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Toxic tax return clients: Whose fault is it?

How do you deal with those uncooperative clients? Jane Aylwin explains how to break off toxic client relationships.

24th Nov 2020
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You know the ones, right? You miss their calls, you ignore their emails – you hide from them.

You know this won’t help in the long run – you’ve been unprofessional, and you have to apologise. But the very thought of speaking to them makes you feel exhausted – it’s like dealing with a boyfriend you don’t want anymore (or maybe that’s just me…).

Who are these clients who make you so nervous?

Well, for me, they were these people:

  1. The ‘friend of a friend: ‘Hi… Jack gave me your number because I’ve just started my [plumbing/dog walking/beauty] business. I have no idea what to do and Jack said you could help me’.
  2. The one down the pub: ‘Hi… I know it’s New Year’s Eve but I need my tax return filed and seeing as you’re here and you’re local I thought you’d be able to help me’.
  3. The one who is unhappy with their accountant: ‘Hi… My accountant wants to double their fees but nothing has changed. They don’t give me any advice, I always seem to pay so much tax - I think it’s time I changed accountant.’

They sneak up on you when you are in the early stages of your business and you grab hold of them with both hands – you need all the clients you can get!

You’ve been recommended? Wow, you’re already making a name for yourself! They’re local? Think of the referrals you’ll get! You’re already taking business away from other accountants – that’s promising! 

Here you are, in one of three places:

  1. Brand new: You’re eager to do everything you can, but you’re starting to feel nervous about this engagement. Something isn’t right – why are you avoiding those calls?
  2. Sometime later: You’re working too hard and wondering whether it’s worth it. You’re busy with better clients, yet still struggling with clients who don’t pay you enough, and wondering how they make 50k+ a year walking dogs...
  3. Years later: You’re successful with a good client base, and after a long hard struggle you’re happy. But somehow, you’re still dealing with a handful of those tricky clients.

If you’re at 1:

It’s fair to feel that you need to hang onto every client. But what you really need is to change that toxic relationship.

These people are non-compliant, pay you pennies and generally make your life difficult – this is not ‘just how this industry is’. 

There are no excuses. They have no right to expect you to do their tax returns at midnight on Jan 31st, or complete them for the price of a loaf of bread.

If you can – educate them, charge them a sensible fee and turn that case into a case worth having.

If you can’t – wave goodbye to them, don’t feel guilty, and don’t worry about your reputation. Losing them is a blessing, not a curse. 

If you’re at 2:

You’ve had enough. Jan 28th rolls around and The Ghost of Tax Return Present turns up with a bag of screwed up receipts and says they don’t expect to pay any tax.

Even if you have to deal with them this year, and in the interest of sanity and sleep and a smooth, unwrinkled forehead, DO NOT DO IT AGAIN NEXT YEAR.

If you’re at 3:

You do not need or want this client; you really have better things to do with your time. Your practice won’t be able to grow until these clients are dealt with.

It might seem harsh, but this is a black and white issue. If someone doesn’t value you show them the door, or demonstrate your value and give them the opportunity to benefit from you without draining your life force on an annual basis.

You could be an accountant for 50+ years! That’s a lot of life force for the price of 50+ loaves of bread (if you’re lucky).

You have two choices:

  1. Put up your fees
    • ​​If they pay – hooray! A case worth having. You may legitimately say that it’s worth it for the money (just get paid in advance).
    • If they leave – hooray! A case not worth having. You may legitimately say that it wasn’t worth it for the money (just make sure you send a VERY detailed disengagement letter).
  2. Carry on as you are
    • Remain miserably serving these people and creating additional lines on your forehead each year (which equals life force in this situation).

A true story

Once upon a time I made a terrible mistake and got married. That was relatively easily dealt with.

However, a side effect of that marriage was a client that was my (ex) husbands’ friend. This was much harder to deal with.

This friend was a self-employed man in trade. We’ll call him Jack.

Jack’s business wasn’t exactly booming.

Jack was very poor with record keeping; he sold at least seven vans in the five years I did his tax returns, and every single van was sold with all of the paperwork in the glove box – can you imagine the rotten luck of it!

None of Jacks’ income or supplier statements ever matched his bank statements. 

Jack could never submit anything before 25 January, and he never expected to pay any tax.

Then one year, Jack decided to buy a house; incredibly, inexplicably, Jack’s income was quadruple what it had ever been! No van had been sold with the precious records in the glove box, and Jack submitted all the information in August (and hounded me for his tax return from the very next day).

To cut a long story short, Jack was my worst ever client.

Ditching Jack was one of the happiest days of my working life. I told him it wasn’t me, it was him – it wasn’t working out, he should move on, find someone else. It wasn’t easy, but I held firm.

Please don’t ever stay with Jack.

I know it’s tough, no matter where you are on our accounting journey. But make those long days and late nights worth it. Be paid what you are worth, feel you have added some value and more importantly, that you are valued.

And most of all, understand that it is down to you to change it – the Jacks of this world will take advantage of you for as long as you let them. So stop letting them, right now.

Tax Talk_ Episode_with Rebecca Benneyworth

Replies (10)

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By ireallyshouldknowthisbut
24th Nov 2020 18:12

Nice article, it took me a while to learn the hard way some of this, although I am well past the "put up your fees". All you get is a PITA with a higher fee.

Thanks (2)
Replying to ireallyshouldknowthisbut:
By Paul Crowley
24th Nov 2020 19:47

The intension is to compensate for PITA
But I agree still never worth it

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By Paul Crowley
24th Nov 2020 19:52

Worth the read
We all know what we should do, but always next year

Thanks (1)
By Calculatorboy
25th Nov 2020 07:13

I hate Jack of all trades , they make me feel like Michael Corlene in Godfather 3 , at the last moment when I'm trying to get out ... they pull me back in

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By Ian McTernan CTA
25th Nov 2020 12:14

Good article. I wonder if a man had written 'like a girlfriend you don't want any more' how many people would have picked up on it and accused the writer of all sorts of non-PC things...

The sooner you learn how to deal with this sort of client the happier your life will be. The article points out the various ways of dealing with them. My favorite is to just not deal with them in the first place, or remove them ASAP.

You should also review your business at least once a year, look through all your clients, and remove the few that are 'not worth it' as this frees up so much of your time. Whether it be endless emails/calls/workload or Jack/Jill, make sure you are being paid for your time well and you are using your time effectively. Don't be afraid to take a hit on your immediate income- usually another, better, client will come along to replace the rotten apple.

However, it also mentions long days and late nights- those are a choice you make too, so step back after January is over and have a long think about what you are trying to achieve in life and adjust work accordingly.

Or in other words: work smart, not hard.

Thanks (0)
By gainsborough
01st Dec 2020 10:40

Always listen to your gut instinct when taking on a client - I do think we all have a PITA client spotting radar. I ignored my gut instinct once in the early years - never again.

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By Ammie
01st Dec 2020 10:56

With the evolving tax system and ever increasing pressure on DIY and "have a go" accountancy the market will be flooded with PITA clients, who will have to buck up and pay up, or keep running from compliance and potentially face a dead end with nowhere to go but to comply.

I have just made a long standing PITA client leave by persistently making his life awkward. I felt like my Christmas had come early and Covid had never happened!

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By meadowsaw227
01st Dec 2020 11:41

When I took over/bought the practice nearly 10 years ago after working in it for nearly 20 years I made a conscious decision to get rid of nearly a third of the clients within a 3 year time span.
Very cathartic.
I now only take on who I want, but I am very very choosy .

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Replying to meadowsaw227:
02nd Dec 2020 19:54

meadowsaw227 wrote:

When I took over/bought the practice nearly 10 years ago after working in it for nearly 20 years I made a conscious decision to get rid of nearly a third of the clients within a 3 year time span.
Very cathartic.
I now only take on who I want, but I am very very choosy .

This is our attitude from now on. We have got rid of dozens of time wasters/bad payers in the last 2 years and haven't looked back. We are still busy but don't have nearly as many of the PITA clients. Poor payers have been asked this year for payment up front too, which has prompted a few to leave :-)

I say cut them loose, you won't regret it.

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By Mr J Andrews
01st Dec 2020 14:15

The article reads like the hard luck story of the decade. Getting married by mistake ; acquiring dodgy clients , whether by failure to keep proper record , fiddling - by inference of not expecting to pay any tax -, nor fees by the look of it ; late provision of information . It goes on.
Or perhaps I'm just lucky in laying down the law at the outset which clearly isn't in the author's style. I'm generally a well mannered , peaceful individual but clients know from Day 1 that my services will be retained as long as they follow what I want and expect and not the other way around as this article sadly demonstrates. Or perhaps it comes down to maturity and the ability to spot a '' Jack the Lad'' as a potential practice bane. In such instances just come straight out with a NO to any request for being taken on .
Whereas the True Story mentions ''holding firm'' in losing the client as not being easy , I ask myself what could be easier ? Lose the waster or waste your own life . A fair share of these 1,2,,3 clients would surely lead to an early grave and no doubt leaving the Practice was a wise decision

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