According to independent research, the service clients’ value most from their accountant is tax planning. And the thing clients want most from their accountant is “proactivity”. So, taken together, this suggests that proactive tax planning is one thing that every single practice must be extremely good at.

Survey 1 – What accountants do

The result of my 2007 survey of over 200 partners are, therefore, really very worrying.

I asked those partners whether they had ensured that every single one of their relevant clients had been given four specific pieces of tax planning advice. Less than 5% of partners said they had given that advice in every case where it was relevant. This means that 95% had not been proactive in giving their clients even quite rudimentary tax planning advice.

And when I asked them about how good they were at proactively sharing genuine leading edge tax planning ideas – such as tax avoidance strategies that could save clients really large amounts of money – most accepted they were failing completely.

This 95% or more failure rate no doubt accounts for the other independent research finding that 90% of clients don’t think their accountant is saving them as much tax as they should be. After all, it appears that those clients are probably right… in 95% of cases their accountant probably isn’t saving them as much tax as they should be!

In my view this is tantamount to negligence. According to the ICAEW, however, it is not necessarily negligence, since “it all depends on what the engagement letter says”.

But regardless of whether this is, or is not, technically negligence – it is certainly commercial stupidity, since as a result most firms are (a) letting clients down, (b) missing out on the opportunity to cross-sell additional tax services, and (c) running the risk of losing the client to an accountant who is more proactive.

Survey 2 – What clients think

I also asked the same 200+ partners the following: “How would your clients react if they discovered that their lawyer could have saved them tens of thousands of pounds on a transaction they were advising on, but they didn’t have the time to tell the client about it, so the opportunity was missed and the client was £000s worse off?”

On this issue every single partner I surveyed was crystal clear… their client would be furious, would find another lawyer and may even sue.

And then in the “penny dropping” moment, I asked them the further question: “Do you have any grounds for believing that your clients would feel any different if they discovered that they had missed out on an equivalent amount in extra cash from all those tax planning and other ideas that you never quite got round to proactively telling them about?”

The solution

Most clients don’t care that you are busy, or that some types of tax planning are difficult for you to get to grips with. They are paying you to help them, and they expect you to do it properly.

They expect you to give them the option of paying as little tax as possible. And that has profound implications for your approach to leading edge tax planning.

Clients don’t want you to hide behind excuses such as “we don’t have the time” or “its outside our skill set”. And in the case of tax avoidance options, they don’t want you to decide for them on the basis that “because we are risk averse, we don’t want to get involved”.

Instead, especially where the tax savings are potentially very large, they want you to tell them about their options, quantify the likely amounts, explain the pros and cons, give your opinion… and then let THEM decide for themselves.

Silence on advanced tax planning, therefore, is not an option. You have to tell your clients about all the possibilities that are relevant to them – even the advanced ones.

And if, for example, you don’t like certain tax planning strategies, make that clear by prefacing what you say like this: “As your accountant I have a professional responsibility to tell you that you may be able to get up to four years worth of income tax back. But it involves tax avoidance. And I am personally not very comfortable with tax avoidance because there are usually risks. But clearly it is for you, not me, to decide whether you are interested in paying no tax. So if you are, I can find out more for you, and run you through the pros and cons so you can make an informed decision as to whether, from your perspective, the benefits outweigh the risks”.

By doing this they will never be able to accuse you of not giving them the chance to cut their tax bills even further.

Instead they will know you are proactive. They will be grateful. Because you are giving them what they want, they will become more loyal. In many instances your proactive suggestions will lead them to buy additional tax planning services from you. And they will refer others to you because you are so proactive.

So your practice will become more successful and profitable.

And that’s the way business works – because profits are a consequence.

Your next step

In future articles I will set out a simple step by step system you can use to identify the most relevant and highest impact ideas (including tax planning ideas) you should be proactively sharing with your clients.

But if you can’t wait until then, and want to start giving your clients a better service straight away, email me at steve@avn.co.uk [1] and I will email you back with everything you need. And because you will have proven yourself to be an action taker, I will also invite you as my guest on 3, 10 or 17 June to a full day’s training on how to be more proactive with tax and every other aspect of your practice.

Steve Pipe FCA can be contacted on steve@avn.co.uk [2]. He is the Chairman and founder of the 250 practice strong association of leading accounting firms, AVN, and a leading researcher into the commercial issues and opportunities facing UK accountancy practices. He was also the editorial adviser to the ICAEW’s groundbreaking 2005 Report, and is the author of the 2008 White Paper “The proactive accountant”.

Copyright retained Steve Pipe and AVN 15 May 2008.