Are your clients getting the tax advice you implicitly promised? This isn’t just about what it says on your website – although many accountants’ websites do implicitly promise more tax advice than they deliver in a regular week.

Every now and then I hear about general practice focused firms of accountants, be they sole-practitioners or multi-partner firms, who know the limitations of their tax expertise. And they want to do more for their clients – without taking undue risks.

These accountants  are great at dealing with most of the day to day tax issues their clients face. They offer (and sometimes deliver) basic pre year end tax planning advice and do their best to answer clients tax queries.

But these forward thinking and commercial accountants know they have implicitly promised more than this to their clients. After all, most clients expect their accountant to be able to resolve and advice on all tax related matters.

And yet few general practice accountants have enough detailed tax knowledge or expertise to do much more than the basics. So how can they remain competitive, win high fee paying new clients, fulfil the implicit promise they have made and boost the real value of their practice?

Simply stated, they need to offer and deliver more in the way of pro-active tax advice. For example:

  • Tax planning ideas drawn from informed pro-active tax reviews
  • Tax consultancy related to commercial transactions – be they corporate reorganisations, mergers, acquisitions and often the related or tax clearance
  • Tax advice related to disclosures of unreported transactions, unpaid taxes or the related tax enquiries and investigations
  • Maximising tax reliefs, from capital allowances to research and development tax credits

Often the firms’ websites reference all of these services but, until and unless clients ask for help, little is forthcoming. The accountants want to provide a higher level of tax service to their existing clients but equally 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. Historically it was often a euphemism for offering tax schemes and products. This is less of an issues these days but if you’re still not sure then check out this blog post: Selling tax schemes is NOT a route to riches.

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. I addressed this challenge in an earlier post about a pair of tax managers I worked with years ago: 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 take over 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 I summarised just now. 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 acquiring firm 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’s a tried and tested approach already followed by many general practice firms when it comes to VAT advice.

In an ideal world it would 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.

Be realistic

Bear in mind too that 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 tax expert every now and then.

Tax Advice Network

The Tax Advice Network , founded in 2007, contains dozens of tax experts with distinct expertise and many of them are already providing regular tax support to general practice firms of accountants. And it costs you nothing to use this website to find suitable tax experts who can provide second opinions, advice and support re specific client matters or who will provide a tax clinic service to your practice.

In summary you can use the website to find suitably experienced and specialist tax advisers who can help you fulfil the implicit tax advice promise you have made to your clients.

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