kidney, operate on your back, undertake a brain scan or whatever.

In the same way there is no shame in admitting to clients that occasionally you have to involve other specialists to ensure that the client gets best advice. This will invariably enhance your relationship with clients than either of the alternatives:

  • Avoiding the issue – to avoid revealing your lack of knowledge/experience;
  • Guessing and using the client as a lab rat (test subject) and risking the consequences of giving incomplete or incorrect advice

When you need a second opinion or want to refer work to a specialist, obviously I would like you to choose one of the vetted independent specialist tax adviser members of the Tax Advice Network.  The options however include:

  • Tax expert colleagues in the office
  • Colleagues in other offices
  • Tax expert friends at local events
  • Professional fees insurer
  • Tax Faculty referral scheme
  • Business Mentor/coach
  • Larger accountancy firms
  • Larger tax consultancy
  • Independent external tax support – such as Tax Advice Network

It’s also worth noting that the Guide to Professional Conduct, applies to all members of the largest professional tax and accountancy bodies. It states that:

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

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>>>


80% of corporate insolvencies are caused by poor financial management

I’m told that this is the view of a senior Insolvency practitioner. What does that say about the advice being provided by accountants?  Are they just missing out on opportunities or are they failing their clients? I’d like to hope that this doesn’t apply to any of the regular readers of this blog (if there are any!)

In  a recent posting on this blog I suggested that: Accountants need to show they really are business advisers as we move into recession.

Let me take that idea further and offer a theory I have developed. It’s drawn from conversations with many accountants over the years.  It’s not a universal truth but it may explain the statistic above.

Most business clients go to an accountant because they want to pay less tax not because they want a set of accounts. To the extent that the business owner wants the accountant to do accountancy work it’s largely because they need their accounts for the bank, for their funders and for the taxman. And many accountants are happy to focus on providing these backwards looking tax and accounting services.

The challenge is for the accountant to help their business clients appreciate the need for effective financial management before it’s too late.  If you look at accountancy firm websites and promotional material however this is not an area on which many of them focus.  And they aren’t well placed to ‘sell’ such services to new clients as an additional spend over and above the quoted fees for the traditional compliance work – unless the business is already in financial difficulty, in which case it could all be too late.

Many accountants would prefer to focus on providing the traditional services that they have always provided year in and year out.  Expanding into the provision of additional services might mean first devoting time to developing additional skills so as to be confident that the advice they provide will be worthwhile.

When clients require tax advice that is outside of the accountant’s area of expertise they can involve external specialists (eg: at the Tax Advice Network). But what about when a client needs solid help to implement effective financial controls? Rather than ignore the situation the accountant could outsource the provision of advice in effect by engaging an independent specialist who has the expertise, experience and time to work with the clients who need help.  My friend David Lewis for example.

I should also stress that even when the accountant offers to assist in the preparation of regular management accounts this is still not the same as helping the client implement effective financial management controls and procedures.

It seems likely that far too many corporate insolvencies can be attributed to poor financial management (whatever is the true statistic). Are accountants to blame or are they simply missing an opportunity to help their clients and to earn valuable additional fees in the process.

What do you think?


If in doubt – imagine you’re advising a loved one

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 test.  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.

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

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


Does the impending recession provide more or fewer opportunities for accountants?.

As the preparation continues for a new seminar I’m presenting next month I started to think about the specific tax advice that might be relevant as the economy moves toward a recession.

Let me stress that I’m referring here to the technical definition (two consecutive quarters of negative growth). From a  personal perspective I see more rather fewer business opportunities.  What about you?

Have you considered, for example the range of generic tax saving ideas that you could mention to clients? Remember they won’t know you’re thinking about ways to save tax if you don’t tell them – face to face is best; otherwise at least in emails and newsletters that you send to them. ( I addressed this issue in a previous blog post: Getting straight to the answer may not be best).

Here’s a short list of simple tax ideas off the top of my head:
– ensuring that clients are claiming all allowable business related expenses as deductions from their taxable income;
– moving suitable clients onto the VAT flat rate scheme and reducing the VAT they pay each quarter;
– maximising the claims for capital allowances;
– securing early relief for trading losses;
– taking advantage of the tax free benefits in kind that even owners of their own company can have;
– reviewing the balance of salary and dividends paid out of their own company;
– registering for tax credits so as to ensure they can get maximum amounts if their income is lower this year than they had hoped;
– claiming all available allowance and reliefs;
– switching to a car that qualifies for additional tax reliefs (in terms of the offsets available against business income);
– seeking a repayment of the sums paid on account in January and July this year if their tax liability for 2008/09 is likely to be lower than it was in 2007/08.

There are also ways to plan to reduce other taxes too – such as capital gains tax mitigation, inheritance tax planning and the taxes that can arise when reorganising groups of companies, such as on demergers or sale. Falling share and property values actually present specific tax planning opportunities for the wealthy – in terms of CGT and IHT, also for those companies wanting to incentivise staff through share option schemes.

Not all accountants have the necessary specialist expertise to advice on such matters. And it’s rarely low cost advice so it’s not for everyone. Many accountants outsource such specialist tax expertise. And that’s another win:win opportunity in the current economic climate.  It must be more cost effective to use the services of vetted independent tax advisers than recruiting or replacing full time in-house tax experts. More info at: (where you’ll also be able to sign up for our free weekly practical tax update written especially for accountants in general practice).

I’ll be addressing these and many other subjects in a talk I’m giving to accountants next month: Mastering the credit crunch – your practice, your advice, your future.

So, going back to the question I asked in the heading to this blog post: Does the impending recession provide more or fewer opportunities for accountants?
My own view is that there certainly aren’t fewer opportunities. There may be fewer people willing pay good money for advice, but if the cost/benefit equation is right then there’s no need for accountants to worry. Service and value for money are as important as ever.
What do you think?


Tax Return completion – tips and advice

Where does the time go? It’s almost exactly two years since I recorded my first webcasts. They are still viewable from the ICAEW Tax Faculty website.

1. Collating clients’ Tax Return information

2. Billing the Tax Return work [the ICAEW link for this webcast doesn’t seem to be working at the moment]

3. Quoting for tax compliance work

They each contain around around 5 minutes of tips and advice and were intended to help accountants to avoid disappointing and losing their clients.
I recall suggesting that it might be best to use a teleprompter for the recordings but none was available. That’s why you can see me referring to my notes. Other than that I think the webcasts are fine and I know they contain useful and commercial soultions. All of these are covered in more detail in my talk: How to make more money from your tax clients.

This year we have a new 31 October deadline for submitting paper based tax returns. This replaces the 30 September deadline referred to in the webcasts. Other than that the advice should be equally valuable this year as it was in 2006 when the recordings were made.

I hope you find them helpful – although the technology has moved on quite a bit in the last two years.


How far do you go?

This was another of the thoughts I had during the workshop that followed an E-business for accountants seminar that I attended. (I’ve already commented on the seminar here and here).

One of the workshop leaders was suggesting that accountants should be more prepared to ‘upskill’ their clients as regards their e-business strategy. I asked whether he meant:

  • To be better able to talk to clients knowledgeably about e-business related subjects and to be able to introduce specialists to help the client with their issues; or
  • To be able to provide billable advice as regards e-business related issues (as distinct from the conventional services that accountants provide).

The point being that accountants want to be provide value to their clients and to be paid for the provision of valuable advice. Some might alternatively say they want to be paid for the time they spend providing valuable advice.

I’m not sure that the speaker had considered the distinction before I explained it. The seminar had been promoted as “a chance to acquire new skills that enable you to advise your clients on their e-business strategy.”

In replying to my question however the speaker made clear that he was referring to the first of those options. That made sense to me – although it was a big step down from the alleged objective for the seminar.

The speaker’s worthy aim was refined as encouraging accountants to assist their clients with e-business related issues and introduce relevant reputable specialists. This makes more sense to me than trying to ensure that accountants are able to provide valuable advice on such matters themselves.

I tend to think that a little knowledge can be a dangerous thing. This is just as relevant in the fast evolving world of e-business as it is in the world of tax which I know so well. (And I recently explained the reasons why I gave up giving tax advice).

I’ve learned a fair amount about many aspects of e-business over the last couple of years – from web marketing to search engine optimisation to the differences between effective website design and website development. And so much more. I’ve put much of this knowledge to good effect in my Tax Advice Network but I know my limitations and take advice from experts – not amateurs.

Still, accountants are often revered for their all round business knowledge. Revered and respected. That puts them in a powerful position and it’s one of the reasons why plenty of those e-business experts want to work with accountants. They believe that you are well placed to make trusted introductions to your clients.

On the tax front it was for similar reasons that I chose accountants as the main target audience for my Tax Advice Network. I know that good accountants know what they don’t know. They are aware of the dangers of going beyond their levels of competence when advising clients on unusual or complex tax issues. And they want to involve trusted, vetted, recommended, commercial and often local tax experts. That’s what we’re all about of course.

Going back to that distinction I drew at the start of this posting. How far do you go?

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Balancing the rights of taxpayers with HMRCs powers

I was delighted to be able to attend the ICAEW Tax Faculty’s annual Wyman debate last week.

The motion under debate was:

This House believes that the balance between the rights of the citizen and the powers of the taxing authority has tilted too far towards HMRC

Speakers for the motion were Francesca Lagerberg and Keith Gordon. Against were Simon Norris and Mark Neale. You can read a summary report of the event here.

There were two elements of the debate that struck me as worthy of mentioning on this blog:

1 – One of the speakers had no notes. None at all. Mark Neale (MD of the Treasury directorate for Budget, Tax and Welfare) started with a couple of references to the previous speaker and I expected him to then look down at his notes. But he didn’t because he had none. He didn’t need any. He spoke eloquently, without hesitation, repetition or deviation(!). He kept to his subject and to his time slot. His presentation was clearly well prepared. Even though I do not share his perspective I sat in awe as I listened to him. I was till in shock after he finished. He is evidently extremely experienced in putting his point across and had a complete command of his subject.

  • How confident would you be if you had to speak without notes on such an occasion? I get pretty good feedback for my talks and presentations but I would rarely be comfortable going out to speak without ANY notes at all – and I’ve been speaking professionally for over 15 years.

2 – By the time Simon Norris stood up (as the fourth speaker) I was feeling sorry for him. Francesca and Keith had made their points with conviction. Whilst Mark Neale had spoken well (see above) his views did not impact my take on the main proposition. I was expecting Simon’s position to be equally unconvincing.

Then he explained that the new system and the new laws would contain MORE safeguards than are in place at the moment. This point also came out further in the subsequent discussion.

I wasn’t the only person to suddenly realise that the debate proposition contained the wrong tense. The balance has not yet tilted too far – it is simply in danger of tilting too far in the near future.

  • A key lesson here, if you are organising a debate – consider carefully the tenses used in the proposition. The Tax Faculty may have had no choice here so as to give HMRC a chance to win the debate. As it was the final voting figures were:

Those for the motion – 67%

Those against – 21%

Those abstaining – 12%


Professional Fee protection policies

These have evolved a great deal over the last few years, both to reflect the changing approach of HMRC and also the feedback from accountants and their clients.

I must admit that I’m torn. If I were still in practice I’m sure I’d want to ensure that my clients had this sort of cover. Equally I’m aware that most of the insurers provide a tax helpline and can (or, in some cases, insist that the insurers) undertake the related professional work to defend a client from an HMRC challenge. And such helplines and tax support services are in direct competition with the facilities provided by my Tax Advice Network.

Anyway the function of this blog is to share commercial tips and advice for accountants so when I become aware of services and facilities that I think may be of interest it behoves me to share this.

In this connection I’m aware of a number of the available policies that are ‘out there’ and of some new ones about to be launched. I’m also aware that different accountants have differing views as to the value of such policies. I think the alternative views can be summarised as follows:

  • Can’t see the need for it. Very few of my clients suffer full investigations and that’s all these things cover isn’t it?
  • Tried it once but cancelled when the insurers wouldn’t pay out on a claim;
  • Happy to tell clients about this and let them decide whether to take out a policy or not;
  • I want my clients to be covered so that I can be confident that my fees will be covered in the event of an investigation;
  • Most of my clients are members of the FSB and so they have cover through that scheme;
  • Our firm is so large that it’s hard to formulate a consistent approach that would satisfy the insurers;
  • We make a good return on the premiums that we sell to our clients – in effect by providing an additional valuable service to our clients we also benefit through an additional and profitable residual income stream;

I’d be interested to learn the views of the readers of this blog.

NB: I heard about an 8 partner firm today where only 4 of the partners tell their clients about the availability of fee insurance. I tend to think that such a firm may be at risk of invalidating their PI policy. One of the standard terms tends to be that clients will be given ‘best advice’. How secure are they if half of the firm’s clients receive advice that the other half don’t receive?


Is the campaign to protect the term ‘accountant’ going to backfire?

Although qualified accountants are aware that anyone can call themselves an ‘accountant’ I find that very few ‘real’ people appreciate this fact. They tend to assume accountants are like dentists, doctors and solicitors. If only that were the case!

It is precisely because of this confusion that various groups of accountants campaign to secure protection of the description ‘accountant’.

I will not repeat here the arguments in favour of change or those put forward in defence of the status quo. What concerns me is that the proponents may not have thought through the consequences that would ensue if the campaign were successful.

Earlier this year I attended the ICAEW’s National Practitioner Forum where we debated various questions as regards the future of General Practitioners. One ongoing threat is perceived to be the fact that non-professionally qualified people can still describe themselves as ‘accountants’. Indeed, some ex-ICAEW members have chosen to continue acting as accountants despite resigning from the Institute and thus saving on the annual subscription.

I have an alternative view borne of many discussions with members of the public in connection with my Tax Advice Network which provides a support service for accountants. I quickly realised that that most non-accountants assume that all accountants are tax advisers as the words are thought to be synonymous.

Why does anyone, other than company directors, typically appoint an accountant? Does the client really care about their accounts? Or are they more interested in obtaining help and advice as regards their tax returns and tax planning? Private investors, the retired and many other clients do not even have accounts in the conventional sense. Yet still the majority of such taxpayers turn to accountants for help. With apologies to the Chartered Institute of Taxation (of which I am proud to be a Fellow), the concept of a ‘Tax Adviser’ as distinct from an ‘Accountant’ has yet to enter the public consciousness.

Even if only qualified accountants could describe themselves as such, it is inconceivable, in my view, that only they would be permitted to provide tax return completion services and tax advice. For me to be wrong on this would mean that Chartered Tax Advisers (“CTAs”), to take just one example, would be precluded from practicing their profession. That’s a fanciful idea that will obviously never happen. There is equally no prospect of CTAs agreeing to be described as Accountants.

Instead, the public would quickly become much more familiar with the distinction between an Accountant and a Tax Adviser than is presently the case. And given the choice between a specialist in preparing accounts and one specialised in advising on tax, which will they choose to appoint?

I am in no doubt that attempts to distinguish qualified and unqualified accountants will increase awareness of the difference between accountants and tax advisers. And if that happens I fear that qualified accountants would lose more than they gain.

What do you think?

(This posting is based on a comment piece I wrote for Accountancy Age in March 2008 )


It’s all in the name

Just before the start of a session of Matthew Huttons‘ excellent Monthly Tax Reviews (MTR), Matthew shared with me his surprise as to a question he had been asked. It concerned the coverage of his forthcoming book on Estate planning.

He had been asked if the book would be covering Capital Gains Tax issues as well as Inheritance Tax (IHT) matters. As Matthew explained to me, the subject of Estate Planning is much wider than just IHT or even than Capital Taxes. And he explains this in an early section of the book (see below).

My reason for mentioning this on my blog is that we all tend to fall into similar traps. We get used to using a phrase or a description of our services and we forget that some people will draw a different inference from that which we intend.

We’ve long had it drummed into us to avoid using accounting or tax jargon when talking to or writing to (or for) clients. But I guess we sometimes forget that some of our jargon has become so ingrained that we forget it’s ‘jargon’. “Estate planning” probably falls into this category.

On the Tax Advice Network website we have a list of specialisms – including Estate Planning of course. The site will shortly be updated to provide an explanation as to what each of the specialisms means. This had already been planned but now I realise that it’s probably more important than I had previously thought.

Are there aspects of your firm’s services that you glibly assume all your clients understand better than is probably the case?

Matthew’s book covers: IHT mitigation, Existing trusts: tax efficient management, The scope for making new trusts, The family home(s), The family business, Farms and woodlands, chattels, investments, life assurance, pensions, charitable giving, the family unit: marriage and divorce, heritage property, offshore trusts and companies, leaving the UK, non-UK domiciliaries coming to the UK, wills, post-death planning, compliance, making a plan and keeping it under review.


“Why I gave up giving tax advice”

Posts to this blog normally contain tips and advice to assist accountants, especially those in practice and /or building up their careers. Today I make an exception.

In July 2008 Taxation magazine published a 4 page lead comment article written by me. I had entitled it, ‘Why I gave up giving tax advice”. The editor cleverly revised that so that the headline became:

“A far, far better thing… that I do than I have ever done. MARK LEE explains why he gave up giving tax advice”

In effect the article explains the reasons for my transition from being a tax adviser in practice (after over 25 years).

The main thrust of the article deals with my frustrations, which have been described as ‘a sad indictment of the tax system’. You can read a copy of the article in pdf format: Why I gave up giving tax advice or on the Taxation website here.

Taxation magazine editor Mike Truman, who commissioned the article, has said “Mark is probably one of the few people who can write about this from the inside, because he is no longer giving advice, yet is still closely involved with the tax scene.”

I have to admit that I found writing the article quite cathartic. It enabled me to get a number of things off my chest.

In the context of THIS blog however, perhaps this quote is the most relevant:

Then two years ago, approaching the age of 50, I had cause to consider what I wanted to do for the rest of my career. Entrepreneurship beckoned. But I wasn’t interested in running my own accountancy or tax practice – for the reasons explained below. Instead I initially created the BookMarkLee ‘brand’, acted as a mentor and business coach for ambitious accountants and continued with my professional speaking engagements.

Despite my ongoing commitment to this blog and to my writing and speaking engagements I also noted that:

this was all moving me away from the world of tax and that didn’t feel right. Then the idea for the Tax Advice Network started to take shape and I eventually decided to focus all of my efforts and activities on this endeavour. Launched at the end of last year, it enables me to play to my strengths, continue with my professional speaking activities and stay in tax. Crucially however it doesn’t involve ME in providing tax advice so I’m not competing with the tax adviser members whose services we promote more widely than they would be able to do themselves.

Edit: It later became apparent that the Network didn’t need me to devote lots of time to it – which is great as I now prefer my other business activities – as set out on this website.

In my conclusion I noted that:

I consider myself very lucky. Not everyone is in a position to choose to review their career and take a new path.

So what about the ambitious accountants who read this blog? Are my fears and frustrations shared by others? Are you also looking for a way out of the profession (or would be but for financial concerns)?


Tax support for accountants

I’m often asked what prompted me to create the Tax Advice Network.

Having spent three years running the tax support for professionals operation at WJB Chiltern I had become aware of how much accountants both valued the facility to secure expert tax support and yet, at the same time resented the traditional approach:

  • A BIG consultancy (with the consequential ‘big firm’ mentality to business);
  • Part of an accountancy firm (previously MRI Moores Rowland, now BDO Stoy Hayward)
  • London based;
  • High overheads to be recovered through the charge-out rates;
  • Limited facility to go direct to the advisers of choice within the firm.

The Tax Advice Network avoids all of those issues. Most of the tax adviser members are sole practitioners. Accountants can choose precisely which adviser to approach by reference to expertise, location, size of firm, ratings, testimonials or indeed any other criteria they consider relevant.

And it seems that we’ve struck a chord as over 1000 accountants have already registered on our website and now receive our free weekly practical tax update, written especially for accountants in general practice. If you have yet to register you’d better get a move on as the free facility is liable to be withdrawn in the future.


Ten top tips to avoid professional negligence claims

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

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

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

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

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

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

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

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

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

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

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

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


Confidence – inside you or through others’ views of you

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

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

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

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

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

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

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

What about you?


Services that accountants outsource within the UK

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

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

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

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

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

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

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

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


Tax support from an accountancy firm or independent tax advisers?

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

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

These accountants tell me that they:

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

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

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

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

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

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

What do you think?

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