PROFESSIONAL CONDUCT
Giving advice to clients Mark Lee asks whether your standards are as professional as they need to be.
H
ow confident are you when it comes to giving advice to clients? Do you think you are more or less confident than fellow members of the AIA? There are generally three approaches here: you could be professional, you could be naive or you could be arrogant. You could also be all three (or any combination). I’ll explain what I mean and then move on to consider the importance of professional standards when it comes to giving tax advice so as to avoid professional negligence claims.
‘Professional’
Professional accountants have the confidence borne of experience and knowledge. They know what they don’t know and so don’t pretend otherwise. More on this later...
‘Naive’
Naive accountants don’t know what they don’t know. They answer their clients’ questions quickly, often without any awareness that the client’s specific situations and circumstances could impact what would be the most appropriate advice. A common example of this is when someone asks whether they should run their business or property investment activities through a company. It can be naive to offer advice without first clarifying their ambitions, plans and attitudes to company admin, etc. Simply comparing the impact of current rates of tax on the two options is naive. In my experience, naive accountants tend to be younger and less experienced. But there are plenty of older and more experienced accountants whose naivety lets them down when clients need AIAWORLDWIDE.COM | ISSUE 128
What can go wrong?
Busy accountants can overlook critical issues and it’s surprising how many miss some basic tax issues. This puts them at risk of professional negligence claims, not to mention failing to give their clients the service and advice they are paying for. Here are ten common mistakes that could put you at risk: 1. Omitting to consider the VAT implications of significant property transactions 2. Missing the deadline to claim research and development tax credits or property related capital allowances 3. Giving an incorrect valuation of business assets, shares or goodwill as part of a sale or purchase transaction 4. Omitting to reorganise group companies to reduce ‘avoidable’ tax charges 5. Failing to advise clients to correct their payroll procedures so as to reduce penalties 6. Not providing ‘standard’ tax planning advice on arrival or departure from the UK 7. Ignoring the consequential adverse implications leading to avoidable tax liabilities (e.g. VAT, stamp duty land tax, inheritance tax, NIC, customs duties, etc.) when giving commercial or ‘basic’ tax advice 8. Omitting to compute and report the tax consequences of transactions such as disincorporation 9. Failure to ensure that all relevant criteria are satisfied to facilitate a claim for specific reliefs 10. Assuming that there would be no liability to inheritance tax and failing to advise as to how the real liability could be reduced
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Mark Lee FCA, CTA (Fellow) Chair, Tax Advice Network
help or advice on issues that go beyond what the accountant has dealt with previously.
‘Arrogant’
Arrogant accountants are those who believe they know it all. They forget that their knowledge may not be up to date, they believe that ‘beating’ HMRC is always in their clients’ interests and they are proud of operating at the borderline of professional ethics. Examples of each of these approaches are all too common: giving clients advice that is out of
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