Wednesday, January 21, 2009

Is there a future for Tax Boutiques in the UK?

As we move into 2009 and whilst many accountants are focused on helping dilatory clients beat the 31 January filing deadline I thought I'd reflect on a development I noticed taking place in 2008.

Was it my imagination or did there seem to be an acceleration in the demise of independent tax boutiques? There were a number of catalysts and different firms reacted in different ways but I'm aware of long standing boutiques that no longer exist as a result of one or more of the following:
  • Anti-money laundering rules requiring unregulated firms to register with HMRC;
  • Clarification of HMRC and the courts' view as regards the availability of legal professional privilege in the context of tax advice;
  • Absence of sufficient regular work flows to cover all overheads and generate a profit;
  • Widespread reduction in appetite for structured tax avoidance schemes;
  • Difficulties in securing fast enough take up for such schemes before they were blocked;
  • Acquisition by a larger practice looking to boost it's tax capability.
Of course there remain plenty of tax boutique firms around. But as we move forward into the recession I suspect that the long term survivors will be those independent advisers providing quality, client centered advice from the lowest fixed cost base. After all, how does the client (be it a tax payer or an accountant) benefit if they instead obtain specialist tax advice and support from a niche practice with a flashy office, trainee staff and other indirect and heavy overheads. It will invariably be more expensive but will it be commensurately better? How can anyone tell?

One of the challenges for those seeking Vetted Independent Specialist Tax Advice is how to find someone capable of providing that quality, client centered advice. And it was to resolve this quandry that I established the Tax Advice Network in 2007. And we've now introduced a facility for users to rate our tax advisers and to post testimonials to assist other users (like on Ebay and Amazon).

I tend to think that the number of boutique tax practices will reduce further this year with more independent tax advisers seeking admission to the Tax Advice Network. But I would say that wouldn't I!

What do you think?

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