Last week, Wendy Bradley highlighted the results of a survey by Deloitte, which suggested that the average person knows very little about tax.
Her article explores the subject in good detail but a couple of points arise that could be of interest to those of us who practice this arcane and sometimes sinister art.
Accountants inevitably deal with those in the higher echelons of society and therefore show surprise when they discover that the majority of the population has no knowledge of or interest in the tax system.
The way things are currently set up, most people pay tax at source and don’t need to concern themselves with completing returns or paying additional sums at higher rates.
In the same way that someone who doesn’t drive a car need have no interest in congestion zones, those with no real integration into the tax system can ignore it and still live a happy and fulfilled (if not necessarily very prosperous) life.
A much more serious issue arises around those who think that they understand aspects of tax legislation in operation but do not. They come in two different varieties.
First, there is the know-it-all who typically runs his or her own business and insists on using the services of your firm. When you explain that claiming deductions for expenses that you haven’t incurred is unlawful (whatever happened to illegal?), their immediate response is either to ignore your advice or, much worse, challenge it at very great length citing the examples of every single competitor who repeatedly flouts the law.
We all meet clients like this on a regular basis and, quite frankly, lose a great deal of sleep worrying about what they are doing to themselves and the potential reputational damage that we could suffer by association.
The second brand of self-appointed “tax expert” is potentially even more dangerous and considerably more irritating. These are our esteemed colleagues who are supposed to specialise in other disciplines: for example audit or, in bigger firms, sales.
These irrepressibly confident individuals may not have studied tax or kept up with legislative change at any point in the last quarter-century but will happily explain to clients that if you take steps X, Y and Z then there will be no need to pay any tax on a massive swathe of income.
It goes without saying that the people receiving this information will be delighted, appoint your firm to deal with their affairs and then expect the results that they were promised.
Somehow, the used car salesman who has transformed him or herself into the smiling face of an accounting practice is never the one that has to explain that their promises were built on sand.
Tax legislation is frequently unfair, illogical and changes with the wind. It is therefore perfectly reasonable that the average man or woman will be ignorant but, coming back to the point earlier, who needs to know what goes on beneath the bonnet of a car if you always take public transport?
The big positive that every tax specialist should be able to derive from the Deloitte survey is the knowledge that our services are desperately needed.
While many people can get by quite happily thanks to the PAYE system and an exemption on small amounts of investment income, most others are totally fazed by tax legislation and will be delighted to pay an expert, if only we make them aware of our existence.