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: www.TaxAdviceNetwork.co.uk (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?