As a sole practitioner coming from industry after many years, how did you address your lack of tax knowledge?
I have outlined my views here.
Related resources
Replies (10)
Please login or register to join the discussion.
Study without exams?
You've put in your blog that you're thinking about studying for the tax exams - why not just buy the textbooks and study at your own pace? Adding more deadlines to your life isn't going to help you but if you schedule in an hour here and there it will add up and you can read the books and work through the examples, even but the question and answer revision kits and do them. That way you can focus on the areas in which you need to brush up your knowledge but not waste time on those where you feel confident.
You could also consider online courses - I do Mentor ones. You can get decent deals and then you can do them at your desk, stop & start as necessary, go back to them again.... No travel time & no eating too much at the buffet in the lunch break!
Exams give me a target
Thanks Flash Gordon.
I did plan to study without exams - it never happened. An exam would give me a target to aim and make sure I get the work done.
Perhaps I need to change my thinking on this.
I am still thinking which way to go.
I used the text books ...
to get me at least a bit up to speed with the changes that had happened while I had been out of the practice environment. I also did (and still do) the PTP quarterly tax update lectures which are excellent at keeping the knowledge in place.
mn2taxhbj
Thanks for your response that you posted on the blog.
I was not aware of such a low pass rate for CIOT.
Can anyone comment on ATT study in terms of time commitment per paper?
At least its getting better
In the set of exams before I sat them the CIOT pass rate was 13%. The CIOT pass rate is detailed on the website - I would suggest you spend a little bit of time reading through the requirements to see exactly what would eb involved - it is a huge time commitment but one which will pay for itself over time with additional practice revenue. It is also a big advertising hook - there arent that many general practitioner accountants who hold CTA.
i have just had one of my trainees pass the ATT at two papers per sitting. Having no previous tax qualifications she devoted her whole personal time plus went part-time in the run up to the exams and used the days off to study.
In terms of updating your knowledge I would have a look at the Branches section of the cIOT website. Most branches run a number of CPD Events - most of which are free or at minimal cost. These are usually open to non-members if you have another professional qualification.
CPD and "on the job"
I go to several local CPD lectures every year to keep on top of things - they usually include refreshers as well as new developments in the lectures, so over time, tend to cover most relevant things.
I also keep a careful eye on several on line fora, such as here, taxation web, moneysavingexpert, uk business forums, etc etc. I find it fascinating to read people's questions and the answers given. Far more fruitful than reading raw facts from a text book. I've learned a hell of a lot from other peoples' questions! I've found real-life problems are far better than text-book examples which barely ever happen in real life!
As for the initial move from industry to practice, it was a matter of taking things slowly, being careful with only taking on relatively simple clients at first, and never, ever, presuming that I knew something when I didn't. I always kept in mind that "I don't know what I don't know". I'd never make an assumption or tell a client something, however simple, without checking it out first.
For example, a decade ago, I got my first IT contractor. I'd heard about IR35 and knew the raw basics, but knew that wasn't good enough, so before the first meeting, I spent hours online teaching myself about IR35, from the HMRC website and other websites, and a few contractors' forums. At the meeting, quite a few things cropped up that I wasn't sure about, but I knew enough to get through it, sound convincing enough that I knew what I was doing, and got the client. Immediately afterwards, I researched the bits I couldn't answer and got straight back to her with proper answers. That done once, I could handle other IT contractors with ease and ended up as a kind of IR35 specialist! The key, of course, was the basic knowledge that IR35 existed and IT contractors were something out of the ordinary, so knowing that, I could research it.
Same with farmers, authors, doctors & dentists, solicitors, etc etc. A little knowledge goes a long way, if only to realise that there are different rules for some trades/professions and that you therefore know that you'd have to research rather than making a false assumption that they were the same as other businesses.
At the end of the day, I'd suggest that rather than doing any random deep-studying of anything, you just keep an open mind and make a mental note of anything different that you come across - it's enough for you to know that there may be a different rule, rather than actually knowing what that rule is! Take VAT on property, I know there are "option to tax" rules, I know there are different rules for zero rate or 5% rate on new builds, conversions, etc - I don't know the details of these rules, but I know they exist, so when it comes up in a client meeting, I know to flag it for research rather than miss it and let the client go on to make an almighty foul-up. Same with VAT on imports & exports and the differences between goods & services - again, I don't know chapter & verse, but I know to highlight it and research it properly.
A reasonably client wouldn't expect instant answers. They're happy for you to flag up a potential problem or opportunity and for you to go away and research it. All you need to do is train yourself to identify the potential issues - you certainly don't need to know the details in-depth!
I have sat and passed 3 of the required 4 ATT papers - In all honesty, I haven't spent that long studying for each paper. I generally kick into gear about 4 weeks before each exam and probably spend about 4 hours during the week studying and then spend about 6 hours at the weekend. The week before an exam I study everyday for about 4-5 hours. I'm sure most would view that as leaving things too close to the end but when I have studied over a longer period of time, I simply forget the rules!
Tax Knowledge
Not being as brilliantly clever as some on Accounting Web, I have been doing one AAT exam every 6 months and have the 3rd and final one coming up in November. I do need to put in lots of hours, partly because I don't have the relevant experience to begin with, but also because if I don't work, I don't pass.
I had hoped that these exams would give me greater confidence in taking on more (simple) tax work, but unfortunately they just prove how little I know, and I will look at the CTA books after November, and try to work through them. I don't have enough practical experience to make taking the CTA exams worthwhile and it sounds like I wouldn't make the grade right now.
I am going to take Ken Howard's approach and build up my tax clients very gradually indeed, with anyone really complicated-looking from the outset being passed on to someone more experienced.
I also think you can't beat reading practically every single posting on tax on Aweb and trying to understand the answers. Euan, Steve McQueen and Paul Scholes should probably be billing me direct for the education they are giving me, along with many other more casual posters to Aweb.
In 5 years time I hope to know a lot more than I do now, and have gathered experience gradually, at no cost to my poor old clients.
You can't be an expert at everything
I come from a general practice background and studied AAT and ACCA. I think CIoT would be "overkill" for me as all of my clients are in the SME sector and in any case 75% of what I would learn for the exam would be quickly forgotten.
Some areas of knowledge are crucial for servicing my clients so I make sure that I keep up to date with those areas by CPD courses, books, internet and of course, accountingweb.
Other aspects of work I have no interest in at all. If someone wants detailed inheritance tax advice (my own knowledge is basic to say the least) then I am happy to refer them to another accountant that can help them with that aspect, as it is not economic for me to research this area that only occasionally crops up. Similarly I choose to never deal with building subcontractors or charities, so I have no need to ever acquire knowledge in these areas.
Of course, there are "grey areas" (for instance some specialist aspects of capital allowances or CGT) where my knowledge is far from perfect and I would quite like to do myself rather than outsource. In those sorts of cases, generally I find that a bit of research and bouncing the idea off a few friendly accountants will fill in the gaps.