Greg Weismantel, president of Epic Group, a management consulting firm and advisor on strategy for small and large firms and companies has written an interesting article on accountability in the US accounting website, here.

He says that, in discussing strategy and driving forces for the CPA (accounting) firm, the word “accountability” comes up several times but most partners and managers might not understand the difference between responsibility and accountability. He asks: How can partners manage the firm without understanding accountability? How can their people evaluate themselves if their people do not understand what the difference is between accountability and responsibility?

accountability quote
Not understanding accountability is the basis for a leadership management activity called “conflict resolution.” The truth is, according to Greg Weismantel, is knowing and understanding that the difference between accountability and responsibility is basic to managing a firm or company. Why?

Greg Weismantel explains:

  • Normally the partner who is accountable for a particular client or brought it with a merger (we’ll call her Partner A) is accountable for all the work at that client. She, in this case, is the main contact point where all services and presentations must be approved first, or they are not provided to her client. However, not uncommon in most CPA firms, Partner A also has other responsibilities, and in this example she is also the partner in charge of compliance in the firm.
  • She has the work or responsibility of ensuring that all the tax and audit and other services that are used by her client are fully implemented, with full authority to dictate which services are made available to her client. But she also has authority for all compliance issues and decisions within the firm for all clients.
  • So you can see three key elements of accountability in this example. First there is the work or the responsibility that Partner A must undertake for her own client, along with the authority to fully make every decision about that work with her client. The third element of accountability occurred when Partner A agreed with the managing partner to accept the responsibility and authority for her client. But what about compliance?

signsThe normal organisational structure of a CPA firm (and an accountancy firm in the UK) of any size is not a traditional functional type, but more of a matrix, where various other people are responsible for doing the work of tax, audit, accounting or compliance, but are not accountable for the client per se. Partner A is accountable for the client. Why? Because she has authority for any decision made for that client, and the various other people performing the work do not have that authority. Is she also accountable for the tax and audit metrics for the client?

… An interesting question. Simple answer: does she have authority to dictate the tax and audit metrics? And now you can understand the difference between responsibility and accountability within a firm.

By definition, “Accountability is the combining of the responsibility, the fixed duties or work, along with the authority given by a higher level to complete the responsibility, and agreed to by the individual accepting the responsibility.”

The author’s observation is that in most companies and firms, many managers and partners do not know who is actually “accountable” for every facet of management, and this is where most conflicts arise.

Let’s take the usual annual budgeting process in a CPA firm. Who is accountable for the tax and audit budgets for the firm, or the compliance budget? It could probably be assumed that Partner A would be accountable for the tax and audit budgets for her clients, but the partner accountable for tax or audit could also assume that he is accountable for the tax and audit budgets for the firm, and all the clients. Conflict.

When the managing partner says to a director or partner who is responsible for the construction industry, “Give me your next year’s forecast for profits for your industry,” the tax partner and the audit partner both have hours that they have projected for each construction client. Who is accountable for the forecast, the construction industry partner or the tax partner or the audit partner? Conflict.

This could start to get messy, and it usually is caused by the fact that partners and managers in the company or firm do not know, understand and practice the difference between accountability and responsibility. It can be the source for a lot of hard feelings toward members of the firm in other situations as well, but is easily resolved when each person understands the activity of accountability.

There is a simple solution to every accountability issue, and here’s a tip: trace the line of authority for each responsibility or work, and you will find out who is accountable for that work, and in this example, for the budget.

The good thing about knowing who is accountable and not responsible for a scope of work is that it allows self-evaluation to occur by the accountable individual, while allowing the managing partner to recognize great performance as well as taking action to improve inferior results by the accountable person.

In any firm or company, until clear lines of authority are established for any work or responsibility, you will always find conflict between partners, directors and managers.

But keep in mind, it does not matter “who” is accountable, it just matters that the firm “knows” who is accountable for a particular work. That is what resolves all conflicts automatically.

Government pledges personal support to help boost exports

Government pledges personal support to help boost exports

I read today that the government has pledged “personal” support to help UK medium-sized businesses trade with emerging markets. Yesterday the trade minister Lord Livingston announced that he will write to all of the UK’s 8,900 mid-sized businesses (those with a turnover between £25m and £250m a year) to offer them support from UK Trade and Investment in a bid to boost flagging exports.

You might ask this: aren’t these businesses already big enough to get on with their export activities. Surely it’s firms in the £1m to £10m range that really need help?

Anyway, back to Lord Livingston. It seems that his move comes after it emerged that just 17 per cent of mid-sized businesses in the UK currently transact business outside of the EU. Germany does 25 per cent whilst Italy does 30 per cent. Earlier this month the government said that exports have only seen “modest growth” since 2011. The Office of Budget Responsibility attributed weak export figures to low demand in Europe, cementing the need for UK businesses to trade with emerging markets instead.

You might ask, and I would agree with you, how it that the Germans and Italians have cottoned on how and where to export but we haven’t?

But the IOD thinks it’s all a good idea. Alexander Ehmann, deputy director of policy at IoD says: “Doing business abroad will always involve risk, so companies want to have as much information as possible before diving in.”

The BBC wrote last week, here, that efforts to boost UK exports are being hampered by strict visa controls and a lack of co-operation between government departments, MPs have warned. The Public Accounts Committee (PAC) says the UK “is not performing as well as Germany, France and Italy”.  The PAC’s report said that despite the Foreign & Commonwealth Office (FCO) and UK Trade and Investment (UKTI) spending £420m last year on promoting exports, growth remained flat. Worse still, the FCO lack the necessary information to assess the effectiveness of its promotional activities, while UKTI needs to work harder on finding new opportunities in overseas markets.

The British Chambers of Commerce say that “More support for SMEs looking to trade internationally is needed, and this means giving UK businesses more resources in areas such as trade finance, insurance and promotion.”  Note the emphasis on SMEs rather than firms in the £25m to £250m range.

So, against this background, it’s hard to see what Lord Livingston is up to.

Does anyone out there know?

But things are looking up, at least for pigs. Three British pig breeding companies are preparing to start exporting pig semen to China after a deal was struck between the two countries last month. Half the world’s pigs are in China and the deal is worth up to £45m a year to British pig producers.

The Online Business Library… why it could make all the difference to your firm

The Online Business Library… why it could make all the difference to your firm

There are probably four ways in which a firm can maintain relationships with its clients and prospects in providing technical and other information in response to a request for information.

obl      1)    The first option is to buy in publications from publishers. The problem with this is that it is a costly thing to do, the information contained in the publications can easily go out of date and it’s a clumsy way of providing information to those who ask for it. What happens in practice is that there are piles of brochures in the corner of an office, gathering dust.

It was a good idea 28 years ago when I launched the CharterGroup partnership because small to medium sized firms couldn’t afford to write or publish their own brochures, so they had to be syndicated and bought in from a group publisher. But today clients and website visitors want more. Storage of paper publications is difficult and they often get thrown away after they’ve been read.

2)    The next option is to subscribe to a digital business library and have hundreds of brochures and publications available via your website 24 hours a day, every day of the year. This has several advantages: because the publications are digital they are up to date and once clients and prospects register on your website they can simply take what they need and when they need it.

Also, the publications cost nothing to distribute via an on-line mailing (I’ve written some words about MailChimp below) and your on-line showcase can include features such as page turning functionality. Even better still is that the actual cost to a firm of a digital library is a fraction of that for printed publications under option 1.

3)    The third option is to do nothing. This option costs nothing. Clients get nothing that they need. Prospective clients avoid firms that do nothing and move to firms that provide details of their services and issue free publications.

4)    The last option is for a firm to write their own publications and then publish either in paper form (as in option 1) or in PDF digital format. The problem with this option is that accountants and lawyers don’t have any time to do this sort of thing. Even when they find a few minutes to do so, the end result isn’t very smart and is often a mis-mash of design and content.

Be honest, which firm are you?

According to research, over a third of small business owners feel isolated when making key business decisions: 43% confess to loneliness when focusing on changing strategy or direction, and another two fifths feel detached over business planning matters. Accountants and Lawyers are uniquely placed to help businesses by providing them with information direct from their website through a digital business library.

When I was in public practice as an accountant, I set about creating a digital business library. It took me about 10 years to get it right. However, it was all worthwhile as Bizezia’s Online Business Library now leads the market with a comprehensive collection of 650+ professionally-written informative publications that you can offer free to your clients direct from your website. The publications cover an extensive range of business topics from tax to marketing. You name it, there’s probably a publication in the library to cover it.

Digital publications will allow you to add significant value to the service you offer your clients, and help you build relationships with prospective clients.  The “do nothing” option is awful. Please don’t do it.

Bizezia’s Online Business Library

Bizezia’s Online Business Library is probably the UK’s largest and best known. It features over 650 publications. Every publication is personalised and branded to your firm and available for your clients and prospects to download from your website. These business publications provide valuable information on diverse subjects such as law, finance, marketing and management. The Online Business Library is an impressive knowledge resource. Best of all: It underlines your credentials as a knowledgeable, professional firm. It differentiates your firm from others in your locality. You can find details on how to subscribe here.

You can watch the video about it as well.

MailChimp I mentioned MailChimp above. Perhaps I should explain what it is. MailChimp is a web-based email marketing service. It helps you design email newsletters, share them on social networks, integrate with services you already use, and track your results. Whatever the size of your firm, MailChimp has features and integrations that will suit your email-marketing needs.

You can create signup forms that match your firms’ brand’s look and feel, and send updates, event invitations, announcements, or editorial content. You can use their reports to improve your campaigns and learn more about you’re your clients and prospects (MailChimp call people you email “Subscribers”).

And do you know the best thing of all? MailChimp is free for lists of up to 2,000 subscribers. And the free bit allows you to send out 12,000 emails a month.

Try it here. We use it at Bizezia. More than 5 million people use MailChimp to create, send, and track email newsletters, brochures and other digital communications to customers, clients and prospects. About 6 billion emails are sent out every month.

Don’t be paralysed by numbers

Don’t be paralysed by numbers

paralysed by numbrsThere’s a saying, or rather a comment, I picked up from a very smart Scottish accountant who had become an MBA teacher at a leading US Business School. He said that often, accountants and finance directors suffer from something called analysis paralysis. It’s the state of over-analysing (or over-thinking) a situation so that a decision or action is never taken, in effect paralysing the outcome.

Has that ever happened to you? Or worse still, have you been guilty of doing it yourself.

There’s nothing wrong in analysing numbers provided you measure the result.

With this in mind, I’ve taken look at some of the tools within the Bizezia Calculators and Evaluators product and thought it would be useful for my readers to review what these tools do. The results from these tools should be used as a guide only and clients should consult an experienced or qualified accountant or financial/business adviser before making any decisions.

Borrowing Risk Calculator            

Are you serious about reducing borrowing costs? Would you like to know the ‘secrets’ of how your banker assesses a lending proposal and the business in terms of risk?

The Borrowing Risk Assessment Tool, which is intended for use as a guide only, has been developed as a guide to:

1. Show you what you can do to get a lower rate of interest on borrowings by reducing the risk.
2. Help you to identify your ‘escape routes’ if you hit a financial hole.
3. Help you improve your relationship with your bank.

Business Growth Calculator

Based on the well-known “Four ways to grow a business” popularised by Michael Gerber, Jay Abraham and many others, the Business Growth Calculator is designed to calculate the change to the gross profit of a business arising from altering any or all of:

  • the number of customers
  • the average number of times they purchase
  • the average amount they spend, and/or
  • the average gross profit percentage

Most business owners don’t know the number of customers they have, or the frequency of purchase or the average sale value. The good thing about this tool is that it allows you to try various combinations until you arrive at a total sales value that is correct.

Business Health Calculator

This is the smartest of all the tools. Basically, accountants or their clients, input numbers from the accounts of the business.  The calculator then produces a lengthy series of meaningful ratios, including:

  • Profitability Ratios
  • Liquidity Ratios
  • Operational Ratios
  • Solvency Ratios

Then, the calculator does something quite amazing. It works out something called the Z-Score, which indicates financial health (or sickness) of the business. It also indicates the short-term potential for financial problems at your company. The expert who devised the Z-Score is Professor Edward I. Altman, who is known as the founding father of using statistical techniques to predict company failure.

The Z-score was developed from an analysis of 33 bankrupt manufacturing companies in the US with average assets of $6.4 million. Altman’s system, basically a “bankruptcy indicator,” can be used by stockbrokers trying to determine if a company is a good investment, and also internally, by anyone who wants to take a close look at his or her own company’s financial health.

Accountants can even use it on their own firm’s results.

Altman’s Z-score calculates five ratios: return on total assets, sales to total assets, equity to debt, working capital to total assets, and retained earnings to total assets. These ratios are then multiplied by a predetermined weight factor, and the results are added together. The final number, the Z-score, yields a number between -4 and +8. Financially-sound companies show Z-scores above 2.99, while those scoring below 1.81 are in fiscal danger, maybe even heading toward bankruptcy. Scores that fall between these ends indicate potential trouble. In Altman’s initial study of 33 bankrupt companies, Z-scores for 95 % of these companies pointed to trouble or imminent bankruptcy.

In the hands of a smart accountant looking for new work from prospects, this tool could be dynamite in getting new business.

Customer Value Calculator
The Customer Value Calculator considers the effects on sales (over a 5 or 10 year period) of altering the rate of retention of customers and the referrals that customers give to other potential customers.

Business Parameters:
1.  % Retained customers that give referrals
2.  Number of referrals per customer
3.  % Referrals that become customers
4.  % Customer Retention Rate

Risk Exposure Calculator

Analysing data risk exposures enables you to estimate the degree of risk. Results fall into one of these categories:

· Very Little Risk: You either don’t have very much critical data on your computers, or your backup plan is probably adequate. Consider using a remote backup service to supplement your backups.

· Slight Risk:  If you experience a non-catastrophic loss of data, you will probably be able to recover it. Generally, you are doing a good job with your backup plan, but you should consider improving.

·Moderate Risk:  A loss of data from your hard disk drives may not be recoverable. Your backup plan is not adequate and you are at risk of losing data critical to the operation of your daily business.

·High Risk: Any major data loss would be catastrophic, and would probably not be recoverable. Your business is at risk of failure if you lose data.

·Extremely High Risk: Your backup plan isn’t protecting your data. You could experience an un-recoverable catastrophic data loss at any time which could cause the business to fail.

Grading High Book / Market Stocks

This tool is rather smart too. It’s based on the work of Joseph Piotroski, an Accounting Professor at the University of Chicago who reasoned that because value stocks are troubled companies by definition, many are financially distressed and won’t have the financial resources to recover. Pondering on whether he could improve the performance of a value portfolio by throwing out the financially weakest stocks, he devised a simple nine-criterion stock-scoring system for evaluating a stock’s financial strength that could be determined using data solely from financial statements. One point was awarded for each test that a stock passed. Piotroski classed any stocks that scored eight or nine points as being the strongest stocks. His findings were that these strong stocks as a group outperformed a portfolio of all value stocks by 7.5% annually over a 20-year test period. Piotroski also found that weak stocks, scoring two points or fewer, were five times more likely to either go bankrupt or delist due to financial problems.
The evaluator goes through these stages:

·  Net Income: Positive net income – Net income, the bottom line after-tax profits, is the simplest measure of profitability. Score 1 if the latest year’s net income is positive; otherwise, a zero.

·  Operating Cash Flow: Cash flow is arguably a better profitability measure than net income. Cash flow measures the money that actually moved into or out of a company’s bank account; Score 1 point if the latest year’s operating cash flow is positive, otherwise, a zero.

·  Return On Assets (ROA): Earnings quality – Many experts compare net income to operating cash flow to detect potential accounting manipulations. Cash flow normally exceeds net income because depreciation and other non-cash expenses reduce income, but not cash flow; Score 1 point if the latest year’s operating cash flow exceeds the current year’s net income, otherwise, a zero.

·  Quality of Earnings: Warns of Accounting Tricks. Score 1 if last year’s operating cash flow exceeds net income, otherwise, a zero.

·  Long-Term Debt (LTD) vs. Assets: Is Debt decreasing? Score 1 if the ratio of long-term debt to assets is down from the year-ago value, otherwise, a zero. (If LTD is zero but assets are increasing, score 1 anyway.)

·  Current Ratio (CR):  Measures increasing working capital. Score 1 if CR has increased from the prior year, otherwise, a zero.

·  Shares Outstanding: A Measure of potential dilution. Score 1 if the number of shares outstanding is no greater than the year-ago figure, otherwise, a zero.

·  Gross Margin (GM): A measure of improving competitive position. Score 1 if full-year GM exceeds the prior-year GM, otherwise, a zero.

·  Asset Turnover: Measures productivity. Score 1 if the percentage increase in sales exceeds the percentage increase in total assets, otherwise, a zero.

Overall, it’s a pretty impressive list, I think you’ll agree. All these tools and about 50 more can be available to accountants, clients and prospects. They sit on the accountants’ website and are available 24-hours a day, 365 days a year and are accessible from anywhere in the world with an internet connection, on a PC, Mac, iPhone, Smartphone, Android or whatever fancy equipment may be used.  There is no set-up fee for these tools, just an easy, affordable payment option with a minimum 12 month subscription. Details here.

Instead of the restricted functionality available with other online calculator packages, where users can only calculate results in a one-dimensional way, Calculators & Evaluators incorporates Bizezia’s interactive Lead-Generation Technology. This allows users to:

  • Print results
  • Share results with friends and colleagues by email
  • Export results to Excel
  • Export results to PDF
  • Ask for an e-mail alert when the selected Calculator/Evaluator is updated
  • The opportunity to request more information from an accounting firm hosting the tools on their website using the Contact Us feature.

Bizezia is so confident that you and your clients and customers will enjoy using the Calculators & Evaluators that it comes with a 30 Day Money-Back Guarantee. If, within 30 days of the start of a subscription, you think that Calculators & Evaluators is not for you, Bizezia will refund your full subscription, with no questions asked.

If you want more information, call me on 01444 884221 or contact me by email at

Report shows impact of poor customer service

Report shows impact of poor customer service

I was interested to read about a BDO report, (read it here) written by the Economist Intelligence Unit which, for the first time has unveiled the impact of poor customer service on businesses worldwide.

The report shows that businesses admit widespread customer service failings are hitting their bottom line:

  • Nearly two thirds of companies worldwide find bottom lines significantly hit by poor service
  • One in four companies have failed to invest in customer service in the past two years

The survey of more than 800 senior business leaders around the world reveals that almost two thirds (59%) of all companies admit that a customer service failing has had a clear, significant impact on financial performance.

The survey also revealed:

  • ghandiA quarter have lost customers as a result of poor customer service (27%)
  • Service failings have hit the share price of one in seven companies (15%)
  • 23% have had to compensate customers due to poor service
  • 84% of the companies, surveyed believe that customer service is ‘very’ or ‘moderately’ important to their financial performance, but only a third of companies (36%) currently have a strategy to link service and bottom line.
  • Despite customer service draining profits for many, one in four (27%) businesses have made no investment in service whatsoever in the last two years. In addition, less than a third of companies (28%) have a designated head of customer service on the board.
  • Only a quarter (29%) of business leaders feel being seen to be customer focused is key to career progression. Indeed, employee and other internal issues are taking precedence over customer concerns in nine in ten organisations (89%).

The report also finds that for many companies engagement is still low-tech: 36% of companies use social media to engage customers and just 15% believe social media will become the most important method of engaging with customers – more than a quarter believe its importance in 2020 will be the same as it is now.

Allan Evans, Global Head of Clients and Markets at BDO, said “Boardrooms are blinkered – even with clear evidence that poor service is hindering profitability, businesses are failing to invest in, track or apportion sole responsibility for service. We’re calling for more companies to put service on the boardroom agenda and have a clearer focus on the link between service quality and the bottom line. Only then will companies be able to develop clear and effective strategies to make a return on service.”


Monica Woodley, the EIU’s Managing Editor, commented: “It’s clear many businesses find themselves in a service catch 22 situation. Companies intuitively seem to understand customer service impacts financial performance, but they are unsure how to make a clear link with the bottom line. So they don’t prioritise service at a board level because they don’t fully understand it, and they don’t fully understand it, because they don’t prioritise it. More businesses need to take action now to break this service cycle or risk losing out to competitors.”


Jo Causon, the Chief Executive of the Institute of Customer Service, added: “Financials tell the CEO where the organisation has been, but customer satisfaction data gives good indications of where it is going.”


Accountants are ideally placed to help businesses in this area. Those that attended the RAS Boot Camps in the 1990s have been busily imparting to their clients (and other firms’ clients too) everything they learned about customer service. As someone once said “Most businesses don’t actually want an accountant. They want someone to help them become more successful and profitable.”

To me, it makes perfect sense to provide the best service you can to your customers. This will result in the business being more successful and profitable. In February’s Better Business Focus publication, there’s a story about a young manager called Zhang Ruimin took who, 30 years ago, took control of a loss-making fridge factory in Qingdao, China. He was appalled at the low standards of workmanship and quality in its products.  In a dramatic expression of his wrath he gave out sledgehammers and asked factory workers to join him in smashing 76 faulty fridges in front of a large group of shocked employees.

The message was clear – poor quality was no longer acceptable. Since then Zhang has focused on quality, innovation and branding in order to build the company, Haier, into the largest appliance maker in the world with a turnover of over $26billion.  One of elements of Haier’s success was learning from customers. For 4 years running the company has been voted the World’s No. 1 home appliance retailer.  There’s a shed-load of customer satisfaction emerging from China.

Email me at and I’ll send you the Better Business Focus publication when it is available.

Should you or shouldn’t you… charge for an initial consultation

The phone rings. You answer it and find that a possible new client wants to come in “as soon as possible” to see you for an initial chat about a business issue.  The caller explains that he has been recommended to your firm by one of your best clients. He has in mind a free initial consultation.  You arrange to meet later that week.

You start to think about the issue the caller mentioned. It’s a complicated matter but you have the necessary experience to help him. It could be quite a large amount of business for your firm.

Your thoughts focus on the amount you might be able to charge if your firm were to be appointed by this new client. He’ll probably get two or three quotes from other firms, but there are only a few people around who are able to do the work involved, so that puts you at an advantage, doesn’t it?

A “free initial consultation” is what he said.  He’ll explain his problem and you’ll listen. But, he can’t expect “free advice” can he?

The Legal Ombudsman, in its guide for lawyers: says (here): ‘Some firms offer free initial consultation meetings. It is reasonable for a lawyer to charge an initial consultation fee if they wish to, but they must make any charges and conditions clear to a consumer before the appointment is made. The charge made must be reasonable. The consumer should know where they stand when they walk through the door and not hear of any charge, if there is one, at the consultation.’

Ellen Freedman writing in the US in PA Law Practice Management, here, raised some very sensible points about the initial consultation with a prospective client. I think that everything she says applies to lawyers, accountants and other professional firms.  It’s worth reading what she has to say. Briefly:

  • If you already have more work than you can handle, it’s time for other actions, such as raising your fee rates, getting rid of unprofitable or undesirable clients and improving your intake screening techniques of prospects.
  • There are many seemingly genuine prospects out there who just want to pick your brain for free. Don’t allow it, not even under the guise of wanting to show how helpful and valuable you will be. Ellen recommends that you always charge an initial consultation fee, and to set a time limit on the initial meeting. Insist that payment be made before or at the beginning of the initial consultation.
  • If you want, you can provide the prospect with a credit on their first bill for the amount paid during the initial consultation once they become a client. In this way you can still provide a free initial consultation, with the caveat that it is free only for those who ultimately become clients.
  • If you charge an initial consultation fee, it will eliminate all those “fishing” for free information. And if you have a referral source who sends lots of “bad” referrals with the occasional “good”, it will gracefully do the weeding for you without embarrassing or discouraging your referral source.

In most cases, the prospective client is trying to decide whether to engage your firm and to see whether you have the knowledge and experience to help him. They also want to find out what it’s like to deal with you and your firm.

Try having a free initial consultation with a brain surgeon. You won’t get one.

My advice is the same as Ellen’s. Charge for the initial meeting, tell the prospective client (in writing) that you’re going to charge and (most importantly) bill it either before or immediately after the initial meeting.

And when the prospect says yes, you have achieved what you set out to do. What do you do next? Celebrate – No!  What you should do get the terms of the engagement agreed as soon as possible.

Setting out your terms of business with your clients, with specific agreement on the work you do for them and the fees you charge, is the only sensible way to deliver professional services. To do anything else is professional suicide. Our professional bodies have been telling us for years that we must issue engagement letters.  When something goes wrong, not having an engagement letter is going to bring you plenty of problems and cost you a lot of money.

Some years ago, I created an engagement letter system (called Contract Engine) to simplify the whole process, eliminate uncertainty with the client, and make it very easy to agree terms. Find out what it does, here.  Statistics gathered by the AICPA Professional Liability Insurance Program in the USA emphatically stress the importance of engagement letters. More than two-thirds of professional liability claims in that Program arise from client allegations of professional lapses in tax practice and in approximately 25% of all claims made, the client alleged that the scope of the engagement went beyond the services which the accountant believed he or she had agreed to perform. The resulting claim then alleged that when performed, these disputed services were performed negligently.

So, have your meeting with the prospective new client but bear in mind all that’s been said above. And, by the way, good luck!

Equal Pay – Is your firm exposed to claims running into £millions?

Equal Pay – Is your firm exposed to claims running into £millions?

equal payBefore I start, I should say that none of the remainder of this post is legal or other advice. Whilst every effort has been made to ensure that the information given in this note is accurate, at the end of the day only the courts or tribunals can give authoritative interpretations of the law.

Last week, Birmingham City Council were front page news having agreed settlements with thousands of women who were paid less than male workers who did equivalent jobs. BBC News reported that one law firm is said to be dealing with 4,000 outstanding cases. The legal claims over equal pay are said to total more than £1bn.

So, what’s all the fuss about?

It stems from The Equal Pay Act in the UK which is designed to eliminate discrimination as regards pay and other terms and conditions between men and women in the same employment when they are employed to do:

  • Like work – work that is the same or a broadly similar nature
  • Work rated as equivalent – that is, in jobs which a job evaluation study of part or all of their employer’s workforce has shown to have an equal value
  • Work of equal value – that is, in jobs which are equal in value in terms of the demands made on them under headings such as effort, skill and decision-making

Men as well as women are entitled to equal pay for equal work, but in practice most claimants are women.

A complainant, the fancy legal term for the person bringing a claim, must choose an actual comparator of the opposite sex who is treated more favourably and is shown to be employed on “like work”, “work rated as equivalent”, or “work of equal value”.  Equal value involves a comparison of the work of the claimant and the comparator under various headings such as effort, skill and decision.Equal value claims can be made using comparators paid under different grading systems, collective agreements or job evaluation schemes.

The Equal Pay Commission recommends that all employers carry out equal pay audits. This will help in identifying any potential vulnerability to equal pay claims. An equal pay audit is the best and most effective way to compare the pay of employees doing equal work and it provides a detailed picture to identify and put right any unlawful pay discrimination. There a useful toolkit on the Equality and Human Rights website, and money

The Equal Pay Act refers to the “same employment”, a term that has to be interpreted in the light of European law. Anyone thinking they have been unfairly treated by their employer will need to get legal advice on interpretation of the law by domestic courts and the European Court of Justice.

The Equality Act 2010 replaces the previous anti-discrimination laws with a single Act. It simplifies the law, removing inconsistencies and making it easier for people to understand and comply with it. The majority of the Act came into force on 1 October 2010. The Equality Act 2010 gives women (and men) a right to equal pay for equal work. It replaced previous legislation on equal pay, including the Equal Pay Act 1970, the Sex Discrimination Act 1975, and the equality provisions in the Pensions Act 1995. The provisions relating to equal pay are known as ‘the equality of terms’ provisions and are scattered throughout the Act, but are brought together in the Equal Pay Statutory Code of Practice.

There a useful glossary of terms used in connection with equal pay here.

From October 2014, The Enterprise and Regulatory Reform Act 2013 requires Employment Tribunals to order employers to carry out an equal pay audit, where they may have breached equal pay provisions under the Equality Act 2010, except in prescribed circumstances. The Act can be viewed on the UK legislation website here.

Is your firm exposed?

Obviously, Birmingham City Council is a big target. But compliance with the law on equal pay could become a nightmare for accountants and lawyers – in fact for any professional firm.

So, how do these firms go about checking whether they have any exposure?  Going through the following brief checklist could help.

Equal Pay Checklist – Are you exposed? (© Copyright 2014, Bizezia Limited)

o  Have you paid a male employee a bonus or given a pay rise but have not done the same for a female employee because she is on maternity leave?

o  Have you restricted sick pay, holiday pay or pension benefits of a female employee because she works part-time?

o  Have you put male employees on individual contract and told them not to discuss the terms with female employees?

o  Have there been any mergers or acquisitions where pay rates for the same job have never been harmonised?

o  Have jobs changed over time but because no job evaluation or other review has ever taken place, the growing similarities between jobs have not been recognised?

o  Are there any similar jobs which were originally paid at the same rate but one of the jobs is now done by a part-time worker who does not have access to the same total pay package as her full time male colleague?

Author’s Note: this checklist is not complete. I intend to update it as events unfold.

What next?

Over the next week or so, I shall be adding to the checklist and probably add it to the online Calculators and Evaluators – see here. It will be useful tool for professionals to introduce the issue to clients as a value-adding service, and of course for businesses to use themselves. I’ll also be talking to law firms to see what expertise is available on this matter.

In the meantime, please email me with your thoughts on the matter to

Make a date with Tax Calendar

Make a date with Tax Calendar

tax calendarI’m pleased to say that the Bizezia 2014 Tax Calendar is now available, here.

It’s an interactive tax reminder for your website. Tax Calendar is a great way to ensure your clients and prospects never forget their tax dates, and it’s a valuable resource which will help attract and retain website traffic, generate leads and enhance existing client loyalty. Bizezia’s Tax Calendar is a value-adding website tool which interactively displays relevant tax dates.

The Tax Calendar contains 3 different calendars for different types of user:

  1. self-assessment taxpayers
  2. companies and employers
  3. partners and partnerships

The people viewing the calendar can choose the following viewing options:

  1. year view
  2. month view
  3. list view

The calendars are simple to use with colour-coded clickable graphics to represent the tax dates occurring. You can access any of these views from all parts of the calendar.

Lead Generation Technology
Tax Calendar is not only a useful resource for clients and prospects; it goes one step further by giving users the opportunity to request more information from the host accountancy firm using the Contact Us feature. This innovative technology brings prospects to your door.

·       All key dates are covered for Self-Assessment Taxpayers, Companies & Employers and Partners & Partnerships

·       Key dates are presented by month, by year or as a downloadable list

·       Easy to use with colour-coded clickable graphics to represent the tax dates

·       Online, on-demand delivery through your website

·       Choice of colours to match your website

·       Tax Calendar is updated automatically by Bizezia

·       Contact Us

·       No programming experience required on your part

·       No set-up fees, just an easy and affordable monthly or annual payment option with minimum 12 month subscription

·       Free support from Bizezia

·       Attract and retain website traffic

·       Generate leads

·       Build existing client loyalty

·       Provide a useful knowledge resource for your clients and prospects

·       Keep yourself up-to-date with this valuable tool

There is no set-up fee for Tax Calendar, just an easy and affordable monthly or annual payment option with a minimum 12 month subscription.

Bizezia is so confident that you and your clients and customers will enjoy using Tax Calendar that it comes with a 30 Day Money-Back Guarantee. If, within 30 days of the start of a subscription, you think that Tax Calendar is not for you, Bizezia will refund your full subscription, with no questions asked.

If you want more information, call me on 01444 884221 or contact me by email at

Does it add up? Is 10,000 hours really the key to success?

Does it add up? Is 10,000 hours really the key to success?

keytosuccessBest-selling author Malcolm Gladwell studied the lives of extremely successful people to find out how they achieved success. Gladwell’s book Outliers popularised the work of K. Anderson Ericsson and the notion that the key to success in any field was logging 10 years or 10,000 hours of practice. It’s worth reading The Influence of Experience and Deliberate Practice on the Development of Superior Expert Performancei, here.

Does this resonate with you?

Louis Pasteur, inventor of pasteurisation, is said to have remarked in a university lecture, “chance favours the prepared mind.” But how much preparation is enough? If you’re a fan of Malcolm Gladwell’s work, you know the answer: it’s 10,000 hours of preparation.

Based on research suggesting that practice is the essence of genius, Malcolm Gladwell has popularised the idea that 10,000 hours of appropriately guided practice was “the magic number of greatness,” to achieve success.  In his book Outliers, Gladwell says that it takes roughly ten thousand hours of practice to achieve mastery in a field.

It sounds like an interesting idea and it’s one that has been getting quite a lot of attention recently and the idea has come under fire. Critics argue that the “10,000-hour rule” is over-simplified and doesn’t account for genetic differences. In The Sports Gene, former Sports Illustrated senior writer David Epstein (author), points out some contradictions to Gladwell’s rule – for example, that athletes at the same level of competition can have very different amounts of practice time or playing experience, and that success in sports isn’t determined only by how much an athlete practices.

In an article posted on line in the New Yorker last year Gladwell, here  comments on his theory and supports the research findings he reached.

In his new book, Focus: The Hidden Driver of Excellence, best selling author of Emotional Intelligence (which I first read during my MBA studies in the late 1990s), Daniel Goleman says “The ‘10,000-hour rule’ – that this level of practice holds the secret to great success in any field – has become sacrosanct gospel, echoed on websites and recited as litany in high-performance workshops. The problem: it’s only half-true.” Read more on what Goleman says in a posting on Huffington Post, here.

My view is this. To achieve success you need to be able to see things that exist and envisage something new, plus all or some of these:

  • An innate skill or aptitude
  • Desire
  • Commitment /Perseverance
  • Opportunity
  • Serendipity
  • Focus

What do you think?

Bizezia has a publication on achieving success in business: 130 Reasons why some people are much, much more successful in business than others. Some of these reasons come from mega-successful entrepreneurs while others come from working with small businesses, over the last 40 years.

If you would like a copy of this publication, please email me at:

HMRC gets tough on tax avoidance via EBT schemes

Earlier this week, AccountancyLive reported that there has been a 160% rise in the tax take from HMRC’s investigations into payroll tax avoidance and the use of employee benefits trusts (EBTs) for the payment of salaries and bonuses to the top earners at some of the UK’s biggest companies, according to analysis by law firm Pinsent Masons.

Pinsent Masons says its calculations show HMRC investigations into payroll irregularities brought in the staggering sum of £533m in extra tax in the last year, compared to £205m the previous year, amid “signs that HMRC is cracking down on the use of both EBTs and Employer Funded Unapproved Retirement Benefit Schemes (EFURBS) as a means of reducing tax liabilities”.

The law firm says HMRC has been trying to tackle the use of EBTs, which can also generate a claim for corporation tax deductions, for over a decade, but is now starting to make headway as a result of winning some high profile court cases and changes in tax legislation in 2010.

Ray McCann, partner at Pinsent Masons, said: ‘We expect even more activity by HMRC in the coming year as they look to close other loopholes with the aim of bringing in even more revenue in 2014. For companies with EBT schemes that have been called into question, time is running out. If they do not settle with HMRC they will face direct action and, if HMRC gets its way, far more severe penalties.’

McCann predicted that new penalties for pursuing appeals in hopeless tax avoidance cases announced in the Autumn Statement are likely to spur employers to reach early settlements, as HMRC is expected to invoke these against any remaining EBT schemes that appear reluctant to settle.

In a statement HMRC said: ‘We will not allow the abuse of employee benefits trusts (EBT) for tax avoidance purposes. The government has made almost £1bn available to HMRC to police the tax rules and we have specialist inspectors making sure any past abuse of EBTs is effectively challenged and the tax paid.’


A credit boom before each bust

A credit boom before each bust

I found a piece today (on the Blog.Spectator) that is so interesting and pellucid that I want to share it with you. The Blog is here.

mortgagesThe author, Douglas Carswell provides a simple graph. It shows the four economic downturns Britain has been through (red lines) over the past forty years. Preceding each sustained fall in GDP (red line) since 1971 there has been a sharp increase in money and credit (blue line).

What is striking, says Mr Carswell, is that each downturn was preceded by the same thing: a surge in the growth of money (blue line). In other words, the bust followed an unsustainable credit-induced boom.

He says: The motives and justification behind monetary policy leading up to each boom/bust might have been different. In the early 1970s, monetary policy was shaped by Competition and Credit Control (CCC) reforms. In the late 1980s, those who decided monetary policy wanted to shadow the Deutsche Mark, then join the Exchange Rate Mechanism (ERM). After that unhappy experience, monetary policy was made in order to target inflation.

No matter what those in charge thought they were doing – CCC, ERM or inflation targeting – as the blue lines show, they nonetheless presided over an unsustainable growth in the money supply. Which was followed by a sharp downturn.

In a paper on monetary policy published in the House of Commons (15/1/2014), Mr Carswell will argue that we are in danger of repeating the same mistakes again. Yet another growth in money and credit – which will be followed by yet another falling red line on the graph.

Mr Carswell says that many of the warning signs of yet another credit-induced boom are already there; increasing reliance on consumer spending, surging house prices, falling savings ratio and a deteriorating current account balance.

He asks: What ought we to do about it?

His answer: First, we need a tighter monetary policy, with higher interest rates. But we also need some more far reaching change in the way we run the economy, too.

One of the reasons, Mr Carswell suggests in his paper, why successive administrations have failed to prevent these credit bubbles is not merely down to misjudgement. Part of the problem is that banks are able to conjure credit out of thin air.

Preventing endless boom/busts requires real banking reform. In his paper, he suggests how we might prevent runaway credit bubbles forming – but using the free market, rather than the flawed judgement of central bankers or regulators.

Although the Bank of England might not have met its inflation target for many months, it has delivered lower, and more stable, inflation. In the twenty years since inflation targeting began, inflation has average 2.1 per cent – compared to 12 per cent in the 1970s and 6 per cent in the 1980s.

But low and stable inflation on one side of the equation has seen bank busts and credit crunches on the other. As long as bank’s lending is simply a function of their appetite to lend, combined with the appetite of borrowers to borrow – and restrained only by regulators – this fundamental instability will remain. A banks ability to lend must also be a function of its deposits. Mr Carswell’s paper proposes a simply way of achieving this.

If we are to avoid boom/bust 5, we need to change the way we manage the money.

Mr Carswell ends saying that he hopes his paper and its suggestions help. He says that he suspects at some point in the future we might need new ideas on monetary reform.

He is probably right.

Biggest retailers taking longer to pay suppliers

Biggest retailers taking longer to pay suppliers

They’re at it again. Britain’s leading retailers are taking longer to pay their suppliers, emphasising the squeeze on small companies from a toughening of payment terms.

rretailAccording to an analysis of the top 25 listed retailers by The Telegraph, the number of days it took to pay suppliers grew from an average of 40 to 42 in 2013. Only 2 days yes, but why does it take 6 weeks to pay the bills?  It means that small companies are battling with slower cashflow and tougher terms from their leading customers just as the economy starts to recover and they try to grow.
Graham Ruddick of The Telegraph ran a story on this here.

The disclosure of the slight increase in payment days follows the publication of letters from Debenhams, Laura Ashley and John Lewis over the last year that showed the retailers demanding discounts from their suppliers.

The analysis of payment terms is based on the creditor payment days reported by retailers in their annual report for 2013. Some retailers provide their average creditor days while others give a figure for payment outstanding at the end of their financial year.

The research shows that eight retailers extended their payment days, with Topps Tiles, Asos, Home Retail Group and Mothercare the worst offenders.

In contrast, ten retailers cut the number of days it took to pay creditors, although this was by just one or two days with the exception of Mulberry, whose payment days reduced by five.

The company that paid suppliers the fastest was Mulberry, whose average payment time was just 15 days. Marks & Spencer was second with trade creditor days of 24, based on the ratio of company trade creditors at the end of the year to the amounts invoiced during the year by trade creditors.

In contrast, Home Retail Group, the owner of Argos and Homebase, increased trade creditor days by nine from 51 to 60 says, while Asos and Topps Tiles grew from 43 in 2012 to 59 in 2013. Debenhams, which issued a profits warning after a disappointing Christmas, took 60 days to pay suppliers, more than twice as long as M&S.

As ever, the apparent culprits for taking advantage of small firms had an answer:

  • A spokesman for Home Retail said: “Our suppliers are very important to us. Payment is made in accordance with pre-agreed terms and reflect the markets in which we and our suppliers operate.”
  • Topps Tiles said: “There has been no policy of extending supplier payment terms this year.”
  • In a letter to suppliers before Christmas, Debenhams said it was seeking a one-off fee from suppliers worth 2.5pc of its outstanding payments as of Tuesday. It will also apply a 2.5pc discount to orders it has agreed with suppliers.

Debenhams told its suppliers that the discounts were a “contribution” to the retailer’s investment in new store openings and the £25m revamp of its flagship Oxford Street store.  In the letter, Mr Herrick wrote: “As we will mutually benefit from the growth of Debenhams we are now seeking a contribution from our suppliers to support our commitment to on-going investment.”

Earlier in 2013, John Lewis said suppliers would be subjected to a rebate of up to 5.25pc on annual sales because it needs “all parties to participate in showing their ongoing commitment and support”.

Laura Ashley was also accused of squeezing suppliers after asking for suppliers to pay back 10pc of the value of orders it has already agreed with them.

Interesting views here. Is there a link between corporate failure and the unwillingness of a company to pay its bills on time? I had always understood there was. I hope I’m wrong.

AJ Bell sets out seven-point plan for pensions’ reform

AJ Bell sets out seven-point plan for pensions’ reform

retirementI was interested to see that AJ Bell has written to the government calling for a review and overhaul of the pensions’ regime in an effort to increase simplicity and fairness. The firm plans to change the name of its Sippcentre platform to AJ Bell Investcentre in April.

The firm’s chief executive Andy Bell has penned an open letter to financial secretary to the Treasury Sajid Javid, setting out a seven-point plan to overhaul the current pensions system.

Bell said: ‘Our proposals have the objective of bringing pensions into the 21st century and building a system that is simpler, more sustainable and will give people the confidence to commit to long term saving. I am more convinced than ever that change is needed to the current system. Without a fundamental review, the system will fail to engage many pension savers due to its complexity and lack of flexibility’.

The proposals are as follows:

  • Scrap the lifetime allowance: AJ Bell has suggested the government should use the annual allowance as the primary control on pension tax reliefs and remove the lifetime allowance and associated complex protection regimes.
  • Simplify the current capped drawdown pension rules: AJ Bell has proposed a move to a percentage-based regime where annual income allowance is based on an individual’s age. It argued this will increase the certainty of their likely maximum income based on their pension fund value.
  • Revisit flexible drawdown: AJ Bell believes the government should scrap flexible drawdown and introduce a new requirement which allows individuals to withdraw 10% per annum of any pension savings in excess of £200,000 irrespective of their age
  • Reintroduce a Sipp permitted investment list: AJ Bell has proposed the government reintroduce a simple list of permitted investments for Sipps which contains all mainstream quoted investments, UK regulated collective investment schemes and commercial property. AJ Bell believes this will tackle the number of failing investments made through Sipps and give investors greater protection.
  • Charge 35% tax on all lump sums on death: AJ Bell has suggested the government should apply a single rate 35% tax to lump sum death benefits for both uncrystallised and crystallised lump sums. The company said this will remove the current 55% ‘cliff edge’ tax applied on crystallised pensions.
  • Allow early access to pension commencement lump sums: AJ Bell has proposed allowing a saver’s tax-free lump sum to be drawn early for only those aged 45 and over which it believes will help protect those lured by pension liberation schemes in times of financial difficulty to gain early access to savings in breach of current rules.
  • Extend rules on serious ill health lump sums: AJ Bell wants the government to change the current rules on serious ill health lump sums, where you can only receive it if you have not yet started to get your pension, or used up your lifetime allowance, to allow savers who have already crystallised their pension funds to get it if they have less than 12 months left to live to support their needs.

So far as I can see, all these proposals seems to make a lot of sense and the Government should listen to what Andy Bell is saying.

The story was reported on by Jun Merritt in New Model Adviser this week, here.

ICAEW and CIPFA to work with development body

ICAEW and the Chartered Institute of Public Finance and Accountancy (CIPFA) have teamed-up with a government-funded programme that supports developing countries. Helen Roxburgh wrote about it here.

The Investment Facility for Utilising Specialist Expertise (IFUSE) is funded by the Department for International Development (DFID), and aims to provide developing countries with access to UK expertise to help create the infrastructure needed for growth. Past examples of its work include experts from the Office of Fair Trading training officials at the Competition Commission of Pakistan, and HMRC supporting officials at the Tanzanian Revenue Authority to make it easier for citizens and businesses to pay their taxes.

You get more information on IFUSE here and here from the Gov.UK website.

Back to what the story said:

ICAEW and CIPFA will be the first chartered accountancy bodies to join the network. Staff will be deployed on short term assignments to train officials and assist with developing and implementing policies to improve transparency, public financial management and financial accountability.

International development secretary Justine Greening said, “Our accountancy profession is world class, and these ground-breaking partnerships will allow countries in the developing world to benefit from the very best expertise Britain has to offer.”

Justine Greening, who qualified as a chartered accountant with Price Waterhouse (now PwC) and worked for 15 years in finance before becoming an MP, said, “It is not just about pulling in the private sector in to help these countries, it is about pulling in the best expertise, which includes our accountancy profession. The IFUSE programme matches British expertise with expertise gaps in developing countries. “Most of what we have done so far has been using expertise from within government. What we are saying now is that we can take this programme and use it with something like the UK’s fantastic accounting profession.”

ICAEW’s chief executive Michael Izza said, “Government departments, regulators and businesses all need reliable financial information and the guidance of professional accountants. We realise that strengthening national accountancy institutes will contribute to economic growth and we are assisting our development partners to create a new generation of accountants so that their countries can evolve independently.”

ICAEW already has a dedicated team for international development and has undertaken around 20 capacity building projects in 15 countries over five years, mostly in Africa and Asia.

The countries covered by IFUSE include Afghanistan, Bangladesh, Burma, DR Congo, Ethiopia, India, Kenya, Kyrgyzstan, Liberia, Malawi, Nigeria, Occupied Palestinian Territories, Pakistan, Sierra Leone, Somalia, Tanzania, Uganda, Vietnam, and Zimbabwe.

The announcement coincides with a meeting between Justine Greening and the top five accountancy institutes to discuss how they can co-operate with DFID.

There will be more from Greening and more on the ICAEW’s capacity-building projects in the February issue of economia.

Wooing external investors

Wooing external investors

Good stuff from The Institute of Chartered Accountants in England & Wales (ICAEW) – from finding investors to what happens after the pitch, here are their top tips on how to woo external investors. I found it on the Real Business website, here.  This feature was placed by ICAEW.

external investors

  • Where to find investors:  There is an established business angel and private equity market in the UK, so the UK Business Angels Association and British Venture Capital Association (BVCA) could be a useful port of call.
  • Prepare your business plan:Seek advice on the areas of the business plan you are least comfortable with. For example, pitching for finance requires financial information and forecasts. Most early stage business people will benefit from a discussion with an accountant about the forecasts within the plan. Once your business plan is prepared, it’s wise to practice your pitch in front of a friendly audience, such as a business acquaintance or your accountant.
  • What your business plan should tell a potential investor:

–     Your plan must summarise your business model in a short and easily understood way. Give a clear idea of the business model and how it will make money;

–     Clearly summarise your target market. Who are your competitors? How do you expect to break into the market? Be clear about the figures. What is your target market share and your strategy for achieving it?

–     Identify the key people in your team and their qualifications, experience and past successes. This not only includes employees but also people who have already invested in the business, mentors and advisers;

–     Your business plan should contain past financial figures and forecasts. Turnover, gross margins, net profit, cashflow and set-up costs must be included. It’s also important to state how much you’ve invested – investors want to feel the risks are being shared;

–     Your plan should also detail the opportunities and threats to the business. It’s as well to be up front about these – potential investors may well have knowledge of the sector so you are probably going to be asked what the dangers are anyway; and

–     Your plan should paint a picture of the future. Imagine what the business could look like in two to three years’ time. It helps investors focus on the growth potential in the business, or ‘the up-side’.

  • At the pitch: It’s important to have the key financials at your fingertips and be as well prepared as possible to answer questions. If you don’t know the answers, it’s better to say that you will provide the information after the meeting.
  • After the pitch: Find some time to review how it went:

–     What did you learn from it?

–     What questions did the pitch or meeting raise?

–     What was the feedback?

–     What would you do differently next time?

–     Does your business plan need modification?

If you did practice in front of somebody else, talk through the experience with them – they have seen your pitch before the event and an independent person can give insightful feedback.

  • Due diligence: If your potential investor is still interested, there will be some form of due diligence. If the investor is a business angel the chances are they will visit the business themselves, while private equity investors will employ external accountants to conduct the due diligence.

If you need help with your business plan, or simply want to talk over the financial information and forecasts, a discussion with the ICAEW Business Advice Service (BAS) is a good place to start. Start today with a free straightforward, open discussion with an ICAEW Chartered Accountant. There’s no catch, no obligation and no charge for your first session – just practical thinking to help your business succeed.

To find an ICAEW Chartered Accountant near to you, click here.  If you want the latest business news and analysis from my company, Bizezia, click here.  Finally, if you want publications on Business Plans, Angel Financing, Raising Venture Capital or anything else, email me at

Practice Management: Winning new clients

Practice Management: Winning new clients

practice managementI found something new on Accountancy Age Insight. To refresh your memory, this resource allows accountants to keep up to date with the most recently added briefings to its online service. The latest is from Sage: Practice management: Winning new clients

Sage (or is it Accountancy Age Insight?) say that running an accounting or bookkeeping practice can be very demanding, and it can often mean juggling marketing and sales to keep the business growing. The duties and responsibilities of running a business are critical tasks that must be performed in order to gain new clients. However, these are usually not the core function of the owner at the outset and more often than not, these skills need to be honed and developed.

Sage’s whitepaper helps by looking at how your firm can expand its potential client base by improving marketing communications and widening its web presence.

You can download this paper from here. Registration is required.

New Haircut anyone?

New Haircut anyone?

I liked the story in The Lawyer, here titled: New Year and a new look for the Co-op

haircutThe story says that some people start the New Year with a new haircut. The Co-op Group has opted for an altogether more radical look by completely overhauling the shape of its legal team.

As they say, it comes as a breath of fresh air after the seriously bumpy ride the Co-op endured last year.

After finding a £1.5bn capital hole in the summer (where were the regulators I wonder?), it then fought tooth and nail to hold onto its banking branch network.

As we all know, the Co-op ended up in the majority control of several US hedge funds.

The story continues: Not only did the shift turn out to be a well-publicised PR nightmare, it also no doubt caused more than its fair share of headaches for the group’s legal chief, relative newbie Alistair Asher.

He and the Co-op bank’s new general counsel Brona McKeown have effectively been picking teams, sorting through the Co-op’s legal offering to figure out who works for whom. The final divide is a 60/40 split in favour of the group versus the bank, although the pair will now be doing some hiring to fill the gaps.

Everyone at the Co-op must be looking forward to a quieter 2014. 2013 was anything but that.

£8 million technology boost for UK high streets

£8 million technology boost for UK high streets

It sounds good to me: A brand new, £8 million initiative, designed to re-invigorate UK high streets, has been announced by Science and Universities Minister, David Willetts.

The initiative, a funding competition run by the UK’s innovation agency, the Technology Strategy Board, will allow businesses to compete for funding awards, in order to trial innovative ways of addressing the challenges facing UK high streets.

The competition is seeking innovative technology solutions to boost the high streets by exploring new approaches to retailing/services, logistics and travel and traffic.

Minister of State for Universities and Science, David Willetts said: “Technology plays a vital role in people’s everyday lives and has the ability to influence our movements and shopping habits. By developing innovations to regenerate the retail sector we will be able to breathe new life into the UK’s high streets. This competition will encourage exciting new developments that could change the way business is done across our high streets. Giving shoppers and businesses real time information that they can use to their advantage will make a real difference in helping to boost the UK economy.”

High Streets Minister Brandon Lewis said: “Britain’s shopping culture is changing with online shopping pushing town centres to evolve and exploit new technology to prosper and attract people to their local high street. This government is committed to supporting high streets and this competition will challenge them to come up with exciting and innovative ways to be at the forefront of change. It builds on the £1 billion support package of new tax breaks for shops and sensible changes to planning and parking rules. That investment combined with strong local leadership can help high streets remain at the heart of communities for decades to come.”

Technology Strategy Board Chief Executive Iain Gray said: “There is real appetite among business and consumers to come up with new ways to regenerate our high streets. This competition is aimed at encouraging businesses of all sizes to come up with innovations that address key challenges, such as ways we can combine both physical and virtual shopping or develop real-time parking information.  Up to £2 million will be available for feasibility studies in phase 1 of the competition called Re-imagining the high street, and those successful projects will then compete for a further £6 million in phase 2.”

The competition

  • The funding competition opens on 13 January 2014. The deadline for registration is noon on 26 February 2014 and the deadline for applications for phase 1 of the competition is noon on 5 March 2014. A webinar briefing session will be held at 10am on 20 January 2014.
  • The competition is being run under the SBRI (Small Business Research Initiative) programme that provides opportunities for innovative companies to take advantage of public sector procurement to solve specific problems. SBRI competitions are open to all organisations that can demonstrate a commercial potential to their solution. The scheme is particularly suited to emerging and small businesses.

Further information:

You can find further details of the funding competition at Re-imagining the high street.

Interesting Tax News

Interesting Tax News

A couple of interesting stories today:calc

HMRC Car and Car Fuel Benefit Calculator

Last week, HMRC announced that its car and fuel benefit calculator has been updated to include calculations for 2014 to 2015.

When a company car is made available for the private use of an employee a ‘benefit in kind’ value is calculated in relation to the car, and the fuel if that is also provided for private use.

This calculator:

  • allows you to calculate the ‘benefit in kind’ value of a company car and, if appropriate the car fuel benefit
  • provides an indication of the Income Tax you would be liable to pay for the provision of company car and car fuel benefit

The calculator allows calculations for the years 2009/10 up to 2014/15.
Information about forthcoming changes is available by following here.
To make a calculation, you need to go to: although it wasn’t working when I last tried it.

James Hay calls for flat rate of pension tax relief

A flat rate of pension tax relief would give most people a better incentive to save into pensions, according to Sipp provider James Hay, reported here.

The head of technical support at James Hay, Neil MacGillivray, said pensions were not as popular as ISAs with working age savers and cost the government, which only earns back £1 in every £3 in pensions’ tax relief.

Speaking at a masterclass at the New Model Adviser® conference, MacGillivray said it was time to look again at a recommendation made by Centre for Policy Studies author Michael Johnson in 2012, namely that pensions’ tax relief should not be given at individual’s marginal rate but on a flat rate basis.

‘If you are going to restrict tax relief you still need to incentivise people to save, if you won’t get tax relief at the higher rate then, as Michael Johnson suggest, there needs to be a flat rate at around 30% so it is cost neutral for the government.

‘For basic rate taxpayers it would be a real incentive to save. For a higher rate tax payer it would not be as good as incentive as it was, but still be better than an ISA.’

The New Model Advisers article says that the lifetime allowance for tax-relieved pension contributions was lowered from £1.8 million to £1.5 million in 2010 and will be cut to £1.25 million from April 2013. The annual allowance will also drop from £50,000 to £40,000. MacGillivray said further cuts to the annual allowance would make a lifetime allowance unnecessary.

He also called for a period of stability within pensions’ policy and to stop political meddling.  ‘We should take the short-term politics out of pensions because politicians are elected for five-year periods and need to get elected,’ he said.

US Taxpayer Advocate Calls for Taxpayer Bill of Rights

US Taxpayer Advocate Calls for Taxpayer Bill of Rights

I picked up an interesting story last week about the US National Taxpayer Advocate (pictured right) releasing her 2013 Annual Report to Congress. Her report identifies the most serious problems facing US taxpayers today and provides recommendations to fix them.  It urges the US Internal Revenue Service to adopt a comprehensive Taxpayer Bill of Rights.

She said it would increase trust in the agency and, more generally, strengthen the IRS’ ability to serve taxpayers and collect tax. In addition, she recommended allowing voluntary certification of unenrolled tax preparers if the IRS fails to win a court appeal of a ruling invalidating its testing requirements for tax preparers.

This story was reported in accountingTODAY and written by Michael Cohn.
Nina Olson also expressed deep concern that the IRS is not adequately funded to serve taxpayers, pointing out that the IRS annually receives more than 100 million telephone calls from taxpayers. In fiscal year 2013, she noted, the IRS could only answer 61% of the calls it received from taxpayers hoping to speak with an IRS customer service representative. Key metrics show the agency is increasingly unable to keep up with taxpayers’ demand for help in complying with their tax obligations.

Because of sequestration, the IRS’ funding was substantially cut, which translated into a reduction in taxpayer service. And public trust in its fairness and impartiality was called into question.

The story in accountingTODAY notes the longstanding recommendation of the Taxpayer Advocate Service and that Nina Olsen should press the IRS to adopt a Taxpayer Bill of Rights. In a prior report, Olson analysed the IRS’s processing of applications for tax-exempt status and concluded its procedures violated eight of the ten taxpayer rights she has proposed. The report argues that the rationale for a Taxpayer Bill of Rights, or TBOR, is much broader.

Here are some telling words from the report: “Taxpayer rights are central to voluntary compliance.  If taxpayers believe they are treated, or can be treated, in an arbitrary and capricious manner, they will mistrust the tax system and be less likely to comply with the laws voluntarily. If taxpayers have confidence in the fairness and integrity of the system, they will be more likely to comply.”

The report emphasises that the US tax system is built on voluntary compliance. 98% of all US tax revenue collected by the IRS is paid on a timely basis and voluntarily. Only 2% results from IRS enforcement actions. For the taxpayer, voluntary compliance means not having to face IRS enforcement. For the government, voluntary compliance is cheapest, because enforced compliance requires the IRS to devote resources to detecting and collecting amounts that are not voluntarily reported or paid.

“The report notes that the US Internal Revenue Code provides dozens of real, substantive taxpayer rights.  “However, these rights are scattered throughout the Code and are not presented in a coherent way. Consequently, most taxpayers have no idea what their rights are and therefore often cannot take advantage of them”, the report says.

The report argues the case for the IRS to take the taxpayer rights that already exist and group them into 10 broad categories, modelled after the US Constitution’s Bill of Rights. The report says the “simplicity and clarity” of a thematic, principle-based Taxpayer Bill of Rights would help taxpayers understand their rights in general terms.

The 10 rights the Advocate is proposing are detailed in the report. Olson has been in discussions with senior IRS officials about publishing a TBOR, and TAS has just completed a series of focus groups with taxpayers and preparers to gauge reaction to, and comprehension of, the proposed list. Olson said the IRS has been open to publishing a proposed TBOR, and she will continue to work with the IRS leadership to refine and publish a TBOR during the coming year.

I’ve taken a brief look at the law in Canada. I found it interesting that where there is ambiguity in the tax law, the ambiguity is read in favour of the taxpayer.  It’s called contra proferentem which means that where there is doubt about the meaning of something, the words will be construed against the person (or authority) who put them forward. The onus is for the Canadian Government to prove why the presumption should not be applied.  They also have a Charter of Rights and Freedoms that applies to all interactions between private citizens and the Government.  This includes that due process will not be delayed.

If you get the chance to do so, you might like to check on how the HMRC fared in the UK. There are some similarities: Underfunding and poor customer service certainly. But surprisingly, HMRC staff have been laid off. And as far as I know, there’s no sign of any Taxpayers’ Bill of Rights. Whilst there’s an HMRC charter, here, in my view it’s very light on specificities and is more of a marketing leaflet than a serious Charter of Rights. In any case, from personal experience, on big cases, I have found that HMRC deviate widely from what’s expected of them.

I see that, at the European Court of Human Rights (ECHR), Britain has lost a staggering 202 European human rights cases several of which involved murderers, terrorists, paedophiles and rapists. Last year, there was a bit of kerfuffle over prisoner’s rights to vote and threats of taking the injustice to the HCHR.

Common-sense seems to have prevailed when, the Supreme Court’s judgement asserted that EU law did not provide an individual right to vote, paralleling that recognised by the ECHR and that eligibility under EU law is a matter for national parliaments. Fair enough, but, as far as I am aware, British taxpayers haven’t felt disgruntled enough (so far) to ask the Judges in Strasbourg for fairer treatment on something really important such as taxpayer rights and fairer treatment from HMRC.