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Practitioner's Diary: It's all about team work

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31st Jan 2008
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Our West Country general practitioner is finding that this January is far less stressful than previous years.
* * *
30 January - I seem to be redundant in the tax section today, which is just how it ought to be. I have half a dozen phone calls to make to clients I know well, and I will probably have a few visitors today dropping off their Returns and wanting a chat, but at last I can get on with some proper work - like sorting a couple of tax enquiries that have been hanging around, and collating all the stuff I need to pass to my secretary for some new clients.

Money laundering has made taking on new clients a real pain! Our admin team delight in rejecting new client cases until we provide them with all the proper documents and verifications, so I know not to waste my time and try to by-pass the system.

* * *
29 January - The tax workflow system says we still have 97 returns to file. Take out the people we don't seem to be acting for - i.e. we did a return last year but haven't heard from them since - and the handful who have told us they are going to be late, and there's not much left.

A couple of very late cases drifted in today, "I'm not too late am I ...?" Well, as it happens we'll do what we can but no promises. In reality we'll be able to get something out, even if we have to make some estimates and file a repair next month! At least they know they will be paying a premium rate.

* * *
28 January - Couple of the tax team came in briefly over the weekend, but no-one's having to go mad this year. We are down to the last few cases, but this week looks like much of the tax return work will be the admin team getting on the phone and chasing down the signed returns.

* * *
25 January - Just a week left and the tax team are pretty upbeat about finishing everything on time again this year. Once again we have identified the clients who are inevitably going to be late, so we can ignoe them for now. If it hadn't been for the extra block of clients we took on at the last minute I reckon we would have had a very easy month.

As I have said before, this has been a process over several years but my tips for anyone struggling to meet the deadline would be:

1. Get some tax return software that includes workflow tracking, and make sure everyone uses it. That way you know exactly where each return is and don't risk forgetting anyone. When new clients are taken on one of the first admin tasks is to set them up on the tax return database.

2. Delegate, delegate, delegate! Make sure your tax people do the bulk of the return work and don't let the partners get involved in the detail. Even a sole practitioner can train his or her secretary to input basic stuff - P60s, interest, dividends, etc - into the tax software system, and to operate a chaser system without any external input.

3. Train your clients - tell them what you expect, remind them annually, and stick to your guns.

4. Process tax return data as you receive it, don't prevaricate! You'll be surprised how many of this month's returns could have been finalised six months ago!

5. Unless you're starting a new practice it will take a few years to get staff and clients trained to work the way you want them to. Be patient, but be determined.

* * *
22 January - Speaking to colleagues across our firm, and to tax accountants and their clients generally, I really wonder where we're heading. As I write this (8.30pm) there will be accountants across the UK feverishly working on last minute accounts and tax returns. The question is, why?

Leaving aside the obvious answer (- because they have to be submitted to HMR&C by 31 January), it appears to me that:

1. Accountants are generally too soft. Many of these extra hours and overtime being worked will be charged at normal rates. In most cases it is only worth an extra £100 (the cost of a late filing penalty) to the client anyway. And since many accountants have happily accepted last minute jobs for years without complaint there is little scope to up the fee this year.

2. A lot of this work is being done by far too expensive people, so they are having to work extra hours just to make their target recovery rate or fee budget for the month. Why? Because many accountants I have come across are insanely protective of their own clients and won't seek help from junior staff. That's why many of the extra hours being worked this month are being charged (if they are recorded at all) by senior tax accountants fiddling about with tiddly I&E accounts for subbies and the like! Presumably their firms don't have enough appropriate work for them to do at their normal charge rate ....?

3. There is no shortage of demand for good compliance services, there's still good money to be made out of doing such work - even without sending it to India - but too many firms are making a complete pig's ear of it. In fact, good source of compliance work for us is incompetent sole practitioners - their ex-clients are just SO appreciative of good service, they understand the extra value they are paying for with us because, as Sainsbury's like to say, they have "tasted the difference"! How many times have I heard sob stories of records handed over to a sole practitioner (and let me say these are generally ICAEW or ACCA members, not unqualified back street crooks) and never seen again? I am currently working on 2007-08 accounts for two new clients who have been unable to get accounts or 2007 Tax Returns out of their previous advisers, time is running out and they have no idea if they have tax to pay this month, or how much.

4. Accountants are prevaricators! They must be the worst time managers, and must be some of the worst time wasters around. Just get your act together and organise your client work to get more tax returns done sooner! It CAN be done, you just have to decide to do it. We have seen an enormous improvement this year in getting tax work done sooner, but it has been a gradual process since Self Assessment began. So this summer, make sure you complete an extra tax return before each illicit round of golf, or set targets for your tax team, and maybe offer them some incentives for meeting their targets. None of them want to be working weekends during January.

My suggestions for a happier January 2009 are:

1. Set clear rules for clients and stick to them. Set fees and timescales, and make sure all your team knows what they are. Get rid of non-compliant clients and bad payers. As Ron Baker says, bad clients drive out good ones.

2. Manage compliance work as a business within the firm - and don't let the tax partner anywhere near a set of accounts!

3. Set yourself service standards that will set you above the crowd, publicise them and make sure clients appreciate the extra value they are paying for.

4. Resolve to get paid what you're worth next year - which probably means working fewer hours but doing better work for the clients you DO work on. And learn to delegate - it's the best lesson you'll ever learn!

* * *
18 January - I was just totting them up today, I have averaged one new incorporation per working day this month so far! That's a nice growth in the corporate side of our client base, although of course most of these won't generate much in compliance fees for a year or so. However, there will be tax and business planning work to do - may be more of the former if the Budget throws in a few anti-small company changes this Spring. Despite the CT increases and the Arctic Systems upset there is still a decent tax saving to be had by trading through a company.

Frankly the so-called tax loss (it's really an NIC loss, but it all goes the same way) is peanuts to the Treasury so I will be surprised and disappointed if there is much of a change. Leave small companies alone and the good ones will become big companies - and big employers. It's a small investment in UK plc after all, but the potential future benefits are huge.

* * *
17 January - I see from the just-published HMRC stats that 489 poor souls filed their SA returns online on Christmas Day last year (and a further 1,876 on Boxing Day). Practitioners take note - the SA online system should be working at full speed during the festive season, a good opportunity to avoid the potential January Internet go-slow in future!

To be helpful, HMRC have "suggested" that we should avoid filing returns this month on weekdays between 10am and 12 noon and mid-afternoons. Some chance.

Note to self: discuss with Mrs P the possibility of working on Christmas Day this year ...

* * *
16 January - This time of year tax accountants across the UK are learning to say no - or wishing they had. So far this week I have turned down one new client but accepted a couple of new instructions (for 2006-07 tax returns) from referrals from existing clients, more out of a desire to show my appreciation to my existing client than out of any desire to take on new work this month! The trick, of course, is getting paid a premium fee for getting the new client out of a hole at this late stage.

Returns are getting completed and heading out the door at a fair rate and the tax team is still pretty upbeat about making the deadline. Good to see that Royal Mail is getting back to normal after Christmas, so at least we are receiving our post at a steady rate (instead of in fits and starts, as we did in December) and there are more and more signed tax returns in each day's post bag.

* * *
14 January - Still getting calls from worried clients chasing their SA statements. There is clearly a problem out there - I can't be the only one can I?

In one case we filed the client's Tax Return online in June, we have an agent copy statement dated 29 November showing the correct amount of tax due. But the client hasn't received his statement, just a reminder to pay tax with a blank payslip. The client spoke to HMR&C and was told that a computer glitch meant that no statements had been sent!

I spoke to one of our local tax offices on Friday who denied there was a computer glitch but they did confirm that "statements had not yet been sent to individuals but hopefully they would be before the end of the month." Not much help at all for unrepresented taxpayers!

At this late stage I am not sure which tax offices this affects. Another client has told me this morning that his wife has received a statement from Devon Area but he has not received a statement from Central Yorkshire Area.

This does not bode well!

* * *
9 January - My tax assistant tells me that if we each manage to file two tax returns per day this month we'll get them all finished. Having completed the Returns for a 6-partner firm yesterday I am well ahead!

Is it me or has the post gone AWOL recently? I must have taken a dozen calls this week from SA clients who have not received their taxpayer statement and tax payslip for 31 January yet. In fact, I haven't received mine yet. It is very inconsistent - in several partnership cases some partners have received their statements but others or their wives have not. Just when the Tax Return system seemed to be working a bit better something else grinds to a halt! Oh well (as Peter Green would say).

* * *
7 January - Letters have all gone out to these new tax cases assuring them that we will do our best to make the filing deadline so long as they co-operate. Looking at the files and in the light of telephone calls with some of them
it may not be plain sailing. Our predecessor seemed to be happy to fill in the gaps himself if clients were slow in producing the information - not something I am prepared to do - so some of these clients will need to get their act together if they want us to help them this year. Previously I have filed at most one return a year with estimated figures, but it looks like that may change this year.

* * *
4 January - Last month my tax team were pretty upbeat about the prospect of having an easy January, the tax workload was well under control. The first week back has ended with a phone call from a sole practitioner with whom we have an "alternate" agreement. For reasons which I won't go into he has ceased to practice with immediate effect and we are picking up 100 or so small tax and business accounts clients from his office this weekend!

From what I have seen of his files we have a few immediate problems:

1. I can't find all his files;
2. The files I have seen are very poor; and
3. As always with these cases, we are going to have to match his normal fees, which are somewhat below ours, without taking into account the work required to bring files up to date!

- but apart from that it looks like a piece of cake. If the whole team works evenings and weekends this month we should be OK.

* * *
3 January - I was never one for new year resolutions, but this seems like a good opportunity to offer my predictions for practitioners in 2008 - and to invite readers' suggestions of their own (go ahead, post a comment below).

1. We won't be troubled by online accounting - we heard a lot about this on AccountingWEB in 2007, but it just ain't gonna happen in a big way in the SME market that most practitioners serve. The biggest reason for me is that the Internet is just so slow compared with desktop applications on the latest zippy dual processor PCs. Added to which, small businesses don't want to spend money on accounting software, and they certainly don't want to pay a monthly fee for it. So sorry Dennis Howlett - I would love to be proved wrong on this, but I don't think I will be.

2. There will be no significant improvement in the service we receive from HMR&C, or in the underlying tax system. I joined the profession in 1979 and the system has just got steadily worse and more complex each year, and I don't see either the present government or the Tories wanting to change this. Arctic Systems/profit shifting alone should keep us busy all year without the CGT changes!

3. The ICAEW will waste members' funds on an abortive merger and/or a new logo. Happens every couple of years, why not this year too?

4. We'll get another easy year on IT budgets. There is no urgency to change Windows operating systems or Office suites in 2008, so now's the time to buy some cheap hardware and consider upgrading other applications. Practice management, tax and final accounts software vendors should have a bumper year.

5. We had websites, then blogs, then podcasts - what's next? The only thing left is video. Look out for widespread video podcasts and website content by the end of 2008. AccountingWEB TV could be just round the corner folks!

6. The return of the sub-contractor? Recruitment is the big issue for many smaller practices, while work/life balance is the biggest issue for employees. I foresee an even greater move towards flexible working, employees working increasingly from home and firms engaging more qualified accountants on a sub-contract basis for certain periods (e.g tax filing) or specific projects rather than taking on permanent employees.

7. Advisers and their clients will reach email overload and simply turn off their email, at least periodically. Some big businesses have already started email-free days. I'm not sure whether white lists or better spam filters are the answer, but I'm sure someone will offer us a new software solution. I just want a solution that doesn't pressurise me to respond to mail instantly.

8. A pracice guru from a developing economy such as India will appear and step into the shoes of the likes of Accountants Bootcamp/AVN/2020, etc and turn the profession on its head again. I have no idea who this might be, but keep an eye open for him (or her)!

9. Practitioners will start to actively shed compliance work. The doom mongers have always predicted that firms would lose compliance work to outsourcers/unqualified accountants/etc, but I reckon we're going to see firms actually getting rid of work before it walks of its own accord. Once they realise they are making negligible profit from compliance work - in exchanges for which their clients are unappreciative, uncooperative and very liable to sue for any mistakes - more will actively move out of this area of work on their own initiative.

10. Mrs P will still be moaning at me about fixing the gutters (I can guarantee this one!).

Happy New Year to you all!

* * *
Last year ended for our practitioner with a CGT flavour - for a recap, visit his December diary.

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Replies (8)

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By AnonymousUser
06th Feb 2008 16:47

Or alternatively ...
... you can use the LexisNexis KYC ID searches instead, which give you access to media citations as well, particularly negative media comments. See http://www1.lexisnexis.co.uk/kycid/index.html

Mike Truman
Editor, Taxation magazine
(published by LexisNexis)

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David Winch
By David Winch
31st Jan 2008 07:50

Verifications for MLR

There is a growing trend to use online electronic verification as part of the customer due diligence process. It is instant and hassle free (where there is a positive confirmation) and cheap. It can also be used for existing clients. (It deals with issues like "enhanced" due diligence for clients whom you do not meet and "politically exposed persons" too.)

However you are supposed to inform clients that you are performing / have performed an electronic ID check, and whilst an electronic check will confirm that there is a Mr Del Boy date of birth 25 December 1950 living at 25 Acacia Gardens, Neasden - it won't tell you that the person purporting to be Mr D Boy actually is him.

However if you send (by post) an engagement letter to Mr D Boy at that address and it is signed and returned to you then that, combined with the satisfactory electronic check result, should be enough verification of his ID for MLR purposes.

It can be less hassle than reminding him three times to bring in his passport / photo driving licence and other ID documents (oh, and for his wife too where she is a partner / director / significant shareholder in the business.)

The electronic check for an individual typically costs about £4 plus VAT from suppliers such as CallCredit or AMLSearch.

It might remove some of the "real pain" you speak of and let you get on with the real work!

David
www.MLROsupport.co.uk

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Dennis Howlett
By dahowlett
04th Jan 2008 15:04

oh dear
Which means the 250,000 users I know about must be kidding themselves.

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By kenfrost
04th Jan 2008 17:17

New Year
Some of these predictions are past their prime I would say:

Re 2, No kidding! See www.hmrcisshite.com

Re 3, I doubt that; Izza is in no mood to go down that route this year (see www.icaew.info)

Re 5, been there seen it done it 2 years ago (see www.icaew.info)

Happy New Year

Ken Frost

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avatar
By User deleted
06th Jan 2008 19:56

Sorry Dennis
I had a feeling that comment would smoke you out! This remains a puzzle to me. According to Dennis and other pundits there are already more online accounting users out there than the sum total of small businesses in the UK - well, almost ;)

But across our firm and accountants I speak to in the South West we have few if any. Where are they all? I have signed up to three free/demo online services - does that make me three of the quoted stats?!

"Which means the 250,000 users I know about must be kidding themselves" - why? About what? I don't see that that follows at all. I'm simply saying the evidence before me suggests that this isn't going to happen with the SME businesses I come into contact with. I am not sure why my actual experience would turn other people into "idiots", as Dennis says in his Blog.

For the record: I understand the benefits of online accounting and SAAS generally. I will be very happy to promote online accounting when my clients show an interest in it. In fact, I'll promote it when they start to show ANY interest at all in accounting - which doesn't look like any time soon, so I'm not holding my breath.

What would help most would be the final demise of paper cheques and the well-overdue introduction of proper electronic bank statements like they have in Netherlands etc. This would revolutionise SME accounting.

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By User deleted
07th Jan 2008 09:23

Online accounting: Maybe not all UK users?
Maybe also large corporates, where employee numbers are taken into consideration? Give us a clue Dennis, I know of some large players in the market, and they must be selling the services to someone!

7. Email overload: Reached that point, just ring me if you want an instant answer.

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Dennis Howlett
By dahowlett
07th Jan 2008 13:34

OK so here you go
The number for small businesses quoted is way out by a factor of 10.

What *I* am seeing is small businesses looking for firms able to accommodate online systems, not those who already use incumbent packages or who don't 'get it.'

They want the direct link to the firm that online provides. I know of several firms that are handling (respectively) 16,000, 12,000, 8,000 clients in this manner.

These practices are highly profitable. Way above the AVN average.

I know of other firms that have offshored their operations and can only handle clients in this manner. MYOB is building what I call a 'middleman' solution out in the Far East designed to act as a factory for compliance work. I don't think this will work unless they get their prices right.

The problem I see is that *most* practitioners understand that online solutions change the power relationship between practitioner and client but do not understand that it provides the potential for added value service. They believe the SMB is only after a basic service at a set price. They are *wrong* but don't get it.

I will be writing about this more over the coming year at my own place and at a soon to be launched ICAEW members site. I am also considering running events that discuss this is more detail. And as a piece of total self promotion, I do advise practitioners on this topic. There is a growing interest.

In the interests of full disclosure, I have a small interest in FreeAgent Central which is aimed at freelance service providers.

Readers are welcome to check out our customer support site to see what our users are talking about, requesting etc. We believe this provides an excellent lens into how customers think, one of the most important issues for any service business. We also believe that transparency is paramount in building a quality service.

PS - here's a good example re: cashflow

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Dennis Howlett
By dahowlett
08th Jan 2008 04:00

Here goes part 2
If you haven't read it, I urge you to get hold of Access Accounting's report on the future of financial applications that is kicking around on AccWeb here

I am going to comment on it extensively because despite I believe there are some holes in CEO John Beech's discussion around the numbers, the message that comes out loud and clear is that on-demand (in one or other of its many forms) is here. CFO/FD types ARE looking at it very seriously.

If you're not in shape to advise or assist then there are others who are. This is a HUGE opportunity and those who miss it are going down the toilet of irrelevance.

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