How much does a tax advisor cost?

So…why do so many people ask Google this question?…The fact that you ask this question at all means you are probably concerned about your own ability so you “need” a tax adviser. Just get a qualified one and you will be fine.

Not convinced why you should always use a tax adviser? If you need your car repaired…you just get it done…if you need your property roof repairing…you just get it done. Even if you think your tax return is easy…just get a qualified adviser…and…if your return really is easy…he will not charge much anyway…convinced yet?

Tax advisers all charge give or take the same amount. A little bit less for easy returns and a little bit more for more detailed returns. But a tax return done badly for £500 or £75 is the same damage to you. When HMRC start charging you tax based penalties and interest the price you paid for the tax return will be insignificant…are you a risk taker?

Do I really have the time, the technical knowledge, the qualifications and the experience? A fully qualified tax adviser studies for a minimum of 4 years. So if he charges you £250 for a tax return, you should think that is cheap to get his expert eye over your tax affairs. £250 might take you 1 hour or 2 days to earn. But either way, reasonable fees cost less than your time and mistakes.

I think paying £250 to £500 a tax return is a very reasonable price indeed.

Reasonable fees cost much less than your time and mistakes.

Do you really have the time to spend on your tax affairs?
Are you confident with completing the forms?
Did you put the right numbers in the right boxes?
Is anything missed out?
Do you have the software to file electronically?
Did you take into account changing tax laws?
Will you be confident to defend questions from HMRC?

Tax and accountant hourly rates seem so high. At Ernst & Young (one of 4 largest professional advisory firms in the world) the partners would charge me out to their clients at what seems like an incredible £225 excluding VAT every hour. I was paid barely a fraction of that but when I wrote the invoices to my clients for the work I personally had done, I would think every time about the value I delivered in terms of certainty and in terms of tax savings I remember telling myself how the £225 was a bargain! An easy tax return for a client I knew well took me under an hour to complete so even the Big 4 firms were able to prepare tax returns for average prices!

Why do I see tax return offers for much less? £20? £75? £99? Many firms believe cutting prices to offer a cheap tax return is the way to win the sale of the client. The adverts look attractive and you are rightly tempted, but they always attract a low paying client…A low paying client who values the cost to his wallet now and does not think about his wallet in the future. It is your name and signature that goes on the tax return…it is your name that gets called up to court if the mistake is serious.

Many firms are using trainee staff to prepare tax returns. I was one of them in the early years. I was studying for my exams but I was also completing tax returns from day one. Great for my experience but is it really great for the clients.

Many firms are paying fully qualified tax staff around £30,000 a year and will expect that person to manage a portfolio of 300-500 tax returns. That is roughly 1.5 tax returns a day. That is roughly a staff cost of £80-£100 a tax return. Staff costs are typically 1/3rd of full costs for a professional services business, so triple the £80 and you get an average tax return fee of around £240. If you are paying much less….corners are being cut somewhere. Do you really want to pay £99 if there are corners being cut?

The real questions should be what are the opportunity cost of me struggling to understand my taxes, and then complete the forms, and then submit them on time, and then have confidence they are completed well enough for me to rest easy and am I sure I did not miss out on a tax saving opportunity?

Being able to say in conversation “My tax adviser…” gives you a sense of comfort knowing you have someone qualified keeping an eye on one aspect of your personal finances. Priceless!