How Accountants Can Mitigate Risks in Tax Consulting

Working with businesses in areas where errors can have severe consequences, such as tax, leaves you vulnerable to being held liable for mistakes. Protect yourself against being fined, fired or sued by taking measures to minimise the risks involved in tax consulting, ensuring a safe, smooth process and good reputation for you and your clients.

Take all necessary precautions

First and foremost, remember that even if you put all the recommended safeguards in place, errors can occur for which you could be liable. You could consider taking out specialist accountants’ insurance for peace of mind.

Examples of negligence in tax consulting include unintentional breach of confidentiality, loss of documents or data, incorrect advice that leads to financial loss, and a failure to adhere to your contract and duty of care.

Stay up-to-date with regulations

The government frequently revises tax laws, so you must keep abreast of the latest regulations to remain compliant with HMRC guidelines.

You can check the requirements of different types of business tax on the official government website. Major updates are usually discussed in the national news, so keep an eye on the papers, industry-specific magazines like the Financial Times, and relevant radio and TV programmes offered by public service broadcasters like the BBC.

Assess your clients thoroughly

Before you begin working with a new client, conduct a thorough assessment of their finances. This will provide insight into their financial situation and company tax obligations, which you need clarity on to give accurate accounting advice.

Review the balance sheet, income statement and cash flow records to corroborate claims about profits and losses, keeping an eye out for any discrepancies. You can make a voluntary disclosure to HMRC if you discover errors in the tax affairs to help avoid fines.

Implement internal controls

Ensure errors in tax payments and wider financial processes are minimised by implementing internal controls when consulting with companies. These controls help to identify potential problems early so they can be solved before any damage is done.

Examples of internal controls include regular risk assessments and employee training sessions, regulation of processes, and the distribution of duties to create task ‘champions’.

Utilise advanced software

We can all make mistakes, no matter how experienced we are. Safeguard yourself and your clients against the risk of incorrect data and calculations with advanced software.

Automated computer programs can input and monitor large data sets in seconds, flagging anything unusual immediately. You can find specialist software for working out tax payments for domestic and international sales, a quick and effective way to ensure compliance – if the software is regularly updated with the latest tax information.