Know your client

Posted on

I wrote recently about what client's want from their accountants. That was based on my own experience of more than 20 years in practice. That experience also tells me most accountants don't deliver what is required.

The fundamental reason is simple. They impose their desires on their clients. Accountancy Age reported recently that most accountants are good talkers and poor listeners. I agree.

There is a way round this. It's called 'know your client'. That's not the basis data required by money laundering rules we all have to collect and keep. It's actually about knowing them and what they want. And if accountants aren't good at this they should create a system to make sure they have to listen.

Being a good accountant I believe there's nothing like a form to help this process along - and I'm only jesting a little. Having to ask questions and record answers to ensure that a client's wishes are identified makes complete sense. After all, it's what the financial services industry has been meant to do for years.

So, my suggestion is simple. Any accountant should actually ask their client what they want. The range of answers will be interesting. There will be some who don't want to pay tax. Show them the door is my advice: they won't want to pay you either.

Most will be remarkably risk averse. If it's made clear that tax avoidance increases the chance of the Revenue raising questions they'll do all they can to avoid that.

Some will ask for real planning i.e. what can be done to manage their affairs within the spirit of the law with low risk of investigation eliminating all possible gains arising. That's p[profitable for both accountant and client. I would encourage it.

And a few will want to avoid. In which case my advice is much the same as for those who want to pay no tax: steer clear of them. They represent risk to the accountant, in which case no profit maximising firm should not want them. Tax investigations of their own clients do not make accountants money. So why take the risk of suffering them?

The simple fact is I know from experience that most clients want to be tax compliant. They like sleeping easy at night. That way profit lies for most firms. Simply asking clients would prove this to be true. In which case the firms who deserve to attract attention would stand out and the burden on the compliant tax practitioner would fall overnight. In addition, firms doing this would not have to tell compliant clients about tax issues in which the client will have no interest, especially if that fact is recorded in the engagement letter.

So why, I wonder, aren't the professional institutes promoting this? Is it tax, clients or profit they don't understand? Or maybe all three?