I have a tax question… help!
With over a decade of working in the industry, we hear you. Tax is complex. Right before your eyes, it can grow arms and legs like an apocalyptic creature, going from what seems to be a quick question to becoming a full-on project. We know that, and you know that.
Unfortunately, many clients do not understand the complexity of tax and expect you to know the answer faster than you can say, ‘Johann Goethe’. They want answers, and they want them now, sometimes yesterday, and for free! Clients don’t appreciate that an Accountant and a Tax Adviser are separate roles, each requiring hours, days, and years of devotion to master.
This means you must know your options quickly to effectively deal with your client’s tax questions. As with anything complex, there are numerous factors for clients to consider, including time, money, expertise, and risk. You need your eyes wide open when it comes to tax queries, so you don’t lose time, money, and sleep!
With most tax questions, the biggest challenge is often knowing where to start. Depending on your experience, your time, and the complexity of the tax question, there are different routes you could take to find the answer you need.
This could be your time or the client’s time. Your client may have a deadline they need to meet; equally, you might not have sufficient time to research the query to the required level. YOUR EXPERIENCE This doesn’t mean you need to be a qualified CTA or ATT professional. It can also mean that you have previously researched, helped a client, or undertaken training in the area of tax.
The complexity of the tax query could range from a quick question to specific advice on an area of tax or a more comprehensive project with tax implications.
Different combinations of the above factors will impact the route you take to find the necessary answers and support. But fear not; we’ve developed a method to help you navigate the complexity of tax queries regardless of the source.
Based on your time, your experience, and the tax question complexity, there are three common sets of circumstances that will determine the route you take:
You have the time and/or experience to research what you need.
It’s a quick query, but you don’t have the time and/or experience.
You’re looking for advice in a specific area or advice on tax implications impacting a more comprehensive project but you don’t have the time and/or experience.
Let’s look at the options you have for each of the above scenarios and the pros and cons to consider.
1. You have the time and/or experience to research what you need
Suppose you have plenty of time and experience to look into the tax question yourself. In that case, there is an abundance of resources you can access, such as the gov.uk website, HMRC guidance, tax legislation, Diagnostax download area, digital tax resources, tax books, professional body technical resources, online articles, and resources, CPD notes from courses, HMRC’s technical department; the list goes on. However, you need ample time and confidence to arrive at the information you need.
By handling a tax query, you will naturally build your knowledge and experience, which is excellent for your development. You’ll also have the comfort of controlling the process with the client, removing the reliance on someone else to get the job done.
But this also comes with risk. Are you confident you know enough about the subject area? It’s also critical to check your professional body code of practice, as you should only take on work you are experienced in dealing with, which leads to insurance. You must have the appropriate level of insurance. Your professional body will have its own guidance on the levels of professional indemnity insurance you need for different types of work. Then, we come to the realities of the work; the time and costs. Is it worth your time and effort?
Finally, you may find that once you begin your research, you unearth something that isn’t in your area of expertise or you have no practical experience dealing with it. You’ll need to consider alternative options depending on the support you need.
2. It’s a quick query, but you don’t have adequate time and/or experience.
You may get so far and find you have a quick tax question and need to validate the answer. This could be something you or your client have identified; typically, you’d have researched the area and acquired some knowledge. To fall into the ‘quick query’ category, it should take approximately 15-30 minutes to find the answer and respond to the client. Examples could be:
Is this business cost an allowable deduction for corporation tax purposes?
How do I estimate the SDLT charged on a property purchase?
Can I reclaim the VAT on a particular purchase?
If it’s a quick query, you may succeed with a tax helpline or by contacting a specific expert via your network.
Tax helplines can be great for a quick query as they are easy to access, and you have direct time with a specialist. But they are often a chargeable service with an annual fee, and it can be difficult finding the right fit for your business. The biggest issue is the specificity of the answer. You cannot get specific tax advice to use with your client, it can be very generic. Therefore, you must be 100% clear on the question you are asking to ensure you get the correct answer and be prepared to take responsibility for the risk associated with using the information to advise your client.
Reaching out to your network can be a great alternative. You have access to a tax specialist who can deal with the client, saving you time and money. However, you do run the risk of losing control of a client relationship and the level of service they receive. Even worse, you may lose the client altogether. You also need to consider the specialist’s reputation; it can take time to identify someone suitable. This will be a recurring issue each time you have a tax query in a specific area of tax.
Not so quick after all….
We all know a “quick” question from a client isn’t always quick, and can often fall into one of two additional categories. Here are a couple of examples:
Example 1: Can I claim business asset disposal relief if I sell my company shares?
This may seem like a “quick” question, but it would be a specific area of advice as you need to consider the client and company position to determine if the relief applies. You could provide generic advice to explain what the relief is, and how it works and then explain that specific chargeable tax advice could be given to review their position and provide a response.
Example 2: Can I set up a holding company for my business?
That is a simple question on the surface. Yes, holding companies are a good idea if you want to create separate sub-companies for different trades or split the trade and assets into two companies. But stop there; what are the tax implications of the transfer and ongoing? Do you know how to execute the transfers needed for this transaction?
As you can see, the examples above are stepping into the realms of specific tax advice or wider project-related advice - not so quick after all - and require a different level of support altogether.
3. You’re looking for advice in a specific area or advice on tax implications impacting a wider project, but you don’t have the time and/or experience. Suppose you’re looking for specific tax advice or support with a tax project. In that case, you will require a more advanced service from a tax specialist with a detailed scope of work, such as the Tax Panel service, accessible to all Diagnostax subscribers.
Specific advice is when a client needs advice on an area of tax in writing. It usually relates to a planned transaction or event, i.e. they know what they are doing and want advice on that route. Examples could include:
Can my client claim stamp duty land tax relief on a property purchase?
My client is gifting some of their company shares to their business partner and wants to know the cost to them and if they can save money.
What is the VAT treatment of my client’s business services as they set up a new business?
Project-based advice typically involves a client tax query where the client hasn’t decided what they want to do and requires the following three components:
Consultancy: a fact-finding exercise to understand the client’s goals and objectives, consulting with the client to determine suitable options considering tax, commercials, and client objectives.
Tax Advice: formal written tax advice which sets out the client’s options and the tax and commercial implications of the options.
Delivery / Implementation: putting in place the chosen option, such as legal paperwork, Companies House filings, and HMRC filings.
Examples of project-based advice could include:
I want to incentivise a new senior manager with options to buy shares and wish to do so tax efficiently over three years.
I want to set up or restructure my businesses into a group.
I want to understand how to tax efficiently hold my property rental portfolio that is currently owned personally.
Depending on your connections, you may have a suitable contact to lean upon with the relevant expertise and experience to deliver the specific or project-based tax advice your client needs. However, as detailed, this doesn’t come without risk. Tax Panel by Diagnostax Alternatively, you can access a dedicated service, such as the Tax Panel by Diagnostax, designed to deliver specific or project-based tax advice. The Tax Panel service efficiently enables access to specialist tax advice, protecting you from risk, getting the best solution for the client, and ultimately keeping control with you. There’s even a white-label option. It takes 8 to 10 working days from enquiry to a proposal issued at no additional cost to Diagnostax subscribers.
Template emails, visuals, guidance, process documents, and FAQs support the process. You receive all the documentation and facts relating to the enquiry.
Regarding the advice, the risk sits with the tax specialist. An allocated Tax Director manages the process from start to finish, identifying the appropriate tax specialist saving you time and money. You can feel confident that the tax specialists are aligned with our values and brand, so if we’re a good fit, they are too. Due to the nature of the process, you need to be aware of the timescales and communicate these to your client. If you need an answer tomorrow, this isn’t the suitable route for you.
If you have a tax query and need help figuring out where to start, use our routemap graphic. DTX’ers can download the graphic with guidance from the Tax Panel download area or get in touch if you have a tax advice enquiry you need help with.
Diagnostax, A-Z Tax Advice & Consultancy function
New to Diagnostax? Our A-Z Tax Advice & Consultancy function will integrate seamlessly with your business. Our services, tools, resources, products, and tax experts cover the A-Z of tax advice and consultancy. Whether you want to engage with clients to start talking about tax, diagnose what tax advice they need, or deliver that advice, we can help.