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Dog with lead | AccountingWEB | Could Labour be the accountant's best friend?
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Could Labour be the accountant’s best friend?

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A new government could mean fresh opportunities ahead. Take the lead with your clients and get proactive with tax planning ideas.

3rd Jan 2024
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It is almost certain that 2024 will be an election year. Judging by polling over the past few months, Labour are odds-on favourites to take power towards the end of the year.

Many accountants will throw their hands up in horror at the prospect, although Sir Keir Starmer and Rachel Reeves have been so vague about their plans that panic may be premature.

In any event, they have offered a substantial list of promises regarding the economy and the tax regime, many of which sound suspiciously like watered-down versions of the current regime’s plans.

Even when party manifestos are published in the not-too-distant future, we may need to take them with a pinch of salt, given the regularity with which they are ignored or forgotten once the relevant party gets into office.

For most accountants, the key question is what can we expect from Labour in the realm of taxation.

In broad terms, the Conservatives would love to abolish all taxes, especially those on the wealthy, while Labour has historically been keen to help the common man and get the rich to pay.

Just do nothing

Based on the limited information currently available, one could argue that the best approach is to do absolutely nothing for a number of reasons.

First, the Conservatives might just get back in. Were that to be the case, then you could see inheritance tax disappearing, massive tax breaks for big corporates and maybe even handouts to everyone from the moderately wealthy upwards.

Secondly, Labour might only manage to come into power as part of the coalition, constrained from doing anything radical and awaiting a second general election that might or might not clarify their parliamentary power base.

Thirdly, even if there is a change of government and the incoming party wins by a big majority, if it keeps all of those promises about freezing taxes then why worry?

This is where things get interesting for our profession. On the one hand, Starmer and Reeves are keen to emphasise that they will stick to fiscal rules, which means very limited spending. On the other, they have big plans to develop a green strategy, support health and education and, you can be sure, so much more.

All of that will cost money and it has to come from somewhere. Few could imagine that a government that will at least be mildly left-leaning would seek to claw even more taxes from those on modest incomes and with limited capital.

Spinning scare stories

Who does that leave? Our clients!

If you haven’t yet completed your New Year’s resolutions list, it might be a good idea to add in one more. Start contacting your most valued clients and spin some scare stories about what might happen when (not if) those dastardly lefties get into office.

Some of the following might very easily reel in a series of lucrative tax planning opportunities:

  • an increase in the rate of inheritance tax
  • windfall taxes on a selection of industries including energy, banking, finance and anyone who has made a killing as a result of the pandemic
  • a 50% income tax rate
  • unification of income tax and capital gains tax rates
  • a widespread review of tax avoidance and loopholes, closing down many of those clever strategies that have made our clients (and by extension ourselves) rich.

Get proactive

Some accountants might be concerned about the personal impact of a number of these measures but anyone worth his or her salt should be able to make more than enough from supplementary consultancy services provided to clients to offset any additional tax that our inflated profits may suffer.

If this sounds premature, just remember that if you don’t provide proactive advice to clients, you can be sure that a competitor will do so. Turning that on its head, if a competitor isn’t providing proactive service to its own clients, then this could be your opportunity to poach them.

Here’s to a happy and lucrative New Year.

Replies (10)

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the sea otter
By memyself-eye
03rd Jan 2024 15:06

I will proactively just do nothing.

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By Open all hours
03rd Jan 2024 15:14

Gordon Brown increased our revenues substantially. Loved him and hated him ever since.

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By AdamJones82
03rd Jan 2024 16:27

They can't be any worse than the current lot, thought admittedly that's a very low bar

Thanks (3)
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By FactChecker
03rd Jan 2024 17:32

"Start contacting your most valued clients and spin some scare stories about what might happen when (not if) those dastardly lefties get into office.
Some of the following might very easily reel in a series of lucrative tax planning opportunities .."

So let me get this straight ... the recommendation is to:
* take a bunch of unknowns (for which by definition you have no worked-out solutions) - and
* promote the bejaysus around the undefined fear component of these to your clients, with the sole expectation of being able to screw more money out of them (for probably irrelevant advice)?

Thanks (7)
Replying to FactChecker:
paddle steamer
By DJKL
04th Jan 2024 17:25

Yep- Fear is the Key (as Mr MacLean once said)

I always get cagey predicting what future governments might do as however much I believe politicians are cretins they somehow always exceed my expectations in this regard.

Any planning before Pandora's box is opened could certainly bite if you have made your clients suffer pain needlessly to plan for the black cat, in the dark room that is not even there.

Rule one for Labour, they want power
Rule two for Labour, they want power for more than one term.
Rule three for Labour, given rules one and two their proposals may actually be quite modest (Middle Ground is very attractive )

I think their proposals will turn out to be far more Modest Proposals than Swift's.

Thanks (2)
Replying to DJKL:
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By FactChecker
04th Jan 2024 18:37

Sir Kier 'steady as she goes' Starmer?

There's certainly more evidence for that than for any major reversals ... so far there are few proposals for any radical changes. Once you strip out the flannelling in which the pronouncements are packed, it's basically - we're on the right course but it'd be better if I was the driver.

What we don't know is how much this is due to his determination to keep the old lefties out of it vs how much he really believes in a middle way (that is not too far from either Blair or Cameron)? Frightening isn't it - our options that is.

But my point was that hiding amongst the lies and platitudes of those who are failing (both to do our bidding or deliver what is good for us) is not a good look for any professional with even a modicum of self-respect and leaves a sour taste!

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By Rob Swan
04th Jan 2024 11:38

I'll just take the dog for a walk...

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By Mr J Andrews
09th Jan 2024 12:54

I guess some will spend considerable time ''advising'' clients what might - or might not - happen with a new Govt. Good luck.
I know some spent considerable time thinking they were being proactive for the wonderful concept of MTD. What a complete and utter waste of time. More fool them.
Me ? - I'll keep my preempts with my Bridge partner. { And struggling to keep my New Year's resolution for a dry January.}

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By Retrocanary
10th Jan 2024 09:15

As someone else has pointed out - it's very hard to imagine Labour being worse and not being at least slightly better than the current government.

Just yesterday someone came in with their documents and looking at their interest-only mortgage statement together it really jumps out of the page just how bad this government has been. If you think Starmer's vague, maybe you could enlighten us as to what on Earth Sunak stands for or has managed to acheive?

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By bendybod
17th Jan 2024 12:03

Given how much time we've spent trying to predict what the government in power will do regarding things that definitely affect our clients, I just put a "of course it is an election year, so anything might change" proviso on my current advice and suggest we have a conversation later in the year if anything relevant emerges. Client is happy that I'm thinking ahead and have things in hand. Whether the feet are paddling frantically below the serene surface is my problem.

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