Bookkeepers giving tax advice

Bookkeepers giving tax advice

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A good bookkeeper is worth their weight in gold. I know that and have reaped the benefits.

My client, who previously did his own books, took on one who is excellent at bookkeeping. The client has put great faith in him and so it has become a convenient (and probably cheaper) option for the client to discuss tax matters with him too. As a result I have uncovered decisions made that are either not tax efficient or plain wrong. This covers a multitude of areas, including FRS VAT, dividends, use of home, W+E purchases etc.

The bookkeeper's relationship with the client is strong and probably closer than my own with him having more regular contact. Any thoughts on how to handle this one?

Thanks in advance.

Replies (25)

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By wilcoskip
04th Jul 2013 14:33

Give the numbers
Have a meeting and say you're worried. That it's great the bookkeeping is under control but there are areas of concern over some decisions.
Then go through each problem, putting a number on it (estimated if need be) - some numbers will be extra tax paid, some will be potential penalties and interest.

At the end of this, just ask: 'would you like me to work with you to help put this right?'
If he says no, there's not much you can do. Put it in a letter to cover your back. If he says yes, quote him.

WS.

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By ShirleyM
04th Jul 2013 14:37

Not always the bookkeepers fault

Many clients will direct their queries to a bookkeeper, because, as you say, they are in more regular contact, and also because they are cheaper.

The bookkeeper should be persuaded to deflect all queries back to the accountant. Maybe if you informed them of the bad advice they have given to your client, it may help persuade them?

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By hertsaccountant
04th Jul 2013 14:48

You should have more contact with your client

I make a huge effort to be in regular contact with all of my clients and I also ensure I have a relationship with any book keepers they use. After all we should all be working as one team. There is no reason why you as the accountant should not have the same relationship as the book keeper. The downside to this is that I spend a lot of unbilled hours working on the relationships, but it's worth it.

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Replying to chatman:
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By littlerich
12th Jul 2013 22:12

How true.

hertsaccountant wrote:

I make a huge effort to be in regular contact with all of my clients and I also ensure I have a relationship with any book keepers they use. After all we should all be working as one team. 

 

As a bookkeeper I have several clients who's accountants just do not want to communicate with the bookkeeper. I cannot even get balance sheet adjustments from one accountant who requests information at year end then just does not respond to requests from me. This cannot be good for the client to whom I cannot give a true picture of their business but, sadly, will hear no wrong of their accountant.

Yet some accountants are very proactive with the client and bookkeeper. It is they I recommend when I have a client seeking to change or engage an accountant so it is beneficial to their practice in the long run. 

 

Littlerich

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Mark Lee headshot 2023
By Mark Lee
04th Jul 2013 15:02

Good advice from @wilcoskip

Years ago I acted as an expert witness in a professional negligence case where it was unclear who was or was not giving tax advice to the client - the bookkeeper or the accountant or neither.

You need to get this resolved asap

Mark

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Teignmouth
By Paul Scholes
04th Jul 2013 15:56

Have a chat with the bookkeeper

Always a difficult one but I'd go to the horse's mouth.  There's every chance he genuinely believes the advice he's been giving and so needs gently putting right, if he then realises he's been giving wrong advice, he'll be the one to approach the client.

If, instead, you approach the client first and he then takes it to the bookkeeper you have no control over how the message will come across and it could just cause unnecessary friction.

Hopefully you can then make sure that roles & responsibilities are put in their rightful place.

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Replying to andy.partridge:
Red Leader
By Red Leader
04th Jul 2013 16:37

agree with Paul

Best to speak to the bookkeeper directly. If you speak to the client "behind the b/k's back" as it were, you could get the b/k really batting against you.

Tell the b/k you are more than happy to discuss any tax issues with them to make sure the client doesn't end up with an enquiry or out of pocket.

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By User deleted
04th Jul 2013 21:19

Funnily enough ...

... been talking to a prospect this week - omb company, not IR35, unhappy with the adice received and the amount of CT he was paying. His "accountant" is really just a book-keeper.

I confirmed his suspicions as the lack of Directors Remuneration stuck out like a sore thumb, only dividends, so not only over payingsome £1500 CT each of the last few but a big gap in state pension contributions!

As an aside, what would be best? Y/E 30/09 so we could re-do 2011 and 2012 and re-file the CT600's? I doubt the dividends are pukka, more likely post-dated to square up "drawings".

Any thing to be done with P35's not done or will the fines outweigh any benefit?

I doubt the guy has PII!!

(sorry, didn't mean to hi-jack the thread!)

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By JCresswellTax
05th Jul 2013 09:28

Sleeping Dogs OGC

Wouldn't go back amending - may just lead to enquiries from HMRC and although you say he isn't IR35, is that fact or client opinion!  Defo not worth it in my eyes...

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By User deleted
06th Jul 2013 22:30

From discussions ...

... fact. Can't see any problem with an enquiry - would be interesting to see HMRC arguing salary was in fact back-dated dividends!

These incompetent cretins make me cross - not so fussed about the tax-payer, he should have got a proper accountant and not been so tight, but it gives us all a bad name.

My view is the accounts were not correct and should be amended. from talking to the potential client he thought he was taking a monthly wage and it is the "accountant" (used laughingly) who prepared the accounts incorrectly.

If he had a "proper" accountant, with a regulator and PI, I would tell him to take it up with them, but the guy obviously isn't happy with a 2012 £6k tax bill due now that should be £4.5K.

Just finding out if 2012 gone to HMRC yet (they were only signed 28/06) - i have also asked for a list of payments he took from teh company - at the end of the day if teh accounts were wrong they were wrong! I am more concerned over the NI credits and whether trying to sort out "late" P35 would be more costly than not.

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Teignmouth
By Paul Scholes
05th Jul 2013 10:45

"Proper Accountant"

OGA I'm afraid that, as with any other profession or trade, there is no such thing as a "proper" person and, although we'd wish & expect it, having a regulator & PI is no guarantee of redress or competent working.

I'm just doing battle with an incompetent firm of "proper" accountants who have no evidence or justification for the dividends or salaries they put through the accounts and, in fact, seem not to have any backup for the past two year's TBs.  They submitted P35s without client pre-approval and incorporated the "no P11Ds due" tick box when there were director loans and other reportable items.

A complaint is with the regulator and solicitors are trying their best, but I'm not holding my breath.

Also, I have to say that calling someone "just a bookkeeper" is unfair, I've known experienced bookeepers who know more than some "proper" accountan's I've met, a title sometimes can be meaningless, I have two cleints who are "just" hoteliers & publicans but they both probably know as much as, if not more, about finance than I do.

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By User deleted
06th Jul 2013 22:35

@ Paul ...

... shame on you of all people taking me out of context.

I meant his skills are confined to "just" book-keeping and not accountancy as well you know :o)

There I know many very skilled book-keepers and would defer to their wider experience in many areas, but they know their comfort zone and stick to it.

I know regulation and PII are not the be all and end all, but they are better than nothing. That sai, I have just picked up my second client from a "Chartered" firm, the work of which is less than satisfactory (and one had been audited and had nonsense bank reconciliation items!).

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By petersaxton
06th Jul 2013 23:19

Who's fault is it?

Maybe the client asked the bookkeeper to do some bookkeeping and decided he didn't need an accountant.

It's much easier for an accountant to come in and say what needs to be done than a bookkeeper can. 

There's another thread that was going about a bookkeeper offering advice - OK it might have been wrong - but sometimes the bookkeeper gets told "who are you to advise me on this?" and so they keep quiet and then get the blame for not giving advice!

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Replying to Accountant A:
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By User deleted
09th Jul 2013 12:35

@Peter

petersaxton wrote:

Maybe the client asked the bookkeeper to do some bookkeeping and decided he didn't need an accountant.

It's much easier for an accountant to come in and say what needs to be done than a bookkeeper can. 

There's another thread that was going about a bookkeeper offering advice - OK it might have been wrong - but sometimes the bookkeeper gets told "who are you to advise me on this?" and so they keep quiet and then get the blame for not giving advice!

I feel in this situation, a sensible book-keeper will say to their client, "I think this may be a good thing for you to do, why don't you check with your accountant?"

That way they have it on record they suggested it, but also they did not recommend it without a second opinion. May be some accountants are snotty if the book-keeper comes up with ideas - more fool them - a good relationship between accountant and book-keeper is my ideal.

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Teignmouth
By Paul Scholes
08th Jul 2013 11:20

Sorry OGA but...

I honestly didn't know you were talking about skills rather than titles, I took your "his accountant is really just a bookkeeper" at face value.  

Accountingweb has been spoiled in the past by "us & them" discussions covering everything from qualified/unqualified to us/europeans and so I apologise for the failure of my sense of smell on this one.

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By User deleted
08th Jul 2013 11:28

That's OK Paul ...

... for the record I try to take people on merit rather than titles, preconceptions etc. but I do get cross when people don't realise (or worse do and don't care) they are outside their "zone" and carry on regardless.

Without wishing to ignite the debate again, the only point I would raise is that a qualified accountant is more likely to be aware of what he doesn't know - which in theory is why their regulator should be hard on them, but in practice they seem more concerned with non-paid subs than poor quality work!

 

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By Peteralco
09th Jul 2013 11:51

Bookkeepers giving tax advice

As we are at pains to point out to our clients in these situations : "The cheapest advice is often the most expensive".

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By FRE
09th Jul 2013 12:19

Good bookkeepers will make it clear to clients where their experience and expertise ends and recommend they seek tax advice from a suitably qualified practitioner.

It is made very clear to ICB qualified bookkeepers that they MUST NOT undertake work or give advice on matters for which they are not qualified.  We all have our clients best interests at heart, therefore should point them in the right direction and not waffle on matters we don't have the knowledge for. 

In your situation I would certainly speak to the bookkeeper.

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By tracey2412
09th Jul 2013 20:54

I'm a book-keeper...

...NOT an accountant - it's my tagline.

Many of my clients are one-man bands so money is always tight, often they look at their accountant as the next being to God! so if they ask me a question, I will always try to find out information (I can google HMRC website as good as the next person) but ALWAYS ALWAYS say ' you need to check with your accountant' as there may be lots of things applicable to your scenario than I am not aware of.

I don't want things coming back to bite me - PI or not.

And I always welcome input / knowledge from accountants - I often pick brains - makes me a better book-keeper for my clients.

 

But yes, a little knowledge can be a dangerous thing. 

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By Sandra Silk
09th Jul 2013 21:28

I'm also a bookkeeper ...

.......and I agree with Tracey.  I always recommend my clients have an accountant as well.  They are the ones qualified to give tax advice and have the experience of completing tax returns and understanding the complexities of some businesses.  I see a bookkeeper's role as keeping the finances under control and thereby helping the business to develop.  I welcome an accountant's support and advice for each of my clients and think that Andy should speak to the bookkeeper.

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Sarah Douglas - HouseTree Business Ltd
By sarah douglas
10th Jul 2013 02:47

But maybe sometimes the accountant does not give the advice

Hi 

Anyone who is good in this profession knows when they should give or not give advice and if they are allowed to under PII.  The fact is anyone can call themselves an accountant. There are  there are plenty of Fellows in the ICB bookkeepers who know far more then some accountants qualified or unqualified and there are some that do not.     Not all bookkeepers want to be accountants and much prefer to be involved in the business management accounts and cash flows helping the business with the costs extra

There are many times bookkeepers pick up many mistakes from accountants and I am sure vice a versa. My favourite one is Other Debtors and Other Creditors for some accountants this seems to be used as a suspense account.  Asking bookkeepers to Journal Debtors control with no regard to Vat or Customer accounts.  Payroll Issues and Dividends. 

I have a situation were I brought in an accountant on top of my services as I recommended to the client that their accountant was not good and I made a rough judgement they  had costed them over 25,000 in CT tax the year before.  The accountant did a brillant job with me using my IT skills for a system going forward and knowledge of the business and we got the CT money back.   The fact was I was right within a £1,000 after they had finished.  On another job with an acoountant I recommended the company to apply for the Regional NI holiday.  The accountant did not advice anything in relation to this matter this benefit came to over 12300 in the first year.   I rang Qdos which is part of ICB membership to find out more about the scheme.  The fact is I made clear I was not of full understanding of the scheme but in the meantime the  company should apply as the HM Revenue could only say no as far as I was concerned.   

I had heard about this at an ICB conference 2011 so should a bookkeeper sit there and say nothing at all as this would have effected my client.  All I am trying to say the client may trust the bookkeeper for many reasons as they may have saved the company more in other ways through the knowledge of their business.

I would ask the question why does the client trust the bookkeeper more. A good accountant and bookkeeper can work really well together and especially when an accountant does not see bookkeeping as beneath them but as a very different skill and vice a versa .  In that situation a client would trust both equally and not one more than an other.   I hate to say this but I feel more contact with your client would have prevented this. 

 

 

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Replying to mrme89:
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By andy.partridge
10th Jul 2013 09:48

The crux of the matter

sarah douglas wrote:

I hate to say this but I feel more contact with your client would have prevented this.  

When the bookkeeper has 10 clients and the accountant 100 it is not possible for the accountant to give the client as much time as the bookkeeper. The problem in this case is that the bookkeeper is a very good bookkeeper, so it was understandable that the client should liaise on further matters. I am sure the bookkeeper thought they were giving good advice. Sadly they weren't.

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Sarah Douglas - HouseTree Business Ltd
By sarah douglas
10th Jul 2013 10:23

Hi 

Hi 

It depends on the size of the bookkeepers and most would have a lot more then 10 clients.  The point is a good bookkeeper would know not to give advice especially tax advice.  As a member of the ICB they make this very clear.  There is a big difference from suggesting to a client and to find out more , then actually giving that advice.  

Alan you mention that you do not have enough time for the client but is that not were the problem lies.   Maybe they do not feel you have the time to answer their questions or had the time for them to approach you .   I would maybe say to the client you were disappointed they had not asked you and explain why, Then try to sort it out with the bookkeeper moving forward as you have said they are good so they should understand. 

Are you available to that bookkeeper if they had contacted to you.  I am not suggesting you are not  but some accountants can be  very rude at times to bookkeepers when they are contacted as if they are a nuisance. 

 

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Replying to zeroprime:
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By andy.partridge
10th Jul 2013 10:46

Always

sarah douglas wrote:

Are you available to that bookkeeper if they had contacted to you.  

I am always available, but not always 'free' ;)

Quite possibly the client thought their queries were easy-peasy ones and so it was a no-brainer to take the bookkeeper's advice than seek mine and risk a fee.

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Sarah Douglas - HouseTree Business Ltd
By sarah douglas
10th Jul 2013 11:25

Fair enough

Hi Alan 

Then I would just maybe ask the client and the bookkeeper for the future if there are any tax related questions that you could be copied in on a email for all 3 of you.   We do this with all our clients.  It gives the accountant the chance to have a look at something during his own time and keeps everyone happy.  I work on the theory 2 heads are always better than 1.  

 

 

 

 

 

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