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The accountant's guide to minimising SA season risk

11th Dec 2018
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Risk in business

Philip Fisher reminds those knee deep in tax returns to focus on risk as one of the most significant issues that could harm your firm

Once you find yourself plunged into next month’s January madness, work levels expand and staff pushes themselves to the limit and beyond, helped by colleagues who are doing the mental equivalent of whipping them like those highly muscled overseers on slave ships.

At the top of the pile, partners are probably little better, blithely pointing out that there are only seven days to go and 500 tax returns to complete.

By this stage, the only consideration will have become finding and churning data in the sure knowledge that the software will do its work and deliver perfect tax returns to HMRC by the end of January. At the same time, it will also notify the clients of what they have to pay and, given a little bit of breathing space, you might even remind them that this is the case.

Those with long experience in the field of tax often find that the most exciting projects they are asked to undertake relate to damage limitation when a firm has been sued. As long as it is not their own firm that they’re helping out, this is an opportunity to take on a real challenge and charge through the nose for achieving the best possible result.

Even then, that best result is often no more than negotiating a reduction in penalties to the minimum allowed by law.

On the other side of the coin, we have probably all been there when a client has sent a demand from HMRC for underpaid tax and asked why this has arisen. Alternatively, at some point in February a member of staff might tentatively approach you to mention that they didn't quite remember to include an expense on a tax return or to make some kind of claim by deadline.

This is the kind of thing that can make hearts leap into mouths. In the worst case scenario, it could even make hearts stop.

It is pretty obvious that people make mistakes when they are under most pressure and not concentrating fully on what they are doing. In addition, those reviewing work can often get to the point where they take everything on trust, blindly hoping that not too much will go wrong as last-minute returns are completed at breakneck speed.

The irony is that we very rarely charge clients a premium for the risk that our firms are effectively taking from them, frequently because they have failed to do what we asked on a timely basis.

While it is all very well to write an article telling people to take more care over their work when this is almost impossible, at the very least accountants should put in place whatever safeguards are available to prevent such disasters from occurring.

Clearly, having good staff and trying to take the pressure off them is a starting point. In addition, systems should be in place to make sure that every deadline is met, every election submitted and no mistakes occur. One way of achieving this might be to enlist the assistance of someone who is outside the process. They could be given some kind of roving brief to look at areas where problems are most likely to occur. Quite where this resource comes from is another matter.

In any event, as you undertake the tax return round at the end of this year and the beginning of next, try to focus on risk as one of the most significant issues that could harm your firm. Realistically, delaying a tax return and meeting a £100 penalty is far more sensible than rushing it through and discovering after the event that a liability hundreds of thousands of times as large has arisen and there is nobody to pick up the bill but the firm which inadvertently failed to comply with its obligations.

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