Taking time to improve your practice

Finally, January is over! It is the time of the year when all practitioners should spend time on their own practice to assess if it is going in the direction they envisaged one year ago.

If yes, then great! They can then think about setting goals to achieve in the year ahead. Nonetheless, things don’t always go as planned, and this time of year might be more for reflection and taking actions and lessons to implement to improve things.

Client management

A good starting point is tidying up your clients’ information and looking at your practice management.

Current clients:

• ensure all engagement letters and consent forms for current clients are up to date and relevant for the services provided
• check you are charging enough fee for the services you provide – very important. You may consider a fixed-fee structure unless you already have a robust credit control set up for your practice 
• consider sacking problem clients who are unappreciative of your advice and constantly complaining about your fee levels or failing to provide information on a timely basis or are abusive to you or your staff.

Previous clients                                                                                      

• terminate services on the practice management for clients you have ceased to act for and ensure that HMRC authorisations are deactivated for these clients. This ACCA article explains the disengagement process to adhere to for the avoidance of later disputes
• double-check they have moved their registered office if they were using your registered office service
• check all records are returned and there are no unnecessary ones clogging up the storeroom.

Assessing cyber risks

It will be worth considering any cyber risks associated with technology/software used by the practice and how to mitigate them. As some of the software is used and offered to clients, firms must adhere to all data protection policies to protect themselves. Read ACCA's guidance on managing cybersecurity. 

Review AML procedures                                

ACCA-supervised firms play a critical role in detecting and preventing money laundering and terrorist financing (MLTF). You need to ensure that you have reviewed your firm’s policies and procedures and they are all up to date with the changes that happened in the practice during the year. CCAB advises carrying out periodic reviews on your clients’ due diligence and keeping a record for any compliance visits.

ACCA's AML hub includes latest guidance, a suite of factsheets, coupled with a risk-assessment tool, 'know-your-client' form and training support which will ensure that you operate a robust system when dealing with clients – both at the onboarding stage and throughout your relationship. Key factsheets have recently been updated, so please take a look at how your practice policies and documentation needs to be updated.

Year-end planning

Next on your list should be to start planning your March year-end company accounts. You should use the year-end meeting as an opportunity to ask your client about developments in their business so that you can plan ahead to save them tax, hopefully.

As part of carrying out the year-end review for the current period, look back at prior periods and determine whether:

• all returns have been submitted and all tax payments made; and
• any claims and elections (repayment of S455 tax, roll-over relief for chargeable gains, R&D claim) should be made, varied or withdrawn in respect of active periods. An active period is up to the end of the amendment period, ie 12 months from the filing deadline.

Depending on the services you provide to your clients, clients often require your proactive advice for:

• capital spends for AIA claims and full expensing
• bonuses for their executives and management team
• pension contributions
• lease or buy assets - tax reliefs and benefits
• dividend planning
• P11D implications for directors overdrawn loan account
• business restructuring
• tax efficient investments
• R&D claims.

You need to start arranging dates in your diary to see these clients so there is sufficient time to implement these decisions before the year end.

Individual tax planning

A similar planning exercise can then be undertaken for high earner individual clients. You may need to check:

• whether they should put extra money into their personal pension accounts to avoid paying higher taxes and to minimise the loss of their personal allowances
• whether pension could also be utilised for clients receiving child benefits, to reduce their child benefit tax charge
• for joint rental properties owned by civil partners or a husband and wife, see if they need advice in order to make some elections to transfer a larger share of their property to the other half to maximise the family tax savings; however, legal advice should be sought before any elections are made. Read more about property taxes in this factsheet
• independent financial advice should be pursued before making any financial commitments
• eligibility to claim marriage allowance. Where one spouse/civil partner is a basic rate taxpayer, and the other has income below the personal allowance, the latter can transfer 10% of their personal allowance to their spouse/civil partner resulting in tax relief of up to £252 in the current tax year
• if your client can claim trading and property allowances. These are two separate £1,000 tax-free allowances available: one for trading and miscellaneous income, and another for income from property
• if your client rents out part of their main residence, up to £7,500 of income from the letting will be tax-free if rent-a-room relief is claimed
• if your client is aware of annual IHT-free gift allowance. It includes annual gift of £3,000, small gifts of £250 per person as many as you care to make per tax year.

Preparing for basis period changes

From 2024/25, the profits for sole traders and partnerships will be taxed on a tax-year basis – ie to the end of 5 April instead of the profits for the 12 months to the accounting date in the tax year. An ACCA free webinar explains the practicalities of basis period reform and the transitional rules.

This article summarises the useful guidance along with how to get your overlap profit figure. Once a request for overlap profit is submitted, the taxpayer can expect to receive a response from HMRC within three weeks, unless the case is particularly complex. So, it is crucial that members request this information well in time before the beginning of the next tax year to advise client accordingly.

Practice growth

Last but not least, you should also consider how you can make your firm stand out to clients, potential clients, recruits, and those you may wish to influence. You can find some useful top tips to drive business efficiency in an uncertain economic climate.

Remember you can take and use articles from In Practice and utilise ACCA guides and other support material to grow your own practice.

You may wish to join the Practitioner LinkedIn group and access The Practice Room for latest updates.