Spineless Profession

Spineless Profession

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Why should I pay an accountant £150 an hour - and often more - just to have them cosy up to HMRC ?

In his admirable article on this issue, Steve Roth naturally treads carefully around the subject because so many of his profession's members are indeed wimps. But it's time to face facts.

HMRC is now adotping a much more agressive stance towards its " customers" . The rules of the game have changed dramatically. The days when accountants and tax inspectors recognised human fallibility, and could afford to work toegther in a warm and friendly manner, agreeing to split differences before going home to their wives and family ended long ago.
It is now quite clear that HMRC has been instructed to claw back as much money as it possibly can using whatever means necessary.

For instance, HMRC now seems to have a policy of regularly contesting amounts up to £2000 because it knows it is cheaper for businesses to settle than to pay accountants to fight the claim. I'm continually hearing reports of extraordinarily aggressive HMRC inspectors who bully accountants because they know that, as a profession, accountants tend to roll over. I'm also hearing rumours that HMRC staff are on bonuses - or have been set career-enhancing targets - according to the amount of additional money they extract.

As a businessman, I want accountants who can:

1) Prepare accurate accounts
2) Adopt a strong pro-active strategy by advising me how best to arrange my affairs while staying within the law.
3)who are are prepared to stand up to HMRC bully tactics and question decisions which are quite clearly wrong.

From our experience, the majority of accountants in the UK simply don't fit the bill.

Mike Bassy

Replies (28)

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By Paula Sparrow
16th Jul 2006 13:51

Accountants and PAYE
I have to agree with Roger on the PAYE point. A few weeks ago I attended a lecture where the advice on status was to look at the Revenue's ESI tool and follow what it says. Aside from the fact that it can't come to a decision on status in the majority of cases, the tool is the REVENUE's tool, and is going to look at status in the same way they do. Time and again the Revenue have taken status cases to court and lost, so the underlying premise is unreliable before we even start.

Some of the questions posed in the tool and by the status officers are wrong or irrelevant in law. We cannot just accept what the Revenue say on this area. They have no right to decide whether someone is an employee; that is the remit of the employment tribunals. Yet accountants are just allowing Inspectors to do it. In my experience we are not looking at small amounts of money. Half a dozen subcontractors over a number of years would easily give a 6 figure bill.

I recently acquired a client who was facing a review of his subcontractors. I was the fifth accountant he spoke to and the previous 4 more or less told him he'd have to accept what the Revenue said. It's not the first time I have come across this.

It's about time we did stand up to the Revenue en-masse on this point at least.

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By AnonymousUser
19th Jul 2006 16:50

Judgement
Mike,

Maybe the other accountants did trust in their judgement and decided that the Inspector was correct.

Using judgement means deciding yourself what is right and wrong in the given circumstances. If you want to employ someone to argue with Inspector even when they are clearly wrong just to prove a point, you better see an insolvency practictioner now! If not, employ someone who is good at their work and LISTEN to their advice.

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By Paula Sparrow
19th Jul 2006 22:19

Thank you Andy, but
the first contractor who came for help when his accountant told him to pay the £15k bill arising out of his subbies being re-categorised had his case closed without paying a penny. Not because I am too stupid to know when I am wrong, but because I know what Red Herrings the Inspector throws into such an argument to deflect the attention from what is actually relevant.

I am just about to close the case who spoke to four accountants before me, so can't be absolutely certain of the result, but so far the Inspector has no grounds for re-categorising any of the 20 subbies in this case.

I have not lost a status case in 3 years (thanks to a presentation by Accountax). This is not because I am withholding information, but because I am ensuring that the Inspector sticks to what is relevant in law. It's not difficult.

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By Chris Smail
19th Jul 2006 13:12

But we do
With respect Mike I think any experienced accountant would trust his own judgement rather then the revenue.

I can see why Roger is trying to whip up some self publicity if he is trying to establish a new business, but these silly unfounded generalisations are just nonsense.

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By Mike Bassy
19th Jul 2006 15:41

HMRC lackeys
If accountants rely upon their own judgement rather than the HMRC,as you say Chris, why did FOUR other acountants - let me say that again, FOUR other accountants - wimp out on the PAYE status issue as Paula has said ?

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By Mike Bassy
19th Jul 2006 11:24

Accountants with courage - at last
At last, an accountant who doesn't see themselves as an arm of HMRC. What a pleasant change. And how revealing that the previous four accountants wanted to cave in without as much as a wimper. This has been my experience too. And as I've said before the accountancy profession should to be ashamed of itself. It is clear that this lilly-livered attitude to HMRC has now become so common that few now find it wrong, unprofessional, and very close to being corrupt. Isn't it time that more of you looked at yourselves in the mirror and asked: have I really acted in my client's interest today ?

Come on you wimps ! Surely some of you have the courage to follow Paula's lead ?

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By Mike Bassy
20th Jul 2006 12:43

brilliant reply
Once again Paula, that's a brilliant reply. This is the type of approach which all accountants should have. It inspires clients by demonstrating a confidence in your own professionalism, a sound practical grasp of legislation and a readiness to act in clients' interests.

No businessman wants to break the law - that's crazy. But we do want to know that the accountants we employ know their subject inside out and are prepared to challenge HMRC if necessary. From my experience, this often isn't the case.

Boy, if only there were more Paulas around.

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By pgittins
05th Jul 2006 10:49

Shurely shome mishtake ....?
"For instance, HMRC now seems to have a policy of regularly contesting amounts up to £2000 because it knows it is cheaper for businesses to settle than to pay accountants to fight the claim"

Isn't that an indication of spineless business men (or women), rather than spineless accountants .........????

And Mr Bassy ..... you don't have to pay accountants to "cosy up to HMRC". You're quite at liberty to take on the battle yourself. Not that many accountants would recommend that course of action; but hey, why listen to anything that they say ...?!

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By neilglos
03rd Jul 2006 16:23

Bad Apples...
I think this is a case of a few bad apples, and then all accountants being daubed with the same brush. All the acountants I've met who have passed the even slightest comment on tax are dismayed at the heavy handed efforts of HMRC - including the ones i currently work with, as they battle out a HMRC stamp down!

If Mike feels so strongly about accountants, why does he continue to use them? If he feels they dont provide a service of a professional level then its logical to assume that maybe he should just do it himself

Neil

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By andyprentice
03rd Jul 2006 16:17

Myers Briggs....
...probably has more to do with it.

I suggest Mike may want to select his next accountants by using some personality testing.

I seem to recall the definition of an extravert accountant as being one who looked down at your shoes and not his own.

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By AnonymousUser
03rd Jul 2006 17:12

Voice of industry?!
Roger,

Why do you say Mike is the voice of industry? If Mike is Scottish, does that make him the voice of Scotland?!
Mike is entitled to his opinion, as is everybody but for you to say everyone in industry thinks the same is a massive bit of bias to support your weak arguement.
As in all business', there is good and bad but to say all accountants are wimps is liking saying all businessmen are clueless. Patently wrong but some people like being controversial.

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By User deleted
03rd Jul 2006 00:50

In a previous life...
... when on the other side of the fence, I never met any of these spineless accountants, not once.

Why? :(

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By AnonymousUser
03rd Jul 2006 09:40

Roger
How about providing some statistics to back up your comments?

I know of absolutely no accountants or tax advisers who would advise their clients to adopt PAYE status where in substance the status was one of self-employment.

I also know of no accountants or tax advisers who welcome Revenue enquiries, particularly with regard to the reasons you cite.

Either you or I talk to completely unrepresentative samples of the professions.

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By AnonymousUser
03rd Jul 2006 10:07

Roger ...
I just don't recognise the picture you paint .. maybe I should get out more and meet more accountants!?

My concern is that what clients like Mike are asking for will lead not to better standards within the industry but worse. Within the legal profession what better value service can be offered to the client than "no win no fee" yet can you argue that this has increased quality of service? If accountants go this way e.g. "we will charge you 50% of the tax saved over last year" is that going to lead to good advice? We have all seen marketing led accounts firms targetting clients with enticing promises which amount to baseless generalisations when analysed.

I want to work with clients in the long term and get consistent results year in year out. I didn't incorporate all of my £20k p/a sole trader plumbers and roofers because I know their record keeping would never be adequate. I am advocating watch and wait to lots of clients waiting to put huge sums in to pension schemes until we see what will be CT allowable. In the short-term this costs in tax relief but in the long-term may well be the right advice.

What I do offer is an answer to any question within my expertise by e-mail or phone usually within minutes or hours without separate charge. I will meet at my clients convenience when they are not working. I will support them when putting in tenders, meetings with customers or just writing technical correspondence where it is not their forte. Clients know they can phone me to run ideas past and I will console them when England lose!

I am sure this is what my clients want and I have only lost perhaps half a dozen in as many years (and those only due to circumstance). It's not all about the tax bill .. it just isn't.

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By Mike Bassy
01st Jul 2006 12:38

more professionalism please
Well done Liz, Ken and Howard. At last, we're beginning to hear from accountants who put their clients' interests first by providing them with great money-saving advice, as well as being more than willing to challenge HMRC. Their strong, pro-active approach should be the norm for the profession. Nevertheless, you can see from other comments that a majority of accountants have become used to taking the line of least resistance, and feel distinctly uncomfortable if anyone dares to point out what a lazy, self-serving, and, ultimately, down grading tactic this is. The comments also suggest that some accountants feel that can get away with shoddy service because clients have no option but to employ them. If accountants prefer to behave like mere book keepers, then I'll pay them book keeper's wages. If you want to continute to be paid as professionals, then isn't it about time that more of you demonstrated some professionalism.

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By User deleted
02nd Jul 2006 18:56

Clients are our paymasters - and not always right.
Apart from the client who is not prepared to fight as it is not cost effective for him, other clients assume that the Inspector is right in his challenge and then blame the accountant .

Months of correspondence finishes with the Inspector backing down totally-but the client still blames the accountant for the costs !


This has happened three times with one client -the Inspector is a bad loser. All part of life's infinite variety.

In another case , where the client is wealthy and meticulous in conducting his affairs- the Inspector has asked over 20 pages of quetions on his personal affairs under a 9A enquiry, and so far has conceded that not one penny of tax has been underpaid.

I have no hesitation in telling the Inspector to 'get lost' at this point, but few clients can afford this kind of assault.

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By adam.arca
01st Jul 2006 13:27

Baffled
Having just read this thread and having also followed the previous one posted by Roger, I still disagree with the points Mike and Roger are making and am still baffled why they are presenting their thoughts as if they were hard evidence rather than just their perceptions of the issue.

So come on, Mike, why don't you put up or shut up? Don't be shy, just let us all know which ones are the "other comments" where it is clear "that a majority of accountants have become used to taking the line of least resistance, and feel distinctly uncomfortable if anyone dares to point out what a lazy, self-serving, and, ultimately, down grading tactic this is." (text in quotations from your posting).

Personally, I can't remember any postings along those lines. You seem to be forgetting that the role of an advisor like an accountant is to advise the client and give both sides of the coin and NOT to make up their mind for them.

If we advise a client to settle, that's much more likely because in our professional experience (ie, what we are being paid for) that is the most cost-effective thing to do, not because we don't fancy a fight. Equally, as Ken's posting points out, there are plenty of times when we as accountants are itching to fight but are prevented by our clients.

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By User deleted
01st Jul 2006 21:40

"Mere bookkeeper"
My apologies for going off track, but I disagree with Mike's suggestion that bookkeeping is an unskilled, low paid occupation. All areas of commerce and industry have an earnings hierarachy, and each level has their part to play, regardless of the income they command.
Mike, I take it your company does not employ the services of a bookkeeper. If it does, I hope he/she will soon find a position where these particular skills and experience are valued more highly.
Bookkeepers do not pretend to be tax experts. They do, however provide an important and cost effective service, which when delivered effectively can provide important information to the client, and free up valuable time for the accountant to deliver his own services effectively. We might not be accountants, but we do have an understanding of what they need to know in order to provide a good service to you.

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By AnonymousUser
02nd Jul 2006 11:40

Example please
Mike, please just one reasonably detailed example (like the one posted by the accountants)of where you have paid an accountant £150.00 p/h and they have acted spinelessly / rolled over / cosied up to HMRC. Without this there is no debate just mud- slinging. If your gripe is so clear cut and your accountant so negligent then why didn't you report or sue them for professional misconduct. Perhaps they were right and your actions gave them no room to fight for you? As I say, no example, no debate.

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By User deleted
02nd Jul 2006 12:47

Example - years ago of Lloyds RITC imposition
Going back may years there is an example that remains in ones memory - very specialist field of Lloyds Underwriters, Panel Auditors & other accountants

When the disallowed RITC (re-insurance to close) was initially proposed by HMIT there were suggestions that it should be the subject of a Judicial Review.

From memory HMIT was against this course of action because it would probably have lost - HMIT pursuaded the accountants (collectively) not to pursue a Judicial Review; thereby ensuring it was implemented

Subsequent enormous losses by syndicates demonstrated that HMIT was quite wrong to have introduced a disallowed RITC and yet the accountants involved bowed down to the Revenue wishes rather than sticking up for their clients

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By AnonymousUser
05th Jul 2006 10:19

I take it all back ..
after a nine month battle I have just won possibly the most marginal claim ever against HMRC ... perhaps I should be more intransigent more often!! No details in case he reads this.

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By User deleted
30th Jun 2006 16:54

Quit whining!
If you don't like the way accountants work maybe you should try doing it all yourself...
And maybe you'd like to publish your company's name so we know who to avoid?!
What a ******!

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By User deleted
30th Jun 2006 16:56

Are we really spineless?
I would love to be able to fight the taxman every time he demands a ridiculous amount of information on specific bad debts for example in a common way of bringing company cash in that isn't due. But if the client decides that days of work and paying me for my time liasing with the Revenue isn't worth it - that's it.

If isn't fair and it isn't right - but it's just not my decision to make - it's the client's.

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By Ken Howard
30th Jun 2006 20:36

Clients are the problem!
I am constantly surprised by just how feeble some of my clients are.

Just last month, an IT consultant decided to be "caught" by IR35. I spent hours talking to him about his contract, I reviewed his contract, we talked about his actual working practices, etc. I was convinced we would win if the IR35 claimed it was IR35. I told him about the insurance options (PCG, QDOS, contract reviews etc), and more importantly gave him spreadsheets showing the tax and NIC differences between being caught or escaping IR35. Then he decided the difference in tax/nic (about the average annual earnings!) wasn't worth the hassle and instructed me to pay him exclusively via payroll! Strewth, what a plonker!!!

Last year, a client had a tax enquiry (in depth) - tax inspector inspected the books and produced a long list of expenses which he claimed weren't "wholly and exclusively" - despite me almost pleading with the client to be given the opportunity to argue the case, client instructed me to accept them being disallowed in full and said he just wanted to know how much to pay, so he could sleep at night again.

Not to mention all the sole traders and partnerships that I can't persuade to incorporate (yes the bigger ones where there is still a benefit!).

Sometimes it's like banging your head against a brick wall. At the end of the day, a lot of clients just want an easy and stress free life - they are happy to pay more tax than they need to in the vain hope of avoiding the tax inspector, and as others have said, basically all they want is for someone to prepare their accounts and tax return for them and to tell them how much the cheque to HMRC should be for.

Now if someone could tell me how to spot each type of client, we could really make progress - we could stop wasting time trying to do tax planning for those not interested and concentrate on the others who really want to take things to their limits. Any ideas?

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By AnonymousUser
01st Jul 2006 09:42

yeah verily...
There was one client where I came up with a very creative (and perfectly legal) way to reduce their taxes by $10,000's. This was at his UK accountant's request; he insisted his clients shouldn't have to pay a penny more than they needed to.

I should have also discussed the plan with the client without his gung-ho UK accountant in the room. If I had realised they were Nervous Nellies; nearly every week they'd call to discuss their fear of getting "caught". Again I'd have to explain it was legal, how the scheme worked, when the benefit would be taken, etc., etc., etc. To top it all off, they were too afraid to follow one step of the plan, and ended up saving far less than we had originally intended for them to save. I was sick of being torn between the clients and their UK advisor after six months, but I had to keep them on for three years to assist them in seeing out the scheme. Thankfully they're someone else's headache now.

The real issue here is being clear what's most important to you upfront: Fear of the HMRC? Or getting every last penny you can? What I do for the first group is completely different than the service I provide the second group.

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By taylorag
30th Jun 2006 14:59

Would you like your teddy back..
.. or shall we leave it where it landed?

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By AnonymousUser
30th Jun 2006 16:11

Blame the system
The sad truth is that many businessmen, particularly the smaller ones, are incapable of maintaining business records that stand up to Revenue scrutiny.

Unfair though it may be, a Revenue enquiry is one of the few instances where the accused is guilty until proven innocent, and the burden of proof rests squarely with the taxpayer.

As far as standing up to bully boy tactics, I relish the challenge. However, if the taxpayer has landed himself in it through inadequate record-keeping or other default, but refuses, through his agent or otherwise, to accept Revenue stance the only way forward is the Commissioners. This approach, and/or continued defence by the taxpayer and his agent, will lead only to further costs, sometimes exceeding the additional tax at stake. At that point the taxpayer has to make a commercial decision as to whether it is financially viable to continue. To suggest that this amounts to the accountant rolling over is ludicrous.

Clearly, you have had a bad week. Pick up your rattle, go home for the weekend and have a couple of beers. It sounds as though you need them.

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By taylorag
30th Jun 2006 14:58

Would you like your teddy back?
Or will we leave it where it landed?

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