Over the years I have collected dozens and dozens of stories of what it is that has led to problems for accountants. Such examples help inform my talks about how to avoid negligence claims. It’s also worth recognising how easy it is for things to go wrong; after all they do say that forewarned is forearmed.

So here is a selection of real life situations that have led to negligence claims against accountants. Don’t get caught out yourself:

• Unexpected obligations to overseas tax authorities
• Difficulties with liquidators due to auditors being officers of the company
• Failing to provide all relevant information to successors
• Failure to evidence independent advice as a trustee
• Difficult clients not providing all relevant information
• Nightmare clients who are not clear as to what they want
• Continuing responsibilities after ceasing to act for a client
• ‘bad’ partners in the firm
• Counter claims when pursuing outstanding fees
• Going beyond agreed scope of work and level of own competence
• Failure to spot employee fraud
• Clients who lose confidence due to poor communication
• Lack of clarity re scope of work and responsibilities
• Adverse media reports after disgruntled client leaves
• Casual relationships
• Third party (or interested party) putting pressure on client to complain
• Failing to spot technical issues
• Valuation related work when subsequent sale suggests a very different figure
• Clients looking for someone to sue

I have also addressed related points in previous posts on this blog – such as

• Expect more clients to seek advice on Tax Credits;
• That key term in PI policies
• Ten top tips to avoid professional negligence claims
• Are you at least ‘reasonably competent’?

If you’d like to know more about How to avoid professional negligence claims and protecting your practice from negligence claims and worse – then you may want to attend my next seminar on the subject.  Full details here.

If you’re unable to get to London for the seminar you can instead access the slides and notes from an earlier version of the seminar by following this link.

And if you have any examples of claims that you’re willing to share do please add them as comments to this blog post.

Twitter seems a bizarre concept. In theory you post brief messages (up to 140 characters at a time) about what you’re doing and these are seen by your ‘followers’. Equally you can read what other people who you’re following say they’re doing.

In practice ‘tweets’ are far more varied than some of the media would have you believe.

Through twitter I have secured attendees at my seminars, traffic to my websites and to my blogs. I have also benefitted from having my messages ReTweeted to wider audiences than the people who ‘follow’ me. And following links from other people’s tweets has led to useful material for my blogs. I’ve also started to build online relationships and have experienced strangers acting as my advocate.

Each time I add new posts to my Ambitious Accountants blog, my TaxBuzz blog or my Accountant jokes blogs an automatic Tweet goes out with a link back to the new blog post. And it’s not only my ‘followers’ who get to see them. Many people search twitter for real time commentary and then tell others.

So, for me twitter is shaping up as a fun business tool. But, do I think many UK accountants will become active on twitter? No. It’s too time consuming as compared with other ways in which they can achieve their business objectives. In this connection I refer back to a blog post I wrote last December in which I explained why ‘Twitter is not for accountants’. My views are unchanged despite knowing a handful of accountants who are now active on twitter – some are even enthusiastic about it. Maybe more will try it out, but I doubt many will stay the course (for business).

Twitter is the latest phenomenon in the area of ‘online business networking’. Business or social? It depends how you choose to use twitter, what you tweet about and who you follow. If you follow all the internet marketing enthusiasts, the celebrity twitterers and the novices who don’t really ‘get it’ you’ll certainly consider twitter a waste of time.

You may know some of your ‘followers’ personally. Others will find you through friends, through real time searches re accountancy and tax subjects or subjects o mutual interest. There are loads of would be twitter spammers – but if you don’t follow them they can’t spam you! And you choose who you follow. If you don’t like the way that someone tweets, ‘unfollow’ them.

I doubt many of my followers read all of my tweets. I certainly don’t have time to read all those of all the people I follow. Many of them in fact only tweet occasionally. As well as friends and business associates I follow other commentators, some journalists, some firms, some publications and some organisations. Many are still experimenting with their twitter strategy – as am I.

—–

If you decide to join in, by all means follow me at www.twitter.com/BookMarkLee. I’ve explained my approach in more details on the twitter page of this blog.

Through the Tax Advice Network I also write the The Tax Buzz blog and twitter feed which you can follow at www.twitter.com/TheTaxBuzz

And if you have a contrary view, whether you are an accountant or not, please add your comments to this post.

It’s been two weeks since my last post on this blog and that’s probably the longest gap between posts since I first started blogging almost 3 years ago. There are well over 250 items here and I continue to enjoy writing and sharing ideas, tips and advice both for ambitious accountants who are building their careers and also for those building their practices.

So why the gap? Simply that I am currently being paid to blog elsewhere and there is a limit as to how much time I can devote to writing blog posts. For the month of March I am the Guest editor of PracticeZone on AccountingWEB.

This foray into online journalism has already taught me that it’s not as easy as it might look to produce readable and useful copy to regular deadlines.  Todate I have only had to focus on the weekly practical tax newsletter that I publish through the Tax Advice Network.

As well as my writing commitments I have other consultancy and speaking engagements – and my role as Chairman of the Tax Advice Network – to fulfill. So, of course, paid work takes priority over unpaid blogging.

Incidentally the Network is now fast approaching my target of 2000 registered accountants.  If you have yet to supply your name and email address don’t leave it too late.  Once registered on the site you’ll receive a free weekly email newsletter containing 3 practical points especially written for accountants in general practice – and of course full access to the profiles, articles, ratings and testimonials of all of the independent tax adviser members of our network.

As regards this blog, normal service will be resumed shortly!

Many, but NOT all accountants, charge fees by reference to the time they spend working on a client’s affairs. Most accountants in practice still complete timesheets to show how much of their day has been devoted to each different client and to each different aspect of management, administration, marketing or other ‘non-billable’ time.

Thinking back to when I was in practice it was many years before I realised that a timesheet may have uses as a management tool but that it did not ‘prove’ how much time had been spent doing anything. It was a guide, nothing more. In my talks to accountants, eg: “How to make more money from your smaller clients” I ask accountants what they would bill in a variety of situations. The answers prove that the timesheet is a guide and that the ‘time costs’ that it reveals are rarely the same as the fees billed (or that could be billed).

In previous posts on this blog I have considered related topics such as: Timesheets and value pricing professional services; How do you set charge out rates?; Clients will pay high fees for good advice; and Setting fee rates – using costs incurred or value provided?;

I am astonished to find that I have, todate, made no previous direct reference to either Ron Baker or the VeraSage Institute ( a “revolutionary think tank for professional knowledge firms”).  I’ve been aware of Ron since first reading his book ‘Professionals Guide to Value Pricing’ in 2001.

Today I rectify that omission and do so by reference to a new post on the VeraSage blog: All accountants charge for their time. NOT!

The blog post refers to a Q&A found on a number of accounting firm websites (possibly as it comes as standard in a template web page):

“How do accountants charge? All Accountants charge by time. The longer it takes to prepare your Return the dearer it’s going to be. Some businesses sell hamburgers. Real Estate Agents get paid commissions, and ACCOUNTANTS SELL TIME.”

This is a sad misconception. It’s based on a misunderstanding and it’s a misleading myth. Accountants may try to determine SOME OF their fees by reference to time. They may try to  charge fees by reference to their time records but TIME is not generally what accountants sell.  If it were then the corollary would be that TIME is what people who want  an accountant set out to buy. And they don’t.

In my view accountants sell (or should focus on selling) Trust, Confidence and Peace of Mind. Indeed a quick Google search reveals an increasing number of firms who state this on their websites.  These are 3 of the key qualities, if not THE 3 key qualities, that clients seek when they want to appoint an accountant.  If  prospective clients do not quickly trust you, have confidence that you will do the necessary and give them peace of mind that they can rely on you, you will not keep them as clients; indeed they may not appoint you in the first place.

What do you think you sell as an accountant in practice?

Anyone who has heard me speak at seminars or enjoyed my mentoring programme will have heard me refer to the ABCDE of client service.

I was surprised recently to note that in the last 2 and half years I haven’t already blogged about this. But a quick search reveals that to be the case.

I first used it when training staff in practice almost 20 years ago. It’s evolved a little bit in that time but hasn’t required much change.

When I was in practice I explained to my staff that the ABCDE of client service summarised the five things that clients most wanted from their accountant. I encouraged my staff to keep it in mind whenever writing, phoning or meeting with clients. I also used this as a tool to help convince prospective clients that I knew how to look after them.

So here it is:

A = Advice – More than anything clients want Tax Advice.  A is NOT for Answers  – See previous post.

B = Barrier – Clients want us to act as a Barrier between them and HMRC.

C = Compliance – We deal with all of the Compliance paperwork and processes.

D = Dates – We make sure that clients know when they need to do things and when we’ll do things, when tax needs to be paid and when refunds can be expected.

E = Estimates – We provide estimates of the tax payable and repayable and update these as and when the information changes.

I remember playing around some years back and adding further definitions for additional letters (F, G, H etc).  But none stuck and five is about the right number anyway.

Does anyone care to try to improve on the above?

This was the message to accountants in a press release issued last week by the Tax Advice Network.   In it I warned that:

Accountants across the UK are likely to see a surge in requests for Tax Credit advice from couples considering getting married following the release of a controversial report highlighting the failings on the current Tax Credit System for married couples.

This followed on from The ‘Individualists Who Co-operate’ report issued last week by Civitas.

In fact I have been suggesting for some time that More and more accountants will find themselves having to advise on tax credits.

And this is also a  point I invariably make in my talks about How to avoid professional negligence claims and Mastering the Credit Crunch.

Question one I always ask for a show of hands as to how many accountants in the audience advise clients about their entitlement to claim tax credits. I’ve spoken to groups of all sizes, from 20-180 and to date no more than 5 hands ever go up. This suggests to me that the vast majority of accountants are not currently advising clients about their entitlement to claim tax credits.

We know why don’t we. They are merely a new(ish) dressing for a social security benefit. Accountants have not traditionally advised on benefits. It’s not cost effective to do so and we don’t know all the rules. Some, but not all, accountants make clear in their engagement letters that they do not advise on tax credit related issues. That is their prerogative and in so doing they probably reduce the prospect of a client making a successful claim for negligence at a later date.

Question two I then ask the accountants whether they advise their clients on how best to offset losses, on Capital allowance disclaimers, pension reliefs and (now) Annual Investment Allowances (AIA). Of course they all do. Indeed, securing tax refunds tends to go down well with clients. In fact, clients tend to value anything their accountant does that reduces the tax payable or that secures the biggest tax refunds. And if they perceive that their accountant isn’t doing all they could in this regard, they are inclined to switch to one who does.

Question three So what happens if the loss claim, the AIA or other advice reduces the client’s income to a level whereby they would be entitled to claim tax credits?

So far as clients are concerned, tax credits are TAX credits.This means they are seen as TAX refunds. Exactly the sort of thing that clients expect to get help on from their accountant. And if their accountant doesn’t help in this regard then it won’t be long until the client switches to one who does. Especially if the client becomes aware that he missed out on claiming tax credits as his accountant didn’t tell him when he should have done so. (The 3 month limit on ‘back claims’ is a real problem here).

If the commitments I note at the end of my seminars and training sessions are anything to go by, an increasing number of accountants will be advising clients on their entitlement to claim tax credits. It doesn’t have to be time consuming and it can be done profitably.

Anyone know how much a client could claim in tax credits this year if they registered for them from April and , as a result of AIA (or losses) they have no taxable income this year? Assume partner has no income and there are 2 children.

—

If you’re on Twitter you can tell your followers about this by clicking here to: Tweet a link to this blog post. You can send the tweet, which contains a shortened link, as is or edit it.

And you can follow me @bookmarklee and @TaxAdviceNet depending on your interest.

Some readers of this blog will be aware that I recently created a new seminar for accountants:  Mastering the credit crunch – Your practice, your advice, your future.

During what was a highly practical and commercial half day I suggested that the credit crunch (or recession as now seems to be accepted as a more accurate description of the economic climate) presents new challenges and new opportunities for accountants.

Simply stated, if we carry on doing what we’ve always done we will probably be LESS successful than in the past. Why? Because more of our clients will be suffering financially and this will impact on their willingness and ability to pay us and to stay in business. Our fee incomes and profits will fall unless we do things differently.

Feedback from the hundreds of accountants who attended the seminar was more positive than I had previously dared hope.  And I will shortly start sharing with the attendees the follow up feedback that is still being collated.

In the meantime I have no plans to repeat the seminar so am now  making the slides and notes available for download through the Tax Advice Network website.

There are so many misconceptions about blogging and I am frequently surprised when I encounter bloggers who seek to encourage accountants in general to start blogging.  I would stress that I enjoy blogging.  This blog now has almost 250 posts on it – built up since 2006. I also write a tax insights and commentary blog for the Tax Advice Network and have a third blog on which I share Accountant jokes and fun.

But I’m not in practice. Given that I’m an enthusiastic blogger and spend a fair part of my time helping accountants to build more successful practices you might expect me to also advocate blogging by accountants. But I don’t.

Here are 5 blogging myths – ie: reasons often given to encourage people to blog regularly and why I think that accountants are different:

Build your credibility - This only works as regards people who see and read your blogs. Most accountants in practice are not seeking to build credibility across the UK, let alone the world. Their target audience is more local than that. Will your target audience (prospective clients, advocates and potential staff) find your blog and read it sufficiently to be influenced?

Enhance your SEO - This refers to ‘Search Engine Optimisation’. How easy is it for your target audience to find you on the web? Not the people who know your name or the name of your practice but those who don’t know you and are looking for someone just like you. Might I suggest that the best starting point here is to arrange for your website to be Optimised before you start blogging – if this is your objective.

It’s fun – I’d agree with that. But then lots of things are fun. How many fun things can you fit into your life? It’s also time consuming.  Is it enough fun to warrant the time and effort?

Emphasise your niche – If you have one. During my talks for accountants I often stress the benefits of focusing on a niche and of highlighting a specialism.  The strength of the argument for doing this sometimes comes as a shock after years of trading as accountants to anyone and everyone. But if you do have a niche then the same points apply in the ‘credibility’ para above.

Distinguish yourself from the others - I’m a great advocate of the idea that it’s ‘more important to be different than to be better.’  But those features that distinguish you need to be evidently of benefit to your target clients. Being 7 foot tall and always carrying a bright green briefcase will make you memorable but do those differences benefit anyone? In the same way, will anyone feel that they are getting more value for money or a better service simply because you are a regular blogger?

The other side of the coin

I’ve been blogging here for over two years now. The frequency of my posts varies but it seems to average about 3 per week. I get to post my thoughts and ideas here to help readers and I am then able to collate the posts to create articles for the press and for other websites.  I also often adapt my blog posts to create supporting material for my courses and seminars for accountants.

I am aware of a relatively small number of accountants in practice who seem to enjoy blogging. I know of far more who gave it a try and then gave up. The benefits didn’t live upto the hype.  I don’t think that’s a reflection on the accountants. I think it’s more to do with the hype.

What do you think?  Please add your views as comments to this post.

Posts to this blog normally contain tips and advice to assist accountants, especially those in practice and /or building up their careers. Today I make an exception.

Last week Taxation magazine published a 4 page lead comment article written by me. I had entitled it, ‘Why I gave up giving tax advice”. The editor cleverly revised that so that the headline became:

“A far, far better thing… that I do than I have ever done. MARK LEE explains why he gave up giving tax advice”

In effect the article explains the reasons for my transition from being a tax adviser in practice (after over 25 years).

The main thrust of the article deals with my frustrations, which have been described as ‘a sad indictment of the tax system’. You can read a copy of the article in pdf format: Why I gave up giving tax advice or on the Taxation website here.

Taxation magazine editor Mike Truman, who commissioned the article, has said “Mark is probably one of the few people who can write about this from the inside, because he is no longer giving advice, yet is still closely involved with the tax scene.”

I have to admit that I found writing the article quite cathartic. It enabled me to get a number of things off my chest.

In the context of THIS blog however, perhaps this quote is the most relevant:

Then two years ago, approaching the age of 50, I had cause to consider what I wanted to do for the rest of my career. Entrepreneurship beckoned. But I wasn’t interested in running my own accountancy or tax practice – for the reasons explained below. Instead I initially created the BookMarkLee ‘brand’, acted as a mentor and business coach for ambitious accountants and continued with my professional speaking engagements.

Despite my ongoing commitment to this blog and to my writing and speaking engagements I also noted that:

this was all moving me away from the world of tax and that didn’t feel right. Then the idea for the Tax Advice Network started to take shape and I eventually decided to focus all of my efforts and activities on this endeavour. Launched at the end of last year, it enables me to play to my strengths, continue with my professional speaking activities and stay in tax. Crucially however it doesn’t involve ME in providing tax advice so I’m not competing with the tax adviser members whose services we promote more widely than they would be able to do themselves.

In my conclusion I added that:

Despite my evident frustrations, the continued ‘doublespeak’ and the prospect of increased unbalanced powers for HMRC, I remain committed to my chosen profession. I remain involved in Tax Faculty (and to a lesser degree CIOT) activities although I prefer to focus more on those that involve the provision of guidance and support to members as compared with the representational work. I can choose which non-exec and related activities to pursue in addition to running my Tax Advice Network and my public speaking roles. I consider myself very lucky. Not everyone is in a position to choose to review their career and take a new path.

So what about the ambitious accountants who read this blog? Are my fears and frustrations shared by others? Are you also looking for a way out of the profession (or would be but for financial concerns)?