The importance of choosing your Tax Adviser wisely

28 December 2023 - Chris George

Choosing a tax adviser is a bit like choosing a car mechanic, the link between the two might not be obvious but Chris George, Tax Advisory Partner looks at the similarities.

Firstly, there are lots of different firms offering a variety of different services.  When your car needs fixing, your options range from a small, independent mechanic through to national retailers and garages linked to manufacturers.  Each has their place in the market, and each offer a different level of service, at a different price.

This is similar to tax advisers, there are a huge range of different advisers, from independent sole practitioners, through to large multinational groups.  As with mechanics each type of practice has its place in the market and offer different services at different prices.

Both tax advisers and mechanics are also very technical jobs requiring experience and training in order to provide a high level, professional service.  However, while both professions have technical qualifications, there is no legal requirement to hold them.  Just as you can service a car or fix someone’s brakes without any qualifications, you can provide tax advice without having any technical qualifications or understanding of legislation.

While most people wouldn’t trust their brakes to someone who isn’t qualified or experienced, it is surprising the number of individuals and businesses who trust quite often complex tax situations to unqualified or inexperienced advisers.

There has been a significant amount of publicity recently about large numbers of individuals taking advice from what they believed to be reputable companies but have since turned out to be fraudulent or dubious claims.  There are a wide variety of different types, but the common ones are:

  • Claiming expenses against employment income for items such as clothing and cleaning costs
  • Making a claim for Research & Development tax relief where there is little technical uncertainty
  • Constructing a property letting business as a partnership to utilise incorporation relief and avoid various tax charges on moving a property portfolio into a company
  • The use of accounting provisions to artificially reduce profits and thereby Corporation Tax liabilities

While it can, of course, be very tempting when an almost guaranteed cash repayment or tax reduction is offered to you by what seems to be a knowledgeable organisation, the old adage still rings true.  If something seems too good to be true, it probably is.

Under self-assessment, both for individuals and companies, HMRC operate under a ‘process now, check later’.  This means that when claims are submitted  the vast majority are accepted without any checking and repayments are issued to the taxpayer.  However, HMRC has a minimum of 12 months, and in some cases, a maximum of 20 years in which to investigate the information submitted and challenge.  It is therefore often several years before serious questions are raised into the validity of any claim.  Should HMRC successfully challenge a claim, it is the taxpayer who is fully responsible for any underpaid tax as well as interest and penalties due.

So, what should you do if contacted by a firm offering these types of arrangements?  First and foremost, you should speak to your existing advisers.  Are they aware of the type of claim being offered and what is their view?  If current advisers are not experienced in the area, you should speak to someone who is, in order to get a second opinion.  Secondly, you should question the proficiency of the firm in question.  What professional qualifications do they hold, are they regulated by a professional body such as the ICAEW or CIOT.

At Scrutton Bland we have significant experience throughout our team covering a wide variety of sectors and specialisms.  We have dedicated experts in VAT, Stamp Duty Land Tax as well as personal and corporate taxes.  Many of our staff hold the Chartered Tax Adviser qualification and we even have individuals who have experience working inside HMRC.  All of our technical staff are required to complete a considerable amount of annual training to ensure they are up to date with the latest legislation and case law to make sure the advice we give is using the most up to date information.

As well as providing advice to clients we also have expertise in assisting individuals and businesses in reviewing historical claims made and dealing with HMRC enquiries.  So, if  something from the past is keeping you up at night, it may be time to seek a second opinion before HMRC start asking questions putting you on the back foot.  It is much better to check your brakes when the car is stationary rather than when you are travelling downhill.

Contact our specialist team regarding tax advice by sending an email to Chris at hello@scruttonbland.co.uk or by calling 0330 058 6559.

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