Sometimes in my line of work we have to lift our heads from what we are doing and take a step back. Are we really doing the right thing? Today I was asked to quote for dealing with the accounts and tax return of what purported to be a business. The owner was concerned at the level of fee he was paying his present accountant for the preparation of the annual accounts and tax returns.
Having had a look at the work involved, I quoted a fee that was apparently much the same as the amount charged by the present adviser. In a sense I was pleased that my nose for what was fair was in line with the market. My USP is that I give more for the money in terms of value, because not only do I carry out the compliance at a fair price, but I am always available to clients on the telephone, giving proactive advice and help my clients be more efficient.
In this case I was concerned that I was being asked to quote for a low turnover business which consistently makes losses and has done for years. There was no other income available against which to set off the losses, for reasons I will not go into. HMRC, if they would ever think about it, would say that this was not a true business but a hobby, and that the losses should not be tax deductible elsewhere.
I said to my prospect that I thought the “business” really was a hobby, and that it would save a great deal in accountancy and tax compliance costs if the present agents were to ask HMRC to agree that the activity was a loss-making hobby and that tax returns and accounts would not be required in the future. Of course I gave away the chance to bid for the work, and probably the present incumbent will lose the business, but I think they should have given it up anyway rather than churning through a pointless process for a regular annual income. I am not saying they were unethical; just not thinking about what they were doing. What do you think?
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