AccountingWeb has an article in which it is claimed that 95% of accountants may be negligent with regard to tax planning because they do not tell all their clients of all the tax planning schemes that might be available to them.
I think that an absurd suggestion and have said so on that site, saying:
This debate has been around for a long time. Let's deal with the tax avoidance thing first. Most people are risk averse, especially when they know the facts. Kite G has outlined some of them. Most accountants are risk averse, especially when they know that the cost of a tax investigation on a scheme they sold to a client will probably fall to their account (and don't always rely on insurance). In that case, and given the ethics of tax avoidance (or rather, the absence of ethics in tax avoidance which means that in my opinion a professional person has a duty not to partake in that activity) then the accountants position can be made abundantly clear to a client at the outset of the relationship - and can be summarised in the engagement letter. It can be stated that arrangements that the accountant thinks to be tax avoidance will not be offered to the client for consideration on the basis that the risk inherent in them is always considered unacceptable for either accountant or client to consider. Use David Ulph's definition of tax avoidance if it helps:
Using artificial or contrived methods of adjusting taxpayers' social, economic or organisational affairs to reduce their tax liability in accordance with the law while not affecting the economic substance of the transactions.
That gets one contentious issue out of the way. Completely.
Let's now get back to the point. Does an accountant have a duty to advise a client on every tax compliant planning opportunity available? No, of course they don't. To say they do is complete cop-out of professional duty. Client's engage accountants to take stress of their shoulders in an area they do not understand: in our case accounting and tax. They do not choose to have an accountant to be the recipient of endless unrequested advice on complex issues they do not comprehend and on which they are not qualified to form an opinion. They paid an accountant to do that.
So, it's an accountants duty to use their professional judgement to suggest opportunities to clients that might be suitable for them. But that has to take into account the broad range of knowledge an accountant has.
Let's take an example. It remains true that limited companies can, theoretically, save tax for a lot of self employed people, most of whom have no regard for the corporate veil, the need to account for tax whenever funds are withdrawn from a company, and who believe that any account with money in it is theirs to raid. It is completely negligent of an accountant to recommend the use of a limited company to a person who does not have the discipline to operate it within the constraints of the law and so expose that client to all sorts of risk. So why do it, to then follow up with a comment which basically says 'You could do this apart from the fact that I think you far to negligent to manage the arrangement?' Is that good client relationship management? I don't think so.
In other words, the accountant has a duty to exercise their own judgement. That is what being a professional person means: exercising judgement. The solution recommended here is a technical solution designed to alienate clients. I'd suggest giving it a very wide berth.
But as for the glaringly obvious advice everyone should supply, why aren't you doing that by email, web site, in routine letters, even (hard to imagine they're relevant anymore, but someone must do them) newsletters? If the client refuses to take the service, so be it. Make sure it's been offered. Then liability risk is removed.
That is being proactive.
I get very annoyed by accountants who claim they have no choice in what they do. They have. They're not technicians who deal in certainty. They're professionals who deal in uncertainty. That means choice is an essential part of their work. To deny that is seriously misleading, at best. It is as often irresponsible because it creates an entirely false impression of what a practicing accountant can and should do.
And what they should do is form judgements. This article appears to deny that essential truth. As such it is very poor advice indeed.