Getting definitive advice from your accountant
I have explained previously why there are many occasions when accountants cannot confidently give clients definitive advice.
Accountants who attempt to give definitive advice on matters where there are legitimate differing views generally fall into one of two categories. Either they are:
- Minimalistic: They encourage you to keep your claims to a minimum - so as to avoid any serious prospect of HMRC successfully challenging your claims; or
- Maternalistic: They misunderstand how the tax system works and base their definitive advice on what they 'have got away with' when advising other clients.
In my view the Maternalistic accountants are dangerous and best avoided.
Equally the Minimalistic accountants are not giving you the chance to decide whether you want to make the maximum claims for tax relief that you could. Thus you are paying more tax than would need to if you were prepared to risk a challenge by HMRC at some future time.
What should really happen is your accountant should find out what sort of advice you would prefer. And if, like most people, your answer is that you just want to pay the minimum amount of tax possible in accordance with the law, your accountant should explain that you still need to make a choice. It's a choice available to everyone in our tax club (the UK's self assessment tax system). Either:
- You keep your claims for tax relief to a minimum so as to avoid any prospect of HMRC successfully challenging anything; or
- You 'try it on' and claim the maximum you can in accordance with your accountant's views and advice - whilst risking the prospect of a successful HMRC challenge at some future date.
Does your accountant know which option you would prefer?
posted by Mark Lee @ 7:00 AM
2 comments
2 Comments:
You are right about maternalistic accountants Mark. They are a danger.
You're also right about minimalist accountants. But they don't carry the risk you imply. The reason is simple. Few people appreciate the stress (for them) of a Revenue investigation. Few appreciate the costs. Few realise the time involved. So certainly an accountant has a duty to find out what the client wants, but equally they have a duty to explain the risks. When they do the vast majority of tax payers have no desire at all to challenge the Revenue. The reason is simple. There are much better ways to make money.
So please don't knock minimalist accountants (so long as they have explained the risks to the client and given them the chance to go elsewhere). They're doing what most clients want.
What worries me are those who say a 'try on' is technically possible and don't explain the consequences to the client.
I agree with Richard and didn't think I was knocking the 'minimalists'.
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