How do others charge for tax advice? Do you charge per hour, quote a fixed fee or a % of the tax savings?
I know I should have gone along to the talks on how to become a millionaire accountant at Accountex.
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If I’ve never done it before, I charge by the hour.
If I’ve done it before I say: “the last time I did work like this it cost £x. How does that work for you?”
Ha - me too, I could be sitting on my yacht by now.
Personally, I've done all three in the past with the first two being the most common. As most of my fees are fixed, I usually try to quote a fixed fee for tax advice or at least set an upper limit so the client has some idea of the maximum charges that could be involved.
What sort of advice - is it basic compliance work or complex planning? And what sort of sums are involved?
A sole trader with £20k revenue will be much more price sensitive than one with £1m revenue, even if the time/work involved differ by little.
My view is that, at least in the small biz world:
- clients are prepared to pay for compliance, but don't value it.
- clients value advice, but aren't prepared to pay for it ("why the hell are you charging me £200 for a chat?!").
I think that's why many firms (including ourselves) are drifting towards what could be seen as a high fixed price for compliance, but advice included "free".
I appreciate this isn't always viable.
No extra fees for any of that...but some of it is stuff we won't do. Eg IR35, we'll give some generic guidance. If the client wants a formal opinion with some legal weight behind it, we point them to QDOS's insurance/contract reviews.
Personally I feel a previous accountant being rubbish doesn't give new accountant carte blanche to charge a high fee for some quick stuff that any decent accountant should spot/be able to provide. I would just see it as an early win, making the client think "wow, glad I switched to this firm". One month in they'll be recommending you to all their friends. I totally accept there are opposing arguments which are perfectly valid.
Entirely agree with Maslins. Blow your own trumpet and make it clear how much you've saved them, but I simply charge a reasonable fixed price for handling what is fairly straight forward stuff, albeit I'd probably charge at the upper end in my mind if I was feeling confident in the relationship with the client. This will inevitably lead to further work with them, and referrals.
I'm just not comfortable with charging a percentage of tax savings extrapolated over 5 years etc, but then I have a small practice with close and long-standing relationships with clients, may be different in the more corporate world where clients come and go freely. I listened in for 2 minutes yesterday on a seminar at Accountex from the usual band as I was passing by, it clearly must work for some practitioners but 2 minutes was sufficient to remind me that I'm just not that kind of sales guy.
Entirely agree with Maslins. Blow your own trumpet and make it clear how much you've saved them, but I simply charge a reasonable fixed price for handling what is fairly straight forward stuff, albeit I'd probably charge at the upper end in my mind if I was feeling confident in the relationship with the client.
I'm just not comfortable with charging a percentage of tax savings extrapolated over 5 years etc, but then I have a small practice with close and long-standing relationships with clients, may be different in the more corporate world where clients come and go freely.
Agree.
Last big thing like this I did was with a loyal client (moved with me from my last employment), saved about £35k in CT by putting a holdco in to get group relief. Think I charged about £300 for the CoSec admin & the same for the advice. Actually maybe it was £750 in total. He really appreciated it and has stayed with me ever since, even though we’ve made a few minor errors that he’s picked up on.
I am increasingly charging more for established businesses moving to me when they themselves tell me their current accountant is rubbish. But of course whichever way you dress it up, none of them really want to pay an extra fee to sort out the past.
Advice? Always by the hour. If they feel its too much, go elsewhere. No compromise. Rather fewer clients and happy me then many happy client (who do not value the advice as cheap) with unhappy me.
And if they argue because the man in the pub had different advice I charge for that argument too!
If it's a new client then sometimes we would do that exercise right at the start to show what savings can be made. On an existing client we would look at it each year as part of the job.
We would charge a few hundred quid if we had to mess around with shares and appointing directors etc but not huge figures.