patnership client - 15/16 had a large tax bill to pay, profits had increased and they hadnt needed payments on account for the year
at the time we advised them that the next years profits were going to be higher, potentially tax due will be higher and gave them advice as to what they could do to migitiate the tax
they didnt follow any of the advice provided and 16/17 profits and tax are both up considerably
client is now emailing, having a whinge at the level of tax due and if things were done differently they could have saved some tax
not really sure how to respond? we clearly feel that sound advice has been provided to legimatley reduce their tax, but in light of the fact that the client has not takn it on baord, what else can we do?
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Tell them the simplest way to reduce their tax bill is to reduce their profits. Oh, and don't forget to disengage. Nobody needs clients like that.
"they didnt follow any of the advice provided and 16/17 profits and tax are both up considerably"
I think you have your answer here? If you provide advice and, client's chose to ignore it, the relationship won't last.
Dead bat it back to them.
"Further to me email of the XXX, when I advised you to YYYY, this would have helped you reduce your tax bill for the past year. It is now too late to do this for the past, but for the future you could ZZZZ. Ultimately profitable business pay a lot of tax, you should see your tax bill as a badge of your success, not as a mark of something going wrong"
Or "I told you so, you bunch of idiots". Said posh like.
If you'd disengage at every client quibble, you wouldn't have any clients.
Just be honest with them and tell them that the you have already explained the anticipated increase in profits and tax, and also provided advice on how to mitigate the tax burdon. Explain that if they choose to ignore your advice, or don't seek further clarification on that advice, then what do they expect you to do?
There's no magic wand, and there has to be some effort on their part.
Sympathise with their predicament and offer to increase your fee to reduce future profits.
If done correctly it'll either produce a
a laugh or won't have the problem from your ex client
What mrme89 said.
Sure, if this client is persistently a pain, you may decide to bin them. However, we have lots of situations where:
- we email client in Feb/Mar discussing current dividend levels and tax to expect,
- 6 months later we do their tax return, and they're horrified at the tax, despite it being as we flagged.
That's life. If we sacked every client like that we wouldn't have many left!
The hypothetical tax bill has become a real tax bill, and hence unsurprisingly feels much more painful.
Just let it go over your head give them an honest professional response, and let it run it's course.
I wouldn't choose to lose a client just because they are a bit of an [***], but I also wouldn't care if they left either. There are benefits either way.
EDIT: Why a.s.s is deemed to be a naughty word is beyond me.
Re your edit point I blame the Americans, if we stopped importing their slang you would not have the issue.
Frankly it is not Anglo Saxon enough.
b*llocks is ok
If you are going to swear, swear British.
Or do it in french. Merde is equally OK.
That said our ever vigilent moderators do take out my swears sometimes. The use of an underscore works too.
I'd go with the being honest option.
Engage with them and explain what you told them before and that they have not utilised that advice. Maybe explore why? Maybe they thought these were only estimates and didn't really think it would happen?
Going forward this for me outlines the positives of MTD. Clients will be forced to do more regular bookkeeping which we can then utilise 'in year' to give timely tax advice.
The only thing is either clients need to pay for that bookkeeping to be done or need effective training to do it properly.
The man down the pub is everywhere.
I had Friday off and was in the pub at dinnertime. Got talking to a plasterer who said he hasn't paid tax in years. Apparently, he puts everything in his wife's name. When I said, 'ah, so your wife is taxed on the income?' he responded 'no because she doesn't work'.
You couldn't make it up.