SA season: Is the January rush a myth?
January has always been greeted with widespread trepidation. Practitioners steady themselves for long hours churning out tax returns and chasing otherwise AWOL clients. But a shift in how practitioners approach January has happened.
A vocal segment has played down the so-called January rush. No longer are these accountants brandishing January war wounds. This begs the question: is the January rush just hyperbole?
AccountingWEB regular Kent Accountant led the charge when he said the “tax return season hysteria is completely blown out of all proportion”. He added: “I've said before the amount of work my practice does in December and January is little different from the rest of the year.”
Blown out of proportion
Although, Kent Accountant admitted that his somewhat unchanged January is the result of having few sole traders. Even so, he ascribed his stable January to completing work on a steady basis throughout the year and that way he avoids “serious backlogs of work”.
This theory was backed by a number of proactive practitioners sharing their self assessments stats at the beginning of December.
Hancox and Co, for instance, had already sewed-up 72% of tax returns with 12% in progress and is waiting on 16% to come in. Trish Baillie was in a similar position, with 222 filed, 27 out for signature and only 39 not started. And again, mfbrown took a sizeable chunk out of their returns, with 136 filed, 22 out for signature and 42 left to do.
People accept the January rush
For AccountingWEB contributor Glenn Martin, avoiding a hectic January is all down to mindset. One school of thought, he explained, accepts January will busy, just like every year.
“[Practitioners] leave all returns until January then blitz them through the month and accept that is just how it is,” Martin said. “I did that one year and it’s not for me. I wanted to change so that work was more constant through the year.”
Instead, Martin is working towards a stress-free January thanks to shifting the majority of his tax returns earlier in the year. He argues that with cloud software firms should have moved away from this traditional way of approaching January. “I think modern firms think the January crazy season is a bad thing so they try and keep away from it.”
Rather than toiling away the hours on tax returns, Martin is using January to work on his practice. “There are opportunities by not falling into the tax return black hole.”
“This year, by not been busy with tax returns,” he said, “it has allowed me to meet some good new prospects whereas I imagine a lot of firms stop all marketing from November to end of January and don’t even consider meeting new clients.”
Easier said than done
That all said the AccountingWEB members' self assessment stats were far from conclusive. Despite EssexFCCA dusting off 190 returns from their pile they were still waiting on 180. For them, the changes in tax on dividends meant more clients fell into self assessment than before.
And for Joe Alderson, the January rush is unavoidable. Even though the majority are done before December, their high volume of clients almost guarantees a delay: “I find the major problem for us isn't getting the clients signatures, but getting them to confirm their other sources income and finalising their company accounts.”
While many practices feel like they’re on course to SA completion, every year there is always the same recurring snag. As Small Change interviewee Darren Stone said: “It is always the last 30/40 that is the stubborn ones to get cleared because they are the clients that don't have the information readily available.”
Jo Tomlinson, the managing director of QuickBooks Firm of the Future winner Business Works, debunks the January rush is a myth theory. “Lots of people because they're so busy leave things until the last minute,” she said. “Regardless of how many times you ask them to give you the information they'll go 'it'll be alright because we know the deadline is 31 Jan'.”
Tomlinson starts weekly planning and forecast meetings from January. The idea is to capture how many tax returns everybody in the team has left and from here the firm creates a workflow to battle the outstanding clients.
But can this be avoided? While the firm can plan, organise and nag clients as much as they can, there will always be someone who suddenly realises over Christmas dinner their SA responsibility.
“They put it in the ‘too hard to do’ drawer,” Tomlinson said. “It's not necessary even that hard. But they don't want to do it so they will delay it as long as they possibly can.”
Can't escape latecomers
Even Martin can’t escape the latecomers. “In an ideal world I would be finished tax returns by end of October but I still have a few diehards who leave it late.”
But at this stage of the year, Martin added, it could be worse: “There are a few old school firms near me who are not even half way through their returns and have 100s to do in January. That would be my idea of hell.”
Is the January still dreaded in your firm? What position are you looking like as we enter the New Year? How bad are you forecasting your January?