One of our most frequently asked questions here at Tax Insider is ‘How do I find a good tax adviser / accountant?’ In the following article I will list the ten top questions you should be asking to ensure that you find a highly qualified and professional tax specialist or accountant.
Do I need a tax adviser or an accountant?
More often than not people will actually require both an accountant and a tax adviser, however, it is important to establish why you need them - do you need someone to manage your accounts and help you with your tax return? Or someone to give you sound advice that will legally save you money?
What does an accountant do?
Your accountant can manage your accounts, provide compliance work and some may even do tax planning.
What does a tax adviser do?
Tax advisers tend to focus solely on tax planning. They spend significant amounts of time keeping up-to-date with the latest tax legislation and tax cases to help make sure they provide their clients with great strategies that will help to reduce or eliminate tax - some of which your accountant may not even be aware of!
Example of the difference between an accountant and tax adviser
If we compare the accountancy profession with medicine, an accountant is the equivalent of a GP, and most of the time a GP is all you need for routine health care, but if you get seriously ill (compare with a dispute with HM Revenue and Customs) or you need surgery (tax planning), then you need a specialist consultant (a Tax Adviser).
What qualifications should my Tax Adviser / Accountant have?
As a client you want to be assured that your tax adviser / accountant is acting in both your best interest and within the law, which is why it is important to know what qualifications your tax adviser or accountant has, and when they were achieved and if they are relevant to you. Check that the qualifications they have cover the area of taxation or accounting that you require assistance with.
How much experience does your Tax Adviser / Accountant have?
When choosing a tax adviser or accountant, it is good to know just how much experience they have and what their reputation is.
Do not be afraid to ask how long have they been giving advice, where they worked before or if they have ever done any public speaking or written work that you can refer back to? Another good question to ask is how many existing clients they have within the area that you are interested in, for example – if you develop property, how many other developers have they provided advice for and will they be able to provide references?
Good tax advisers and accountants will boast about their success, so give them to the opportunity to do so!
How much does a ‘good’ Tax Adviser / Accountant charge?
That really does depend on what type of advice or service you require. The fees generally reflect the tax adviser’s / accountant’s level of experience and qualifications, along with the amount of time they may have to spend on your case; in this instance you can request an estimate of the total. Also ask when fees need to be paid by.
Some accountants and tax advisers do offer ‘fixed fees’ for certain types of advice or help so that you know exactly what you are paying and exactly what you will receive.
Try to negotiate a fixed fee wherever possible, as good tax advisers and accountants won’t be afraid to operate on this basis. It is far better than the ‘let the clock run’ approach, though in some cases such as a tax investigation, hourly charges are the only practical way to work.
Should my Tax Adviser / Accountant be part of a professional body?
There are various professional bodies that you will find tax advisers and accountants are a part of.
Anybody who claims to be able to give ‘tax advice’ should be a ‘Chartered Tax Adviser’ (CTA), which means that they will be member of the Chartered Institute of Taxation and will have taken and passed their examinations.
Qualified accountants will have Chartered Certified Accountant (ACCA or FCCA), or Chartered Accountant (CA, ACA or FCA) in their title.
How much indemnity cover should a Tax Adviser / Accountant have?
If an adviser gives you inappropriate advice or your accountant does not manage your accounts correctly it could result in a huge financial loss for you.
Finding out at the beginning what indemnity cover a tax adviser or accountant has will mean peace of mind for you. Find out whether they are covered for loss of documents, court attendance and legal fees, breach of confidence or misuse of information to suggest just a few areas. Ask who they are covered by and for how much per claim.
Knowing what protection your adviser or accountant has will protect you. You will be alarmed to learn that some advisers do not even have indemnity cover and you are well advised to stay away from such advisers. Chartered accountants and Chartered Tax Advisers are required by the rules of their professional bodies to have professional indemnity insurance.
How do I contact my Tax Adviser / Accountant?
It can be quite frustrating when each time you phone your tax adviser or accountant they are unavailable.
Find out in advance how to contact them and if this suits you. If you know that the procedure is to leave a message with the secretary, that you will be dealing directly with the adviser, or that you will be put through to another adviser you will feel more comfortable.
If you have ‘ad-hoc’ questions to ask your adviser or accountant and you cannot reach them, how soon will they get back to you? Also, find out if they are happy to receive email as you may prefer this method of correspondence.
Your chosen tax adviser / accountant should personally respond to your enquiries and calls within an agreed timescale.
A recent development has been the growth of online accountants and tax advisers, and if you do not feel the need for face to face contact with your adviser, you may want to consider using such a firm. Having lower overheads in the form of offices and meeting rooms, they are often able to offer lower fees than the conventional firms.
How do Tax Advisers / Accountants keep up to date with tax legislation changes?
Tax legislation is constantly changing. That is why it is important that your adviser or accountant keeps up-to-date with all the changes. For example, there was a pre-budget report on December 6th 2006 which highlighted some tax changes for 2007, and there will also be the Budget itself in March 2007.
Also, to retain their qualifications, tax advisers and accountants must adhere to ongoing training programmes enforced by their regulatory bodies, to ensure that they are keeping abreast of the latest changes in legislation and the latest tax planning opportunities.
For Example, CPD (Continuing Professional Development) is the compulsory training a Chartered Tax Adviser is required to do each year in order to keep his qualifications. He or she must do a minimum of 90 hours training per year; broken down into at least 20 hours “structured" training - that is, attending seminars, lectures, etc, and 70 hours "unstructured” training (such as reading textbooks and technical articles)
What if I have a tax / accounting emergency?
You are now aware of how to contact your tax adviser or accountant but what happens if you have an emergency and need urgent tax advice? Make sure to agree with your chosen tax / accounting specialist how and who you should contact in an emergency.
How available is a Tax Adviser / Accountant in a crisis?
Knowing that you can rely on the tax adviser or accountant is an important point when considering paying for their services. Make sure that you are able to contact them without having to arrange a formal meeting!
Do Tax Advisers / Accountants sell ‘off the shelf’ packages?
This is a very important question to ask your tax adviser / accountant. There are certain advisers out there who sell tax schemes (also known as ‘off the shelf’ tax solutions) and earn significant amounts of commission by doing so.
“Tax Schemes” come in all sorts of forms – one example (attacked by some legislation announced in the Pre-Budget Report) is the creation of artificial capital losses to set against capital gains.
If your adviser mentions such schemes to you, then be cautious as HM Revenue and Customs are getting tough on such schemes, and legislation has been introduced requiring those using them to disclose the fact to HMRC.
Will your Tax Adviser / Accountant have the human touch?
One final but important point – what is the “chemistry” like between you and your adviser? If you do not find them pleasant and likeable, you are going to find it harder to do business with them. Mutual trust and respect is an important ingredient in any professional relationship.