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Top tips on advisory at tax year-end

Author: Suzanne Spicer, Derek Blair

Published: 11 Mar 2021

Suzanne Spicer and Derek Blair, members of ICAEW's Practitioner Business Advisers Community, share their top tips on offering advisory services at tax year end.
Suzanne Spicer and Derek Blair, members of ICAEW's Practitioner Business Advisers Community, share their tips on providing advisory services at tax year end.

As 5 April fast approaches Derek Blair and Suzanne Spicer, members of ICAEW’s Practitioner Business Advisers Community, share their insights on how to provide tax advisory services to clients.

The end of the tax year is a busy time, but one which offers a golden opportunity for Chartered Accountants to expand their services from compliance to advice, providing valuable information to clients.

For those unsure of how to start, it can be as simple as informing clients of upcoming changes, according to Suzanne Spicer, a sole practitioner at Spicer and Co. “There's lots of advisory opportunities in the field of tax as the regulations constantly change,” she says. “If you don't tell your clients, somebody else will.”

Spicer highlights the introduction of the domestic reverse charge VAT in the construction sector and changes to off-payroll working rules (commonly known as IR35) as providing advisory opportunities. “You need to tell your clients that these things affect them and that's advisory. It may sound very basic, but that's where you start,” she says.

“Offering advisory services builds a personal relationship and trust with a client. There's an awful lot of compliance accountants out there who are now trying to fight on price. If you're a trusted business advisor they are going to be less price sensitive,” advises Spicer.

Derek Blair, Partner at Pinkham Blair Chartered Accountants, emphasises that making the move to business adviser involves dedicating more time for clients. “If you're doing compliance work 60 hours a week, you may have to employ someone to help you or outsource some of the nuts and bolts,” he advises. “Clients will want to be able to get hold of you and be able to have an hour-long meeting with you.”

Blair describes himself as a “conversational accountant”, arguing that discussions with clients are Pinkham Blair’s core service offering. “It’s where we add the most value,” he says. “The end of year, tax-planning is a reason to have an extra conversation with your clients.”

Tax planning advice

At the heart of tax advisory services at this time of year is tax planning. This will often focus on maximising the benefit of tax rates and allowances. “The obvious one is that we don't want clients to drift over the £100,000 income tax threshold and start losing their tax free personal allowance,” says Blair.

“It is exactly this time of year that someone will take a dividend, without thinking. It might be that they’ve had a redundancy payment earlier in year, and it has taken them very close to the threshold without realising.”

Blair continues: “It might sound simple, but a lot of accountants leave their clients to their own devices and if you can help someone manage their marginal tax rates that can offer great value.”

Spicer meanwhile highlights the importance of being able to gauge what level of support clients are looking for. “You have to understand your client's appetite for tax saving,” she says. “Would they rather just pay the tax, or are they prepared to spend some of their cash on maybe pension planning, or some sort of tax efficient investment?”

This client knowledge is also crucial in how to prioritise tax-planning conversations at such a busy time of year. “It’s not possible to talk to everyone, and some people won't be receptive to a conversation,” she says. “You do have to be selective about who you're offering advice to.

Preparing for tax year end

The key to reaching as many clients as possible at such a busy time of year is preparation. For some clients these conversations can be started much earlier in the tax year. “For us, our planning almost goes back to the company year end, which could be June or December,” explains Spicer. “We're doing pre year-end tax planning to limited companies first, then dividend planning on the back of it.”

She also highlights the power of real-time data sources through bookkeeping software like Xero or Quickbooks. “You've got the figures you need at your fingertips,” she says. “We know exactly what sort of results our clients are looking at.”

Blair agrees: “Having financial data to hand provides the ammunition for some pretty well-informed dividend planning conversations.”

As part of its service offering, Pinkham Blair reviews client data every month and this helps them to identify who to speak to as year end approaches.

“The managers have a very good feel of where every client is and a sense of what dividends have already been drawn during the year. If there is capacity with certain tax bandwidth, then we might initiate a conversation with that client to help them utilise the rest of that remaining tax band or to work out with them where they want to be,” says Blair.

In the run up to tax year end, the practice segments client lists and reaches out to all those for whom they believe the final dividend in the tax year is relevant. “We're working out who might particularly value a year end planning chat and then we send an email inviting them to an appointment,” explains Blair.

At the same time, practitioners have to create capacity to deal with proactive clients that get in touch with a tax planning question. “Some people might contact me around Christmas, while others will get towards the fifth of April and suddenly realise they want to speak to you,” explains Spicer.

Proactive client inquiries may require a not-insignificant amount of time. Blair says: “Clients are often approaching us with something that is quite complicated. We'll be spending half an hour researching before being able to respond as to whether something won’t work and why.”

To make the most of tax-year end practitioners need to focus on the three Ps – planning, preparation and prioritisation. Spicer concludes: “It is a busy time of year and you have to understand your clients’ needs to be able to prioritise.”

Further resources

Hear more tips on tax advisory

You can hear more advice from Derek Blair and Suzanne Spicer in a 10-minute video interview.