Should you take on last minute tax return clients?
With HMRC effectively deferring the self assessment deadline for another six weeks, Jennifer Adams considers whether this may be a once in a lifetime opportunity to expand your business.
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"Whenever the subject of taking on new clients in the last month before any submission deadline has arisen on AccountingWEB, comments are usually in the negative with the view that having left submission to the last minute (without a very good reason) then do you really want such (slack) clients on your books? Nevertheless, even those accountants who usually turn away January enquiries may be tempted to tweak their rules - just this once .."
Why? A bad client remains a poor choice irrespective of HMRC's one month penalty holiday!
They arent all bad
we have historically picked up clients in January, who we have retained for years and turned around to be early filers with good records and fees
with some good judgement of character you can pick up good clients at this time
Indeed ... but it's your "with some good judgement of character" that's obviously key here.
No-one (at least not me) is advocating a wholesale refusal to take any new client in Jan ... but the idea of HMRC's concession providing a window of opportunity is predicated on the prospects being those with an imminent deadline to hit.
Experience shows that as not having a good correlation with long-term retention.
We usually have plenty of work in February and March, not as intensive or as pressured as December and January, but certainly enough for us not to want to push the self assessment work into February. It would mean giving up my longed for week off in February and that is definitely not going to happen.
It's not all tax return lagards.
There are the enquiries this time of the year from the ....'' I have just had the bill for completing this years and accounts and returns from larger corporate firm up the road/always get passed to different people each time I contact them/nobody understand my business''client. These are very worthwhile and worth having that little bit of capacity for.
I consider each referral on it's merits.
I don't mind if they are last minute- I make it very clear if they want to leave it to the last minute then it will probably be late and they will bear the penalty and interest.
I expect to be very busy at this time of year- it let's me go play golf when it's warm 2-3 times a week!
This assumes you're not already working flat out and need the entire month of February to catch up. Remember that this "extension" only makes the 2021 filing season the same length as pre-Covid years. It was only 2020 that was "extended" (or should I say, penalty-free) being 13 months from 01/02/2020 to 28/02/2021 whereas 2021 is now 12 months 01/03/2021 to 28/02/2022. 2022 will be 11 months 01/03/2022 to 31/01/2023. And we've got the next stage of MTD VAT to deal with: that very much depends on the size of your clients - I have a lot of small scale farmers who are sub £85k and are registered because they receive refunds - so the MTD VAT extension affects me more than it might affect other agents.
Why not take them on ? Just spell out the penalty implications - for which you cannot be held responsible . This said , I can think of better once in a lifetime opportunities.
As for getting rid of 'bad' clients in February , there's eleven other months to consider this option.