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 Few clients will know that their accountant’s advice is untested and based on out of date knowledge.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‘,  recently published by Bob Harper. 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)


Incorporation fright – a taxing horror story

Regular readers will know that Incorporation has long been one of my pet subjects. I’ve written two tax digests on the subject and numerous articles. It’s also one of the seminars I am frequently engaged to provide to audiences of accountants.

I was chatting with a business associate (‘Steve’) recently who told me that he had changed his accountants last year – 3 or 4 years after they persuaded him to incorporate. Whenever I hear that someone has changed accountants I always ask ‘why?’

Steve had been with the old firm for ten years. He’d never been especially impressed by them but he stuck with them until they messed up.  In fact at one stage he’d been almost impressed. They persuaded him to incorporate his longstanding partnership business. He wasn’t convinced this was the best thing to do but he remembered the accountants were quite insistent. They said that they would be at risk of a complaint to their professional body if they didn’t incorporate the business due to the tax that could be saved. (This is rubbish of course. Clients can choose whether or not to take advice. It’s their decision. All the accountant has to do is to give the advice AND to ensure that the client only proceeds if they are aware of all the related issues – not just any potential tax saving. But I digress…)

Expecting tax savings Steve was shocked to get a demand for £36,000 ADDITIONAL tax from HMRC some two years after filing the first year’s accounts for the new company.  How did this happen? Steve explained:

His bookkeeper used to work for the accountancy firm who knew they could rely on her work.  After incorporation he had asked the accountants what to do when money came in re invoices issued by the old partnership. They told him to bank it as usual (there had been no change of bank account). The bookkeeper annotated all such receipts in the cashbook as being ‘re partnership’. For reasons I cannot fathom it seems that the accountants ignored the green ink annotation and reflected these receipts as being company income.  The additional tax bill was for the income tax due on the income excluded from the final partnership tax return. (Hopefully the accountants secured a refund for the additional corporation tax paid in error).

This is a shocking story.  It’s no surprise Steve changed his accountants. What steps would you have taken to avoid such a situation arising?


The advisers’ guide to HMRC products

As a long time supporter of the excellent work done by LITRG I’m pleased to note that they have recently launched for accountants and other advisers.

This new website is designed to provide advisers with access to the latest information on various HMRC ‘products’, including tax credits, child benefit and guardian’s allowance, national minimum wage and more.

LITRG has been keen to do more to support advisers who have to grapple with the “giving” side of HMRC activity, in particular, tax credits and child benefit. The new Revenuebenefits website was created with the support of HMRC and in partnership with Rightsnet.

Those who have heard almost any of my various talks over the years will also know that I routinely stress the importance of being able to advise on these issues – especially tax credits which, for example, may be due to clients when their business falls on hard times – but only if they have pre-registered.


Tax specialists leaving general practice accountancy firms

I’ve commented before on the challenges that face accountancy firms that look to recruit their first full time dedicated tax partner. Recently I heard about an unexpected development – Tax specialists leaving general practice accountancy firms.

It’s a sign of the times. The reasons vary but include:

Tax partners’ reluctance to promote dubious tax schemes – to the disappointment of general practice partners (who naively consider their tax partners’ approach to be uncommercial);

Tax partners wanting a bigger share of the firm’s profits – to better reflect their contribution. The tax partners may perhaps be focusing on the level of their billings for tax advice. I hope that in such cases the tax partners are rainmakers and able to generate fees without the input of general practice partners who reel in new clients for recurring accounts and related work.

I’m told that at the CIOT Annual Conference last week there were a number of tax partners who have recently left their firms and set up by themselves.  Clearly I welcome this development and hope that the better ones get in touch and join the Tax Advice Network.

I’d welcome feedback as to why you think tax partners are leaving firms and setting up as standalone tax practices.  Do you think it will continue?


What is ‘Cheap accounting’ all about?

I wonder how many readers of this blog had heard of Elaine Clark before I awarded her the ‘best overnight budget summary‘ last week?

Elaine qualified as a chartered accountant in 1988 and now and runs one of the fastest growing online accountancy practices in the UK. She established it in 2007 and has a number of associates operating their own practices under the same brand name. Indeed Elaine offers a mentoring service for those who want to establish their own practice and benefit from the leads that come from web searches and her related online engagement.

I must admit that I was initially doubtful about the name of her practice: Cheap Accounting, although I do accept that it’s very attractive for online searches. After all, no one googles to find an expensive accountant do they?!

I was always taught that ‘cheap’ went with ‘nasty’. That we should not encourage clients to choose their accountant solely by reference to price – and that a focus on being cheap encourages them to do so.  And then there is the theory that although most clients want accountancy services provided (1) fast, (2) accurate and (3) cheap – they have to choose  just 2 of the 3 .

Having discussed this with Elaine I must admit to being wrong.  I now understand Elaine’s passion and her business model. Her practice offers ‘cheap’ accounting services in that they keep costs down and run an efficient and focused service. They can do this through a reliance on computer-based book-keeping packages and other technology that allows them to operate in a very cost-effective manner.  As explained on her website: “Quality is in no way compromised. CheapAccounting operates to a set of very high service values”.

Inevitably, perhaps, most of Elaine’s clients have straight forward accountancy and taxation needs. Needs that her experienced network of accountants are well capable of addressing. However from time to time there may be a more complex tax issue which requires more specialist advice.

I am delighted to announce that Elaine has chosen my Tax Advice Network to provide tax support when required. We have agreed a working alliance which is clearly promoted on her website.

For obvious reasons I do  not give permission for just anyone to include our logo on their website. Indeed Elaine is the first person to have that authority – beyond the tax adviser members of the Network of course.

I hope that readers are sufficiently intrigued to want to check out the Cheap Accounting website. It’s very different to most accountants’ websites. It’s also popular and successful at drawing in the sort of business that Elaine is targeting. Oh, and it even tells visitors how easy it is to change their accountant. I think we could all learn something from her approach.  Let me know what you think….


And the award for best budget night commentary goes to…..

I’ve long been critical of the ‘me too’ type of overnight budget commentaries. Indeed, these days ‘overnight’ is slow and many commentaries appear online within hours.

I have seen dozens of such identikit commentaries since the Chancellor sat down yesterday. Almost all contain pretty standard lists of the headline measures, cut and paste extracts from the budget press releases and sundry similar ‘commentaries’ containing the initial views of the author or a ‘senior tax partner’. There are a few that contain bog standard ‘advice’ and a few firms have provided commentaries on specific measures – although most of these note that we don’t have enough detail yet to know how the proposals will work in practice. Others reference what the writer would like to have seen or how limited the proposals are in specific situations.

If you really think it’s worth sending one out I’m an advocate of using a tailored version produced by one of the key tax publishers. (My previous thread refers: Budget night summaries – worth the effort?)

Of course there will be many more such commentaries that I haven’t seen. There’s a limit as to how many I can pick up through the email lists I am on and through links contained in tweets on twitter. Still, two very different budget commentaries stand out and deserve an award*

If you’ve come across any others that are clearly distinctive do please reference them in the comments section below and provide links if possible. Many thanks. I’m also keen to receive feedback challenging my view that the effort devoted to these overnight commentaries is a waste of time. By all means share your experiences of how and why you feel differently. Any evidence of the value would be great too.

Runner up – and with a special commendation for dividing up the announcements: Informanagement

  • Budget Summary March 2011 – New tax changes announced today
  • Budget Summary March 2011 – Future changes announced today
  • Budget Summary March 2011 – Changes previously announced for 2011-12, now confirmed

And the winner is………

….Elaine Clark of Cheap Accounting for her blog post: Not A Budget Newsletter!

It won’t suit everyone but I love it!

* ‘Award’ in this context simply means to be acknowledged on this blog with an online link! 😉


Partnership tax planning: You get what you pay for…

This is a bit of a rant, which is not my preferred style of blogging. I have just returned from a local group of tax advisers evening training session. It was supposed to be ‘Tax planning with LLPs”. That was the title in the promotional note, on the website and on the cover of the notes. (Actually they weren’t notes, just copy slides).

The title slide though didn’t mention tax. It was ‘Partnership structures’ and the lawyer who largely read her talk verbatim even started by admitting she wasn’t going to talk about tax. And she didn’t. Barely a mention, other than on the odd occasion when she noted that the audience probably knew more about tax than she did.

I felt short changed. As a regular speaker for groups of professional advisers I wouldn’t dare do what this lawyer did. She ignored the subject she had been asked to speak about and chose a subject of her own. Of course she could afford to do this. She is a partner in a large firm and almost certainly wasn’t being paid for giving the talk on a cold winter evening. No wonder she spoke on her preferred subject rather than the one she had been asked to present.

Maybe she thought she knew better than the committee who had booked her to speak as to what would be relevant and topical. How arrogant. How insulting and how unprofessional. There were almost 200 local tax advisers and accountants in the room. Some may well have found elements of her talk interesting. But it wasn’t on the subject they made time to go and learn about.  I’m sure many will feel they should have stayed at home (or the office!)

Maybe it serves me right. I had only booked to attend the session as I have a series of talks on partnership tax to present over the next few months. The first is next week and the slides AND NOTES are  already done. But I thought I’d see if there were any new ideas I should mention. Well I didn’t pick up any tonight that’s for sure!

I get paid to present my talks. If I didn’t keep to the subject I was booked to present I would be concerned that my fee might be withheld. And I would never be so arrogant as to insist on presenting a different subject to the one I was booked to address. I think tonight’s speaker was disrespectful, rude and unprofessional in her approach. But to an extent, you get what you pay for. As noted above I’m sure no fee was due to be paid to her. I charge a decent professional fee and present and operate in a professional manner (if you don’t mind the odd magic trick to liven things up a bit!)

If you were in the audience tonight do let me know if you’d like to attend my forthcoming half day talk on Partnership tax planning, tips, traps and news. Full details here. Anyone can come but I’ll extend a discount to those who also felt short changed tonight.


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’.

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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>>>