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Landlord Insider
On the Landlord Insider blog, you’ll find some excellent resources for landlords of all sizes. From the latest landlord news, to professional advice, tips and guides for landlords, there’s something for everyone. Brought to you by the excellent team behind the Landlord Vision property management software.

Good Advisors Do Save You Tax

Close-up Of Businessman Calculating Tax In Office

This section has been written by Amer Siddiq, founder of Property Tax Portal.

Finding an Accountant  

There is a saying, “a good accountant pays for him/herself”. Never a truer word has been spoken.  

In this chapter we will become familiar with and understand how to acquire the services of an excellent accountant.  

Accountants Qualifications  

The first step is to ensure that your accountant is a member of a recognised institute. 

Some of the popular ones amongst accountants are ACA, ACCA, ICAEW, ICAS etc.  

Here is what these abbreviations stand for:  

  • Association of Chartered Accountants (ACA)  
  • Association of Chartered Certified Accountants (ACCA)  
  • Institute of Chartered Accountants in England and Wales (ICAEW)  
  • Institute of Chartered Accountants in Scotland (ICAS)  

Furthermore, it would not be a bad idea to pick an accountant who is a member of the Chartered Institute of Taxation or Association of Taxation Technicians.  

Getting to know the history of your proposed accountant is a very good idea, so look for the following signs:  

  1. Are they a former Tax Inspector? 
  2. Have they passed the Taxation (ATII/CTA, ATT) exams? 

A qualified tax advisor is useful for all sorts of tax related services and these include:  

  • Preparing tax returns  
  • Sole trader tax returns  
  • Tax planning advice  

It is most likely that your tax advisor will charge on an hourly basis. However, some will agree a flat fee beforehand.  

It is pertinent to ask whether one should go for a general or specialist tax advisor, although it may seem better to go with the general advisor as he/she will most definitely be cheaper.  

However, in the long-term the specialist may save you money because of his/her in depth knowledge and experience. 

General Advisor or Tax Specialist?  

A specialist will have the answer, usually to hand, whereas a non-specialist may have to consult HMRC documentation or may indeed consult the specialist and then pass the charge back on to you.  

Cost can be a significant issue, as a specialist can charge around £270 per hour. For this you get about 15 minutes of quizzing followed by 45 minutes’ worth of (in most cases) written response (Oh and that’s plus VAT!)  

To put that into perspective a non-specialist can charge around £150 per hour. A typical session with a non-specialist can take up to 2.5 hours. This time would be typically spent in the following way:  

  • 15 minutes of clarification.  
  • 1.5 hours of research.  
  • 45 minutes of written response.  

As you can see sometimes it is beneficial if you go direct to a specialist, particularly if your questions to your accountant require him/her to study before responding.  

With the above two examples in mind it is important to ascertain a working relationship with your advisor. You should be familiar with his/her area of expertise and know what their limitations are i.e. what they are not too hot on.  

How to Choose Your Adviser  

Before you sign up with a tax adviser or accountant, be sure to address the following:  

Will I Need a Tax Adviser or an Accountant?  

More often than not people will actually require both, however, it is important to establish why you need them – do you need someone to manage your accounts and help you with your tax return, or someone to give you sound advice that will legally save you money. Your accountant can manage your accounts, provide compliance work, and some may even do tax planning.  

However, tax advisers tend to focus solely on tax planning. They spend significant amounts of time keeping up-to-date with the latest tax legislation and tax cases to help make sure they provide their clients with great strategies that will help to reduce or eliminate tax – some of which your accountant may not even be aware of!  

If we compare the accountancy profession with medicine, an accountant is the equivalent of a GP, and most of the time a GP is all you need for routine health care, but if you get seriously ill (compare with a dispute with HM Revenue and Customs) or you need surgery (tax planning), then you need a specialist consultant (a Tax Adviser).  

What Qualifications?  

As a client you want to be assured that your tax adviser / accountant is acting in both your best interest and within the law, which is why it is important to know what qualifications your tax adviser or accountant has, and when they were achieved and if they are relevant to you. Check that the qualifications they have cover the area of taxation or accounting that you require assistance with. 

How Much Experience do they Have?  

When choosing a tax adviser or accountant, it is good to know just how much experience they have and what their reputation is.  

Do not be afraid to ask how long have they been giving advice, where they worked before or if they have ever done any public speaking or written work that you can refer back to? Another good question to ask is how many existing clients they have within the area that you are interested in, for example – if you develop property, how many other developers have they provided advice for and will they be able to provide references?  

Good advisers will boast about their success, so give them to the opportunity to do so! 

How Much Will It Cost?  

That really does depend on what type of advice or service you require. The fees generally reflect the adviser’s / accountant’s level of experience and qualifications, along with the amount of time they may have to spend on your case; in this instance you can request an estimate of the total. Also ask when fees need to be paid by.  

Some accountants and tax advisers do offer ‘fixed fees’ for certain types of advice or help so that you know exactly what you are paying and exactly what you will receive.  

Try to negotiate a fixed fee wherever possible, as good advisers won’t be afraid to operate on this basis. It is far better than the ‘let the clock run’ approach, though in some cases such as a tax investigation, hourly charges are the only practical way to work.  

Professional Bodies  

There are various professional bodies that you will find tax advisers and accountants to be part of.  

Anybody who claims to be able to give ‘tax advice’ should be a ‘Chartered Tax Adviser’ (CTA), which means that they will be member of the Chartered Institute of Taxation and will have taken and passed their examinations.  

Qualified accountants will have Chartered Certified Accountant (ACCA or FCCA), or Chartered Accountant (CA, ACA or FCA) in their title.  

What About Indemnity Cover?  

If an adviser gives you inappropriate advice or your accountant does not manage your accounts correctly it could result in a huge financial loss for you. 

Finding out at the beginning what indemnity cover a tax adviser or accountant has will mean peace of mind for you. Find out whether they are covered for loss of documents, court attendance and legal fees, breach of confidence or misuse of information to suggest just a few areas. Ask who they are covered by and for how much per claim.  

Knowing what protection your adviser or accountant has will protect you. You will be alarmed to learn that some advisers do not even have indemnity cover and you are well advised to stay away from such advisers. Chartered accountants and Chartered Tax Advisers are required by the rules of their professional bodies to have professional indemnity insurance. 

How do I Contact My Tax Adviser / Accountant?  

It can be quite frustrating when each time you phone your tax adviser or accountant they are unavailable.  

Find out in advance how to contact them and if this suits you.  

If you have ‘ad-hoc’ questions to ask your adviser or accountant and you cannot reach them, how soon will they get back to you? Also, find out if they are happy to receive email as you may prefer this method of correspondence.  

Your chosen advisers should personally respond to your enquiries and calls within an agreed timescale.  

A recent development has been the growth of online accountants and tax advisers, and if you do not feel the need for face to face contact with your adviser, you may want to consider using such a firm. Having lower overheads in the form of offices and meeting rooms, they are often able to offer lower fees than the conventional firms. 

Keep up to Date with Tax Legislation Changes 

Tax legislation is constantly changing. That is why it is important that your adviser or accountant keeps up-to-date with all the changes.  

Also, to retain their qualifications, tax advisers and accountants must adhere to on-going training programmes enforced by their regulatory bodies, to ensure that they are keeping abreast of the latest changes in legislation and the latest tax planning opportunities.  

For example, CPD (Continuing Professional Development) is the compulsory training a Chartered Tax Adviser is required to do each year in order to keep his qualifications. He or she must do a minimum of 90 hours training per year; broken down into at least 20 hours “structured” training – that is, attending seminars, lectures, etc., and 70 hours “unstructured” training (such as reading textbooks and technical articles). 

What if I Have an Emergency?  

You are now aware of how to contact your tax adviser or accountant, but what happens if you have an emergency and need urgent tax advice?  

How available are they in a crisis?  

Knowing that you can rely on the tax adviser or accountant is an important point when considering their services. Make sure that you are able to contact them without having to arrange a formal meeting! 

Does the Adviser Sell ‘Off the Shelf’ Packages?  

This is a very important question to ask your adviser. There are certain advisers out there who sell tax schemes (also known as ‘off the shelf’ tax solutions) and earn significant amounts of commission by doing so.  

“Tax Schemes” come in all sorts of forms – one example (now stopped by legislation) was the creation of artificial capital losses to set against capital gains.  

If your adviser mentions such schemes to you, then be cautious as HM Revenue and Customs are getting tough on such schemes, and legislation has been introduced requiring those using them to disclose the fact to HMRC. 

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