There has often been a time that, having completed both the client's accounts and tax return, I have asked the client, during a face to face meeting, whether they are happy with the figures or are there any amendments or adjustments they feel should be made either to the accounts or the tax return - and, do they understand what they have in front of them. So often, they reply that "I don't understand them and never have done and leave it to you to sort it out. If I didn't trust you I would look for someone else to do them" This worries me a lot as although I try to go through all the figures with them in as simple terms as possible to enable to have a clearer understanding of what is going to be filed on their behalf, I also want them to understand them as I know it's important. They often as not [or appear not] to be interested in going any further. I sometimes wonder if this is simply a client's cop-out if their case ever goes to enquiry and for them to declare that they never understood the figures in the first place. Is there something else I could do to either to get the client interested or to protect the client and myself? Vic Peake
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I was young once
and it bothered me then too.
After my business partner died I was with one of his clients and tried to start going through his tax return, “oh no no no” he cut me off “George and I would moan about the wives, talk about the grandchildren and then have another moan about the wives. After which he would just say, sign here.”
Just be sure you are happy.
Sits back and awaits backlash from the junior ranks.
We've had that a lot.
We've had that a lot. "Please confirm you agree with the figures", "I have no idea what they mean but I trust you so I'm sure they're right".
At this point I do (very informally rather than going all legal on them) point out that as director it's important they at least understand the headline figures. After a brief discussion they then confirm they are happy with the figures (though whether they're actually any the wiser or not I'm not so sure!).
I do think it's important that their agreement goes beyond "I trust you"...as you can imagine it went messy, that quickly turning into "I trusted you" (and you let me down bla bla)!
I explain on a regular basis that the figures are not just for the taxman, but for them too. I appreciate that they have a gut feel for what is happening, but it's useful to follow the numbers as well. As you say, many do not want to understand, but I still try to drip feed some information.
The old saying about taking a horse to water etc holds true with clients. You can only do so much.
Many of my clients don't have a clue either
Then again, I don't expect them to. I obviously ask them to approve their Tax Return but I don't go through each individual entry (unless, of course, they want me to). I don't explain how their capital allowances have been calculated; how I have claimed loss relief; what were the disallowable items; the opening and closing years' calculations etc etc.
Unless they show a particular interest in the figures, or have a fair knowledge of the tax rules, their eyes would glaze over if a started any such explanation.
What they do understand, however, is a question such as "did you rent out any properties during the year?" or "were you employed at any time and receive a P60 or P45?".
Once they have answered my general and more specific questions, then I think that they have every right to say "I trust you to complete my Tax Return correctly."
They're adults
My clients are all adults and if they can't be bothered to ask me if they don't understand (I do try and explain the vital stuff) or they just don't give a toss then it's up to them. They're signing to say they're happy with the contents after all, not me.
It's a lovely idea but you'll be the one getting stressed and frustrated, and they'll still be trotting out the same lines...
What happened today
My client phoned me and said she's sold her business in July.
I asked her whether her limited company has sold the business or if she had sold her shares in the limited company: "I don't understand".
I explained that she owned the limited company and the limited company owned the business: "I don't understand".
I asked who is going to deal with organising the payment of the corporation tax re the profits in 2012 and 2013: "I am".
I asked her how the buyer was paying: "She was paying the money to the limited company"
I said it wouldn't make sense if the buyer had bought the limited company AND they were making the payment to the limited company: "I don't understand".
I tried various ways of saying things and all I got was: "I don't understand".
I've had exactly the same thing in the past with her. This her standard response to anything I say. This is despite many clients saying that I explain things a lot more simply than previous accountants they've had.
We decided that she would visit me with her sister ("who understands these things").
I bet I'll explain it to the sister and the sister will say exactly the same to her and her response will be: "I understand".
Some people just don't want to make the tiniest effort.
Just give it up
It's not unreasonable on the part of the client. When I take a car in for service, they have this irritating habit of going through the obscene invoice to explain what's been done and I try to nod in an understanding manner. A plumber comes in to fix a leak and asks "is that all OK now?". I know nothing about car engines or plumbing - I just place faith in the professional. It's a subtly different thing from a legal responsibility but then I care more about the safety of my car than I do about the accuracy of my accounts since the former can kill me.
So I don't think this failure of client understanding is a part of some grander plan to avoid any potential responsibility. It's just because what we do is, to a substantial proportion of the public, incomprehensible. Some things are possible to explain but the lack of rhyme or reason involved in something like a change of accounting date makes some concepts just the equivalent. Indeed after a number of attempts with some clients I have been known to say "just give it up and trust me".
Cars and plumbing
I don't know anything about cars or plumbing but I can follow what specialists say if they talk in layman's terms.
Some limited comfort
I get all personal tax clients to sign a declaration of full disclosure worded as below. I do genuinely discuss it with them all and like them to understand what they are signing but life isn't always like that, sometimes they just can't get it despite the most simple explanation.
It does give me comfort that they acknowledge we've been through it and they have no further questions.
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I acknowledge that the information I have supplied to {my firm} in order to complete my self-assessment tax return for 2012-2013 forms the basis of the entries therein. In addition I confirm that I have made {my firm} aware of all my sources of income, including income earned through employment, self-employment, savings, capital gains and any other forms of income.
I have discussed the attached tax return with {my firm} and confirm that the entries thereon are a correct statement of my income and expenses for the year to 5 April 2013. I have no questions on the entries made on the form and fully accept that I am legally responsible for the content thereon.
By signing this form I approve the content of the tax return with HMRC reference number {blablabla} attached and authorise {my firm} to submit it electronically to HMRC on my behalf.
@Luke
I would add "worldwide" as a prefix before employment, income, etc. Some UK-dom clients seem to (conveniently?) assume that they only have to declare UK income and that non-UK income is on a remittance basis.
the more clients you get...
....the more you realise theres a lot like this.
I dont even bother having meetings anymore, (unless they ask)....well there's 2,000 so It would be impossible.....just post them the accounts with a cover letter and a sticker on where to sign
Saves lots of time not having meetings so I can play on here :) and sign up new ones
@Tom7000
Thought it was just me. Yes, I usually only have meetings on a client-request basis. Exceptionally I might call a meeting, typically if it's an unincorporated business thinking of incorporating as there's too many issues to discuss in a letter or phone call.
@red leader
yep...get them in for that...and sell them a new company and explain the 1001 things they need to do and how they will save a pile of tax
downside ...accountants fees are treble but never the less you will still have enough left over for a carribean cruise every year
The one I did on Monday was going to save the 5 partners £250,000 over the next 7 years...they are thinking about it.....
Adjustments
during a face to face meeting, whether they are happy with the figures or are there any amendments or adjustments they feel should be made either to the accounts or the tax return.
That is asking for trouble. Naturally they are going to say 'make us pay less tax' and leave it up to you to conjure up a reason. By the time you get to this stage, you should have had enough meetings with your client to make sure all adjustments have been made, and it is only a signature that is required