Is an increasing reliance on technology creating a faceless process within tax and accounting? Are there deep-rooted misunderstandings of the tax profession within accountancy firms? We speak to Mark Aherne, Tax Director at O’Brien & Partners, about his background, the challenges facing tax professionals today and the future of the industry.
The first question we normally ask people is around how they got into tax. So, Mark, how did it happen for you? Did you always want a career in tax? Does anyone want a career in tax? [laughs] Well, basically, I didn’t really want to go to university. It was never something that interested me, so I started applying for jobs. I always had an interest in business, and accountancy in particular seemed to appeal to me. I saw a job advertised for a tax trainee at Deloitte, and to be honest, saw it as my route into accountancy. I didn’t really realise, at the time, that tax was entirely different to accountancy. Deloitte had a fantastic training scheme, and put you through the professional qualifications. I remember getting the offer, and I had a couple of other job offers at the time – I think one was for a financial advisor position at Standard Life – and they all came through within about a week of each other. The position with Deloitte was the lowest paid believe it or not, but, for me, the opportunity just seemed to be massive.
So, what else stood out to you about a position in tax, and appealed to you above the other positions, like the one at Standard Life, for instance?
Well the great thing about the Deloitte position was that it gave me chance to be involved in business. I’d always wanted to be involved in the business side of things. It’s the human element of tax that I like. Understanding clients, and their stories. Learning how they got to where they are really interests me. Often, you’ll find that it is by accident, rather than by design. It was the fact that I got a chance to be involved in key business decisions from day one. Being a financial advisor, sitting across from people planning their pensions and dealing with their wealth, didn’t really appeal to me. Helping them create and keep their wealth seemed far more interesting!
It sounds like Deloitte got it right when positioning tax as a career. Do you think if firms frame tax, and a career in tax, in the right way, those candidates more interested in the business side of things, like yourself, will always go down the tax route? Yes, definitely. Whether you are considering a university education or even deciding on your A-Levels, careers advisors in the education system talk a lot about accountancy practices, but not really about the tax function within those practices. That’s probably why there are so few of us and why it’s still very niche. Generally, people still don’t understand the difference between a tax advisor and an accountant. Smaller firms, don’t have specific tax expertise, they are accountants who understand the basics of tax. Myself and my team solely advise on tax, day in, day out -we don’t prepare accounts, that’s left to our colleagues. My view is that for young people and students today, tax probably isn’t understood well enough by career advisors. It’s such a different skill base – tax has more legal grounding than the jobs in accountancy. It’s about the interpretation and application of legislation – the numbers bit is relatively easy. The important part of tax, is the analysis of a client’s circumstances, and planning the best route for them going forward.
That’s a really interesting point, and a great insight into your journey. So, what do you think are the main challenges facing tax professionals today? The problem with some more recent changes in legislation, is that it constantly moves the goal posts, and you haven’t really got a concrete base to start from. Historically, one of the fundamental principles of tax was that you’d plan your affairs based on legislation at the time. That isn’t necessarily the case anymore especially surrounding tax avoidance. Whilst some may say that is fair enough, it is important to remember that some of the “avoidance” that the media pick up on is actually very basic planning that has been within the tax code for a long, long time. This can make it harder to give a client certainty which I believe is a fundamental right. The increase in the tax code means that it’s also infinitely more complex than it was when I first started and, for the general tax practitioner, keeping abreast of all the changes is difficult, but part of the job. That can be an advantage for me. I’m a general tax practitioner with a broad knowledge base, but at times I will need specialist advice in certain areas. My strength is understanding the areas where I may have to bring in specialist advice, that ensure the client gets the best possible result. From an industry perspective, the challenges stem from the fact that even people working within the accountancy and finance space, don’t actually know what a tax advisor does. Accountants generally aren’t tax advisors and if, as a client, you haven’t got a tax advisor that you’re dealing with regularly as part of your accountancy package, you have to question whether you’re being advised properly. When it comes to tax, clients don’t know what they don’t know, and guess what? Neither do accountants. I always have respect for previous advice given to clients, and try not to pass judgement on whether it’s good or bad advice as I don’t fully know the circumstances that the advice was given under, but the most frustrating thing for me is when they’ve been given no advice. There are these faceless accounting setups, where clients pay a set price per month just for their accounts to be prepared, and that’s where the advice ends. It’s massively dangerous and always a false economy. Good advice will always pay for itself in savings – every time!
So, how do you do things differently?
Well, when I give tax advice to a client, I’ll spend time understanding their business, goals and concerns. This allows me to put a range of things on the table because I don’t want to make an assumption about a client’s circumstances. I then draw my conclusions about what I think they should do. But then, you can’t just throw that report at the client and say, “There you go!”. You need to meet and discuss it, probably two or three times, and the client needs to fully understand what the advice means, and what they’re making a decision on. It’s very important to present the advice in a way that they feel as though it’s open to discussion. A lot of the time, practices think they’re providing advice but, what they’re actually doing is constantly caveating that advice to cover their own risk, and it can be quite hard for a client to wade through all of that information to understand what conclusion has been drawn from it.
The other thing that I picked up there, is around the danger of potentially creating this faceless process. Does that have a lot to do with the influx of cloud accounting products coming into the industry? Well, yes, and I think you’ve got two kinds of clients; those that see the value in an advisor, and then there are the smaller businesses that just look at accountancy as another overhead. That’s the danger point. It probably stems from the fact that their current accountant doesn’t offer that advice, so they don’t see, or even know about, the value they could be getting. Technology is already starting to replace the accounts processor, which is dangerous. The clients that are going to benefit the most are the ones that see good quality advice as an investment. The way I see it, an advisor has a couple of different jobs. Number one, you’ve got to save money on tax, but number two, you’ve got to manage risk for the client as well. Technology can help there, but you’ve got to see it as part of the solution, and not the entire solution. There’s a real problem with just approaching accountancy from a cost saving perspective, in that it’s easy to become faceless. It completely removes the advice part. If you then want to convert clients to the right model it’s going to be very difficult, because they don’t know any different. Honestly, there’s a real danger that a focus on cost saving alongside a reliance on technology is turning some accountants into glorified bookkeepers.
I completely agree, and I think that’s what Diagnostax was born out of; that lack of quality advice. It was about creating technology that enabled that advisory process to happen. In that respect, it’s important for us to bring a certain type of firm on board. So, when you’re looking for to bring new clients on, do you qualify them in any way? Well I suppose, we do have a prequalification in the fact that much of our work comes from referrals. The fact that our existing clients sing our praises in their own circles, helps to identify companies with a real need for an advisory service. That word of mouth acts as a qualifying stage in itself. When it comes from an external party, people are much more likely to buy into what we can deliver, and they’re the sort of clients that value advisory. So, I guess we don’t have a typical qualification stage, as the clients coming to us do so for a reason, because they know we’ve done something good for somebody else.
That’s really interesting, Mark, and I suppose you don’t really need to do extensive marketing when many of your clients come from word of mouth. As you say, the great work you’ve already done means that existing clients almost act as a qualifying stage for you. Working as a tax person, what do you think the challenges are when trying to communicate the value of tax advisory to non-tax people within a wider firm? Well, I think that’s maybe where a lot of firms suffer. The main part of most practices, large or small, is generally run by accountants. When your tax function consists of specialists, the value comes from being able to advise clients across the entire client base as an add-on service and them being actively involved in the client relationship. So, I think the problem comes with protectionism, within bigger firms particularly, from the partners themselves. They’re very reluctant to let anyone in on that relationship. In some ways, they’re their own worst enemy. The way O’Brien’s work differently is that myself and the tax team have relationships with the entire client base and we constantly see and speak to clients independently of the accounts team. It goes back to the fact that accountants aren’t tax people, and if a tax person isn’t involved in the conversation, opportunities can be missed. That’s the problem I’ve had in the past in other firms, where tax people aren’t really on the ground, and are just brought in for a bit of work at the end and expected to generate fees. I think that’s where a lot of firms fall down and it’s the client that ultimately suffers.
I guess it comes back to that lack of understanding of a tax advisor or tax as a function and the value it can add. So, what does the future of tax look like then? In all honesty, I think there will be an increasing demand for what we already do. I think tax is becoming ever more complicated and I think our service is needed. I think the value of technology in tax is taking what’s in my head – what I can deliver, how can I deliver, when can I deliver – and systemising that process. In that way, it’s good from a client’s point of view because it simplifies our process and means they’ll get the advice they need quicker than they would otherwise. The thing that excites me about the future is the very reason I got into it; it’s the human element, the impact on businesses and the interaction with the business owners. In my opinion, tax goes hand in hand with commerciality. It’s the application of the advice that excites me.
If you enjoyed this interview with Mark, check out, ‘How did I end up here……hitman to hero‘.
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