How can I compete with cowboy accountants??

How can I compete with cowboy accountants??

Didn't find your answer?

This is more of a rant than a question, but interested to know if others feel the same.

I'm continually getting clients telling me things like "My friend's accountant lets him expense all his business suits through his company" and "Every time I go out for dinner with my friend he keeps the receipt and puts it through his company to get the tax back" and "My previous accountant told me to pay the saving I made on the flat rate VAT scheme directly into my personal bank account, putting the payment reference as "free money"" and "My friend is also self-employed and he says the only tax he pays is £2.70 a week national insurance, why can't you do that for me?".

Now I know there's a good chance that the first two were promptly disallowed in the tax computation by the accountant in question, and the client didn't check the return carefully enough to understand what had happened, and the last one probably isn't paying any tax because he isn't making any money, but it still makes it hard to keep clients happy and therefore retain them.

Rant over.

Replies (31)

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By RogerMT
21st Aug 2013 11:43

All but the "My previous

All but the "My previous accountant..." one are classic cases of "My mate down the pub says..." My stock response is along the lines of "If you fell down the stairs at home and broke your arm, and I was there, would you let me, your accountant, set it, or phone for an ambulance?"

As for the accountant, he could tell the client to describe the transaction like that, but how he treated it in the accounts is (hopefully) another matter entirely, and I'd tell the client that!

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By wilcoskip
21st Aug 2013 11:56

Horror stories

I have enough horror stories from Revenue investigations to deter anyone thinking that way.  I also point out that when the Revenue come knocking, the client is responsible and blaming it on the accountant won't help.

The people who want such profit-minimising techniques are also the first to complain when they can't get a mortgage due to little or no income being shown on their tax returns.

WS.

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Replying to Matrix:
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By Accountant33
21st Aug 2013 12:11

True that!

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By whatdoyoumeanwashe
21st Aug 2013 11:59

Thanks. You'd hope that was the case re the accountant, wouldn't you? The problem for me is it's instilled my client a complete lack of understanding of the distinction between himself and the company he owns and runs. The real irony is the client concerned is actually a qualified accountant.....

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By Tosie
21st Aug 2013 12:53

show how little tax is involved

I say do you want HMRC crawling all over you affairs in order to save a couple of £100 this always works for me.

If they insist in paying for private stuff out of company accounts I just charge it against directors loan.

Everybody happy

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By ver1tate
21st Aug 2013 13:02

The real irony is the client is actually a qualified accountant

But which body? Has he passed any exams. It is possible to buy accounting degrees on the internet. 

On balance, is the risk of a tax saving of about £100 on a suit a good gamble against an HMRC fine, plus probable supervision of the accounts for the next six years? 

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By neileg
21st Aug 2013 13:50

£100 tax saving on a suit

When I buy mine from British Heart I only pay £12.50!

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By MJShone
21st Aug 2013 14:08

"But the Revenue would never find out"

Even when you explain to people that it's wrong, they'll often query whether the Revenue would ever find out. Since they've already dismissed the moral/legal argument, the best response is the practical one - tell them that they'd be very surpised what employees, other halves, so called friends etc tell the Revenue when the relationship goes wrong!

If the potential client/existing client still wants you to collude in something illegal, then the cowboys are welcome to them.

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By ACDWebb
21st Aug 2013 14:19

What's the betting

that they're all up in arms about Starbucks, Vodafone, etc,etc...

Seen it on other forums where they moan about the legal avoiders and then with the next breath wonder how they can get something bought on eBay from the US in without having to pay the VAT/Import Duty :(

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By andy.partridge
21st Aug 2013 15:31

Easy

You differentiate yourself by being professional, knowledgeable, honest, reliable, friendly and loyal. 

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By whatdoyoumeanwashe
21st Aug 2013 15:43

@ver1tate: CIMA would you believe.

@neileg: Did you gift aid your £12.50?

Thanks everyone. You've given me some useful ammunition. Won't work on every potential client, but as MJShone says, I don't really want those clients anyway. At least I wouldn't if I was fully utilised...

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By User deleted
21st Aug 2013 15:57

There's the rub ...

... CIMA don't major on tax law, they do a bit of basic business tax in the first level of the qualification.

http://www.cimaglobal.com/Study-with-us/CIMA-Professional-Qualification/Operational-level/

It is a different branch of accounting and akin to asking your dentist to deal with your verrucca!

 

 

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Replying to tonycourt:
By redman7
22nd Aug 2013 07:24

No, there's not the rub

Old Greying Accountant wrote:

... CIMA don't major on tax law, they do a bit of basic business tax in the first level of the qualification.

http://www.cimaglobal.com/Study-with-us/CIMA-Professional-Qualification/Operational-level/

It is a different branch of accounting and akin to asking your dentist to deal with your verrucca!

 

 

Totally irrelevant

I'm a CIMA MiP (and possibly taking your comment personally)

I have seen some real cowboy work over the last 12 months during clearance of new clients - basic issues - none of these previous accountants were CIMA, they were all ACA or ACCA. You can't judge anything from the body they are a member of. It means nothing at all I'm afraid.

RM

 

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By whatdoyoumeanwashe
21st Aug 2013 16:13

The distinction between company and person is as much a matter of company law as tax. Granted CIMA may not focus on that much either, but nonetheless it ought to be first year stuff..

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By The Innkeeper
21st Aug 2013 16:22

the other way to keep them

on the straight and narrow is to explain that the £100 or so actual cash benefit will be used up in costs of an investigation in about 1 nanosecond

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By tom123
21st Aug 2013 17:00

Basic ethics / common sense

I would have thought that anyone attempting to embark on an accountancy qualification would have realised that putting personal expenses through the business was wrong - regardless of qualification.

Whilst CIMA does not have a great deal on tax specifics, It does have an ethics component - as all of the quals do.

I am disappointed in my fellow CIMA member, I must say.

 

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By taxhound
21st Aug 2013 18:05

i recently lost a potential client

because she realised her tax bill would go up if I was her accountant when I told her she could not claim home to work travel as a hairdresser in a shop, nor a big chunk of her utility bills PLUS £10 per week use of home as office (she is a limited co) when she was barely working from home.  £4 per week claim would be tops, plus some of her motor running costs in addition to mileage(which she should not  have been claiming most of in any case).  All of which her current accountant (chartered) allows.

Personally I would rather not have the client than put through dodgy claims.

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By ver1tate
21st Aug 2013 20:32

I would rather not have the client than put through dodgy claims

As would all honest accountants. Your lfuture is at risk over saving a few pounds for a client.

Save him a few pounds this year, and next year it will be a few hundred, rising every year.

Then when he is challenged as no doubt he will be, the blame will be put on you.

Start as you intend to finish-------honestly.

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By User deleted
21st Aug 2013 20:49

On a different scale, perhaps ...

... but if your clients insist on challenging your treatment, perhaps this would help you explain why you prefer to do things honestly and to leave the dodgy stuff to others https://www.accountingweb.co.uk/article/montpelier-executives-charged-ov...

 

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By Chris Smail
22nd Aug 2013 00:39

Do not compete, differentiate

.

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By LancsAccountant
22nd Aug 2013 07:17

Try this - I do:

Ask your client to ask his 'friend' to actually have a look at his/her accounts and tax return, to see whether the tax savings are actually there. Or has the 'mate in the pub' just embellished/misinterpreted  the story.

You'll find that nothing ever materializes.

And then I say - Told you so - its just the beer talking!

 

 

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By User deleted
22nd Aug 2013 09:51

Don't take it personally ...

... there are different arms of accountancy, same as different branches of the building trade.

You wouldn't get an electrician to fit a new bathroom, or a plumber to re-wire your house - but there are still cowboys in both trades.

Same with accountancy, a CIMA majors on management information, budgeting, cost control etc. I am not excellent at those areas, as an ACCA we get taught a general understanding, but our qualification is aimed more at financial accountanting and tax compliance. Our management accounting is aimed more at interpretation than compilation.

Not saying both can't do either, but if someone has worked as a company accountant all their career they are less likely to be strong in tax compliance as it is not that relevant to them.

Ath the end of the day you can put what you like in your accounts, costings, budgets etc. What gets knocked out on the tax comp, or goes on the P11D is another matter!

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By accountsdragon
22nd Aug 2013 10:31

It's not the qualification, it's the attitidue

Having worked in industry, my clients like my practical experience.  However, I am well aware that my CIMA qualification and past experience have not given me detailed tax knowledge.  But that has not prevented me from studying Tolleys Taxwise, AWeb, and the HMRC website etc.  Dare I say I probably have a good chance of getting things right because I do the research.  

No accountant with integrity will rely on age-old qualifications.

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By andy.partridge
22nd Aug 2013 10:49

Attitude and aptitude

Overdue rationalisation of the institutes should put to bed the hackneyed debate of 'my qualification is better than yours'.

Aptitude, CPD and insurance. ACA, ACCA and CIMA Mips all have these.

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Replying to DJKL:
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By ver1tate
22nd Aug 2013 17:32

Qualities

Aptitude, CPD and insurance. ACA, ACCA and CIMA Mips all have these. As do many other bodies.

As far as those stating that accountants are relying on degrees acquired many years ago, I agree with your point about CPD. On the other hand, I have been in London and met accountants ( doctors and other professionals) shopping with their wives, who have freely admitted that they are in London to get CPD points, but after signing in they then hit the town until it is time to sign out. Much better to refresh your degrees as I did aged 60, and continue getting CPD points. 

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By chrisdxuk
22nd Aug 2013 11:29

Experience goes along way

From AccountsDragons ".....No accountant with integrity will rely on age-old qualifications"

Putting in my 2pences worth, I gotta say a lot of the work I see from "unqualifieds" could knock the supposedly superior Institute's qualifieds into a cocked hat. 

Experience goes along way....

 

 

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By CW2012
22nd Aug 2013 11:33

This problems rankles me constantly, I regularly see clients with the my mate stories, the worse incident I had was a client who new where I lived and called at my house 10pm on Christmas Eve because he'd been told a [***] and bull story in the pub and wanted to clear things up to stop it ruining his Christmas. Turns out he been told a pack of nonsense, he wasn't too keen on the bill that hit his desk post Christmas but he never troubled me at home again.

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By ccassociates
22nd Aug 2013 12:04

The Man down the Pub

The Man down the pub is just a loudmouthed liar who is trying to impress and belittle you.

That is the advice I give my potential client.

I also tell them that you can put any receipt you like in your bag of records, I like to see everything with a £1 sign on it, but I decide whether or not it goes in the P&L or in drawings

I also remind them that putting in petrol receipts or any receipt that they get off their mates only increases cash spent which if unexplained generally is added to sales, therefore they are now paying tax on their mates fuel.

If they dont like the way I do things I suggest they ask their mate for his accountants phone number

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Glenn Martin
By Glenn Martin
22nd Aug 2013 14:51

Try Mr Singh

There is an accountant in Newcastle that uses this marketing line

" You have tried the Cowboys now meet the Indians"

It did raise a titter when I saw his leaflet.

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By pembo
22nd Aug 2013 15:18

urban pub myths

If I'd had a £1 for every "mate down the pub" story I would have retired by now. All you can do with factual inaccuracies is to put them straight and point out that HMRC take a dim view of such matters that are actually illegal. As for comparing tax/NIC paid how can you possibly comment without knowing the detail of the other guys affairs.

Think this is where your relationship with the client is crucial. If they trust you often they come out with stuff like that to wind you up but if not they may leave if they don't buy your response. Trouble is people like to hear good news and ignorance only fuels this desire. Had a recent case where a client was told they could get £30k CT back through R&D claims for a 25% fee (non refundable of course). They claimed they could base the claim on a % of turnover. The other slight issue was that firm did not do any qualifying R&D.

After I set the client straight that this was illegal and HMRC would be over them like a rash with interest/penalties and that I would resign if they did it they phoned them back and told them to p*** off.

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By courty61
22nd Aug 2013 16:16

Had one recently when someone was told in pub - great way to avoid tax for a sole trader, have a set of accounts with the year end in 50 years time, with small estimates of income/turnover put on for each year on your tax return.

Was being 100% serious too. 

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