Blog
<- BackThis blog contains postings and comments by tax advisers who are members of the Tax Advice Network.
To register click here
For a short period this blog is being updated elsewhere (By Mr Mark Lee)
http://TaxAdviceNetwork.blogspot.com
Normal service will be resumed shortly.
28 July 2008 | 1:50:56 PM | 
comments (0)
Making Taxes Simpler (By Mr Mark Lee)
Last week I attended the launch, at the ICAEW, of Geoffrey Howe's report and witnessed George Osborne's commitment to accept and adopt the principles set out therein.
He stated that 'the next Conservative Government will create an Office of Tax Simplification' (as proposed in the report). It will include HMRC and Treasury officials as well as members of the professions. Their remit will be to systematically examine the existing tax code and to make proposals for simplification.
Of course, in an ideal world, such a body would not be necessary but our tax code is now amongst the longest in the world. Each year far more is added than is removed. The Tax Law Rewrite project has simplified the language of the law but was forbidden from proposing changes to simplify the law itself.
I have noted elsewhere that this is all too late for me. Two years ago I gave up giving tax advice myself. I have explained my decision (which led to the creation of the Tax Advice Network) in an article that is in our T.A.N.K.
Maybe things would have been different had the OTS already existed. Somehow I doubt it. Whilst I welcome the commitment I anticipate that, even if it comes to fruition, it will take some years to have much impact.
07 July 2008 | 8:30:21 AM | comments (0)
Distinguishing Tax Evasion, Tax Avoidance and Tax Planning (By Mr Mark Lee)
In the past I have only sought to distinguish the illegal 'Tax Evasion' from the legal 'Tax Avoidance'. Indeed, I show a slide to this effect during some of my talks as it's important to ensure that clients appreciate the distinction.
More recently I came across a more detailed distinction:
Tax Planning - When the legislation allows more than one possible treatment of a proposed transaction, tax planning takes place when you compare various means of complying with tax law. It also includes ensuring that a client claims all allowances and reliefs clearly provided for by the law.
Tax Avoidance - (Previously assumed to be synonomous with tax planning) Seeking to minimise a tax bill without deliberate deception - as this would amount to tax evasion or fraud. Of course, if the law provides that no tax is due on a transaction then no tax can have been avoided by undertaking it. The term is now often used to refer to the practice of seeking to not pay tax contrary to the spirit of the law.
Tax Evasion - The illegal non-payment or under-payment of taxes, usually by making a false declaration or no-declaration to tax authorities.
03 July 2008 | 3:43:54 PM | comments (0)
Get your appeals to the General Commissioners listed NOW! (By Mr Mark Lee)
The General Commissioners are being abolished as part of the wholesale review of the tribunals system.
As of April 2009 there will no longer be a facility to elect for taxpayer appeals to be heard before the general Commissioners and there are no plans for an equivalent body under the new system.
It currently takes around 3 months for an appeal to be listed before the General Commissioners. So if you want to have a case listed before the Generals you will need to apply before the end of November. Indeed, the sooner the better.
02 July 2008 | 4:55:32 PM | comments (0)
How confident are you? (By Tax Advice Network)
One of the most powerful factors that affects whether an accountant will refer tax queries to us is the level of confidence that they have. Are they
* Rightly confident that they know enough and that there is little chance of being wrong?
* Over confident and reluctant to seek a second opinion?
* Lacking in confidence and worried that clients will think less of them if they admit what they don''t know? (They''ll certainly be unhappy if the accountant gets it wrong, that''s for sure. Most clients recognise that their accountant is like their GP and that sometimes there is a need to go to a specialist);
What about you?
01 July 2008 | 9:14:45 PM | comments (0)
Some of the practical issues addressed by our recent newsletters (By Mr Mark Lee)
The Tax Advice Newsletters are a key benefit provided to those who register on the website. Every week we address 3 topical practical issues. The following have all been addressed in recent weeks:
# Letting agents and the non-resident landlords scheme
# Overseas bank accounts and withholding tax
# VAT option to tax - revised rules
# Tax return glitches
# P11D dispensations
# Changes to form P46 procedures
There's a link to our newsletters in the left hand margin of this page.
01 July 2008 | 9:11:16 PM | comments (0)
Ten top tips to avoid professional negligence claims (By Tax Advice Network)
I created this list recently for a forthcoming article in the professional press. It’s drawn from my talk, How to avoid tax related professional negligence claims, which I have been presenting all over the UK for the last few years.
1 - When providing tax advice always state the known facts on which your advice is based - in writing;
2 – Equally state any assumptions you have made – in writing;
3 – Create contemporaneous notes of all material advice and of the assumptions you provide during meetings and telephone conversations;
4 – When advising, ask yourself whether you’d be happy for a close friend or family member to rely on the advice. If you’re not sure, do additional research, get a second opinion or involve a tax specialist colleague or trusted third-party (such as a member of the Tax Advice Network);
5 – When advising clients of forthcoming deadlines, focus their attention on the date that you need to receive the information to beat the statutory deadline;
6 – Avoid under-pricing work and introducing time-pressure that could exacerbate mistakes;
7 –Stick to what you know. If a client requires or requests advice on subjects outside of your comfort zone, involve a tax specialist colleague or trusted third-party (see above!);
8 - Stop working for those clients who are more trouble than they are worth. These are the clients who resist paying decent fees, don’t contribute to the growth of your practice and who are most likely to complain, given half a chance.
9 – Manage client expectations and avoid over-promising and under-delivery. Remember that a client’s perception of these may be very different from yours.
10 – Keep uptodate – eg: with the free weekly email containing practical topical tax tips for accountants in general practice from the Tax Advice Network.
27 June 2008 | 1:44:23 AM | comments (0)
Do you tell clients to: “Arrange a review of your taxation affairs”? (By Mr Mark Lee)
I recently read a tax briefing published by one of the larger firms of accountants.
I tend to think that such publications are a good way to evidence to clients that you are upto speed with current tax developments and that you want to help them avoid paying more tax than is absolutely necessary. Having said that I would never encourage a smaller firm to draft such a newsletter or tax briefing from scratch. Better to outsource this and simply to top and tail the briefing – after ensuring that you understand everything that it contains!
The one I was looking at was very impressive, helpful and well written, however I was amused to see the following at the end of the ‘welcome’ paragraph:
“Because of the significant changes made in the 2008 Budget we would suggest that you speak to either your usual contact at [XYZ – the firm] or a member of our tax staff to arrange a review of your taxation affairs.”
Why did that sentence in the briefing amuse me? It’s not the fact that the size of the firm means that they can’t be specific about who clients should talk to (“your usual contact”). Let’s also ignore the fact that the message implies that the ‘usual contact’ may not be capable of arranging a review of the client’s tax affairs – why else is the option given to going to a member of the tax staff?
No. My amusement is in part due to the absence of clarity in the suggestion that the reader should ask for ‘a review’ of their taxation affairs and the open-ended nature of such a request. But also the fact that the firm could be implying that it is simply reactive as distinct from pro-active. That sentence is all but saying ‘We’re here if you want to talk to us, but don’t expect us to raise any of these subjects with you’.
How much better if the sentence had included the following sentiments:
‘We’d like to talk with you about the impact of these changes on your tax position as there may significant tax savings to make and tax traps to avoid. Please speak with your usual contact here to arrange a convenient time and place’.
We have to remember that what we consider to be obvious is not always viewed in the same way by clients. We need to be careful to say what we mean and to avoid the opportunity for clients to draw their own (incorrect) conclusions.
24 June 2008 | 8:34:15 PM | comments (0)
Accounting Service Providers (ASPs) & Money Laundering 1st July (By Mr Bill Stevenson)
The new registration guidance for Accounting Service Providers (ASPs) - is that you? - has not been publicised as yet and therefore the date for sending your application forms has been deferred until one month after the new guidelines are published...... Sorry no date known yet..
If you are a member of a regulated professional body, such as one of the Accountancy Institutes or the CIOT you don't have to workk abou this . But everyone else (eg: bookkeepers, other accountants and tax advisers) may well need to refer to HMRC's website for ongoing updates to make sure you don't miss the new deadline from the foillowing link
http://www.hmrc.gov.uk/mlr/news-update-tcps-asps.htm
You can also review the MLR (oops sorry Money Laundering Regulations) from the following link
http://www.hmrc.gov.uk/mlr/index.htm
Bill Stevenson
19 June 2008 | 9:01:00 AM | comments (0)
Tax support from an accountancy firm or independent tax advisers? (By Mr Mark Lee)
I received a letter today (in error I suspect) from an accountancy firm that provides services to other members of the accountancy profession.
Funny that. It's what the Tax Advice Network does too. And we're not an accountancy firm so are not perceived as being in competition with the accountants who refer work to our members. No amount of assurance re a 'non client poaching policy' is going to change that perception. Especially as the fear is not that the accountant will poach the client but that the client will want to move.
These accountants tell me that they 'specialise in high level tax compliance (eg: company sales, reorganisations, employee share schemes, EIS etc) and sophisticated tax planning work (eg: corporation tax mitigation, profit extraction etc), Funny that. Members of the Tax Advice Network provide all of those services too although I would question whether profit extraction and the like is necessarily 'sophisticated tax planning'.
The letter tells me that the accountancy firm has a number of partners who have previously worked at top twenty firms. Is that attractive to smaller firms of accountants? I'm not sure. It's one of the reasons why we allow our users to choose which of our members they want to approach.
These accountants claim to offer a 'very personal service' (is there any other kind?) and suggest that this helps other firms by protecting their clients from larger predatory firms.
Over the last few years I have been surveying smaller firms and asking them what factors are important to them when it comes to outsourcing tax work and engaging with specialist tax advisers. The vast majority wouldn't go to another firm of accountants for fear of the competition. And who can blame them?
That's one of the reasons why I established the Tax Advice Network. We've come a long way in a short time and there's plenty more to be done.
How do I feel about knowing that a local firm of accountants is mailshotting other firms of accountants and offering to provide then with 'specialist tax services'? Delighted! It highlights the issue, reminds people of why they might want or need tax support and - I hope, prompts them to consider more attractive alternatives - like the Tax Advice Network.
13 June 2008 | 11:07:36 AM | comments (0)
The NEW Tax return Amendment & Enquiry windows working in practice (By Mr Bill Stevenson)
HMRC have put on paper how they see the return amendment and enquiry window limits working in practice with some examples that you can find with the link below:-
http://www.hmrc.gov.uk/sa/enq-amend-windows.htm
08 June 2008 | 10:25:48 PM | comments (0)
New Company Car Advisory Fuel Rates from 1 June 2008 (By Mr Bill Stevenson)
HMRC have updated the rates of FUEL reimbursement that employers can make for business miles in COMPANY cars. It can be introduced from today (1st June 2008) instead of the 1st July because of the hike in recent prices
HMRC says
"Company cars - advisory fuel rates from 1 July 2008
These figures give about one month’s notice of the changes and apply to all journeys on or after 1 July 2008 until further notice.
We have agreed with employers that we should give them one month's notice of a change in advisory fuel rates so that they can amend their systems in good time to implement the new rates. Accordingly we are announcing these new rates in time for implementation on 1 July. However, the recent fuel price increases which justify these AFR changes have happened very rapidly. In these unusual circumstances we are mindful that an implementation date of 1 July might mean that drivers will be incurring higher fuel prices before the new rates become effective. Consequently, where employers are able to do so, HMRC is content for the new rates to be implemented immediately ie from 1 June.
The link for the webpage is http://www.hmrc.gov.uk/cars/advisory_fuel_current.htm
Bill Stevenson 1st June 2008
01 June 2008 | 12:17:33 PM | comments (0)
We launched the Tax Advice Network 6 months ago today. (By Mr Mark Lee)
The website went live on 22 November 2007. Over the last 6 months more than 900 accountants and other users have registered with us and we've raised £450 for TaxAid (with more to come).
Thousands of searches have been performed on the site; perhaps the strangest being for 'VAT on colonic irrigation'!
Dozens of users have telephoned or emailed one or more of the tax adviser members of the network and tens of thousands of pounds of tax advice has been provided by members of the Tax Advice Network over the last 6 months.
Our T.A.N.K has been filled with:
- Almost 30 weekly practical tax updates (we started them before the site went live);
- On average more than one new article a week.
We have also published over 40 shorter items on our blog. And we recently launched a facility for users to rate the individual advisers and to provide testimonials to assist subsequent users of the Network.
Also the Tax Adviser members' forum has had over 100 active discussion threads.
We have had around 7,000 visitors to the site and more then 70% of them, on average, have a good look around. Users typically spend over 4 minutes on the site and look at 5 or 6 pages. I'm told this is all pretty impressive but to me it's just the start. My marketing, PR and Search Engine advisers all tell me that I'm simply being impatient and that we have achieved an enormous amount in a short period of time.
When we were planning the launch I never expected that the biggest tax consultancy in the country, and one of our major competitors, would be swallowed up by BDO Stoy Hayward just weeks before our website went live. Another smaller tax consultancy was bought out by Begbies Trayner not long afterwards. All much too soon to be a function of the change we have introduced to the marketplace but fortuitous developments in the tax support for accountants arena.
I'm quite sure that our niche will become deeper and our reputation for good quality, cost-effective and personal tax advice will grow over time.
Thank you to all of the tax adviser members, the registered users and to everyone who has contributed to the development and promotion of the Tax Advice Network on it's first 'half-birthday'.
You ain't seen nothing yet!
21 May 2008 | 11:17:34 PM | comments (0)
Tax assurance for tax partners in smaller practices (By Mr Mark Lee)
This idea was put to me recently. I wonder how much interest there would be among the hundreds of accountants and tax advisers who have already registered on the Tax Advice Network website?
Almost no one can be an expert in all areas of tax - especially those that they don't have to consider very often. Are there ever situations where a report or paper is required for a client but where you have neither the time or inclination to research and write something from scratch?
Would it be helpful to instead choose and brief a suitable tax expert from the Tax Advice Network. Your role could then be focussed on guiding your client through the advice and helping them to decide what and how to take action. You'd be adding value and everyone would benefit from the way you have effectively 'outsourced' the specialist tax work. You will also have reduced the risk to your practice of giving advice on a subject with which you are not really that familiar.
Of course some people prefer to research new things all the time and are able to recover all of the associated fees from clients. But even then, wouldn't a second opinion be a valuable part of your tax assurance process?
19 May 2008 | 1:17:33 PM | comments (0)
LLPs can score over Limited companies (re Entrepreneurs' relief) (By Mr Mark Lee)
Over the years I written and lectured extensively about the issues to consider when deciding on the 'right' structure for a business.
I've long maintained, for instance, that the headline tax savings that many people sought through incorporation were just one of the factors to consider. Indeed the tax changes announced over the last couple of years mean the pendulum is swinging. Starting a business as a limited company is no longer even as superficially attractive as it was.
Now there is another factor to consider - in the context of Entrepreneurs' relief. If there are going to be minority investors (shareholders) in the business, they will need to hold at last 5% of the shares to benefit (in due course) from the entrepreneurs' relief and pay just 10% of their capital gain when they sell their shares.
There is no such 5% requirement for members of an LLP.
NB: This distinction will be more relevant for start-ups than for established businesses. The latter would need to fist 'disincorporate' but this can be fraught with tax problems as no reliefs or exemptions are available to mitigate the normal tax rules that apply on disposal of business assets (including goodwill) by a company to related parties.
12 May 2008 | 10:12:40 AM | comments (0)
The end of the old paper bag jobs? (By Mr Mark Lee)
The provisions in Schedule 36 and 37 of the Finance Bill 2008 have the potential to revolutionise the way that accountants deal with smaller clients and will increase demand for quality bookkeepers.
Schedule 36 includes, at part 2, new powers for any officer of HMRC to enter into business premises to inspect....business documents...if such an inspection is 'reasonably required for the purpose of checking the tax position of nay person'.
In effect this anticipates the prospect of 'in year' visits for direct taxes in the same way as has long been the norm for VAT and PAYE inspections. Only, in future, these checks may be designed to risk assess the quality of the accounting records DURING THE PERIOD OF ACCOUNT and with the provisions in Sch 37 in mind (see below).
Schedule 37 deal with 'record-keeping' and makes a small but important change to the existing fairly general requirements in s12B TMA 1970. New subsection 3A permits regulations to be introduced to provide:
- for certain specific records to be kept; and
- that those records may have to include specified SUPPORTING DOCUMENTS.
In due course when those regulations and supporting guidance are issued, it surely won't be long before HMRC start using their new powers to make spot checks and 'in year' visits in an effort to ensure that all is as good as it could be.
Once this all becomes commonplace I suspect that the demand for good bookkeepers will grow dramatically.
07 May 2008 | 3:45:28 PM | comments (0)
Discovery assessments (again) (By Mr Mark Lee)
Listening to Keith Gordon of Atlas Chambers speaking about Discovery assessments at a seminar today I feel I should amplify my earlier comments (10 April) on the same subject.
Keith stressed the importance of appealing against discovery assessments within the 30 day time limit. If you have the slightest doubt you should make a protective appeal. You may decide later to withdraw your appeal but once 30 days have passed you're too late.
Keith noted that HMRC often raise discovery assessments that are not valid. As in where the circumstances of the case do not fall within the legislative constraints surrounding discovery assessments. They are only lawful when 3 essential elements exist:
1- HMRC must have made a discovery (see SP 8/91)
2 - There must have been a loss of tax; and
3 - EITHER:
a) Insufficient information was supplied by the taxpayer
OR
b) The taxpayer's conduct was negligent or fraudulent
Discovery assessments enable HMRC to generate 'easy' money as appeals are often not made within the 30 day time limit even though the 3 tests have not been satisfied.
If you are in any doubt about the validity of a Discovery assessment, you can find help here in the Tax Advice Network, via a simple 'search' eg: for Discovery assessment.
29 April 2008 | 7:01:40 PM | comments (0)
Tax support for IFAs and their clients (By Mr Mark Lee)
I'm regularly asked why the Tax Advice Network website is focused on accountants and tax advisers - as distinct from any other advisers and the public generally.
There are various answers to this. Some are the result of my experiences running the tax support for professionals team in a large tax consultancy a few years back. Then there is the more modern approach to niche marketing.
As the founding members of the Tax Advice Network know I was very clear as to where we would initially focus our marketing efforts. Then we would develop the site further but the direction of that development would depend upon our initial experiences.
In this context I have recently become aware that some IFAs had visited the website and assumed that we would not be willing to provide tax support and advice to their clients.
Whilst there are no immediate plans to evolve our approach I have recently revised the 'Taxpayers' page to clarify our message and to ensure that we are not turning away prospective clients of the type we would be happy to assist.
27 April 2008 | 6:00:03 PM | comments (0)
HMRC have issued a discovery assessment. Let's appeal. Hmm. (By Mr Mark Lee)
I'm a simple soul. I adopt a pragmatic approach to tax. Perhaps it's one of the reasons why I don't give tax advice myself any more. (There are plenty of advisers in the Network who can do that very well).
A few years back I was part of a delegation of accountancy and tax professionals who went to see HMRC to find a pragmatic solution to the consequences of the Court of Appeal decision in the 'Langham v Veltema' case. The case and subsequent guidance set the future ground rules for the issue of Discovery assessments by HMRC.
I've just read a report of a more recent case re Household Estate Agents. HMRC issued a discovery assessment. The taxpayer appealed and the Commissioners found in their favour. Hooray?
Guess what? HMRC appealed and won. How unusual.
I cannot stress enough how critical it is to anticipate what will happen if HMRC lose when you take a case to the Commissioners. The taxpayer never gets a second chance to introduce new evidence. If you go the Commissioners and you are prepared to fight on (win or lose) you must be fully prepared before the Commissioners' hearing. This generally requires specialist expertise. Not simply from someone who has been to the Commissioners but someone who understands what happens thereafter.
I'm a simple soul. I know I don't have the requiste expertise. But I know where I'd turn if I was in that situation. (Another example of how the tax Advice Network could be useful!)
10 April 2008 | 8:41:53 PM | comments (0)
Tax Advice Network welcomes survey findings by UK 200 group (By Mr Mark Lee)
I have just read a report in Accountancy Magazine about some research published by the UK 200 group. The report notes that:
Clients are more likely to ditch their accountants for giving therm incorrect or poor advice than for being too expensive......Clients only rate high fees as the THIRD most important reason for switching accountants behind incorrect or poor advice (87%) and lack of personal contact (66%).
Two other key points noted in the short report:
- Tax planning was rated as the most valued service;
- Around 60% of respondents had been with their accountants for upwards of five years;
I'm always dubious about drawing conclusions from surveys and reports when there are no details as to how the data was collected or of how representative was the sample surveyed. So with that caveat what do I conclude from this brief report of the UK 200 group's research?
1 - It seems to vindicate my view that more accountants could increase their fees without losing too many clients. Indeed, those most likely to leave are probably the D-list clients that you want to ditch anyway. Much depends on how you raise the subject and how you implement the fees increase of course.
2 - It reinforces the rationale for the formation of the The Tax Advice Network - which enables accountants to access vetted, independent, cost effective and expert tax specialists. Accountants can use our specialists to provide second opinions and so avoid giving "incorrect or poor advice" and to enable them to provide an appropriate level of "tax planning" to clients.
3 - It confirms my view that clients will pay decent fees for good advice.
When I ran the tax support for professionals team at a large tax consultancy I noted that accountants were reluctant to engage the firm and often said things like "My clients are used to only paying £300 a year. They'd never pay £2,000 for tax planning advice." I'd the first to accept that an accountant knows their clients best. Equally I have long felt that some accountants undervalue the advice they provide and make incorrect assumptions about the level of fees some clients would pay if the cost/benefit ratio made sense.
The UK 200 group's survey suggests that many clients are more interested in getting the right advice than in paying low fees - especially when it comes to the provision of tax planning advice.
10 April 2008 | 12:03:07 PM | comments (0)
To register click here
<- Back