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Do I need a tax advisor?

Do I need a tax advisor?
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    What is a tax advisor?

    A tax advisor or tax consultant uses their tax legislation knowledge to provide advisory and consultancy services to clients.

    Tax advisors help companies and individuals prepare and optimise their tax returns, ensuring they pay the most efficient tax and benefit from any tax exemption and advantages.

    In simple words, tax advisors help their clients save money by making wise tax-related financial decisions. The main concern of the tax advisor is to make sure their client fulfils all tax obligations and follows the tax legislation.

    Tax advisors keep themselves up to date with the changing tax laws and regulations and explain them to clients in simple language.

    Broadly, there are two main types of tax advice:

    1. Corporate – providing advice to companies, to ensure they file their corporate tax returns and do not pay any more tax than necessary.
    2. Personal/individual – providing tax advice to individual clients and some private clients with large assets.

    The work of a tax consultant or a tax advisor is detailed and complex, mainly because the tax legislation world is dynamic.

    Tax advisors will possess expert knowledge in areas such as corporate tax, personal tax, international tax, National Insurance, Inheritance Tax, trusts and estates, and VAT.

    What are the responsibilities of a tax advisor?

    Preparation of tax returns

    Tax advisors or tax consultants prepare or assist in the preparation of tax returns for individuals, organisations and businesses.

    The tax returns they work on may vary from simple to complex and might require significant knowledge of the tax rules and regulations.

    They find ways to minimise the tax paid by the client by taking advantage of any available exemptions and credits. 

    Determine the tax liability

    Tax consultants calculate and determine how much their clients are liable for in taxes. In certain cases, they determine how much they overpaid or underpaid in taxes.

    With the introduction of online tax filing, which is automated, the work of tax consultants has become simple.

    While filing manual returns they make sure they adhere to the instructions and consult tax tables to make correct calculations.

    Gather information

    Tax advisors gather relevant financial and tax information from their clients via interviews or questionnaires. The information they require may include the client’s taxable income, allowances, and deductible expenses.

    They use this information to plan and prepare clients’ tax returns. In some instances, they use this information to advise and assist clients to prepare their own tax returns. 

    Use technology

    Tax professionals should have technological skills for them to perform their tasks efficiently and effectively.

    These can include understanding how to use spreadsheet software such as Microsoft Excel and accounting software such as Xero cloud accounting.

    Further, tax consultants should be skilled in using tax preparation software and financial analysis software.  

    Give information to clients

    The reason many clients go to a tax consultant is to gather information and perform legal research on their behalf.

    Tax consultants must know how to give taxpayers comprehensive and simple data to complete their tax return forms correctly.

    They should also explain to them the tax laws and regulations applicable to individuals and organisations.

    Understand tax rules and regulations

    Tax codes, tax laws and regulations are dynamic, hence tax consultants must continuously update their tax knowledge to make sure they provide accurate and correct information to clients, meaning they pay the correct tax amount.

    They may gain this knowledge by reading online articles, through professional development and continuing education courses, being an active member in tax consultant professional groups and attending conferences and meetings. 

    4 top reasons why should hire a tax consultant

    Personal tax advice and tax planning can save you money, time and a great deal of effort. Hiring a tax consultant will firstly improve all the possibilities of increasing your take-home income.

    Secondly, tax consultants are highly specialised and possess updated knowledge, hence there is less risk of making errors on your return.

    Thirdly, this will make your finances more streamlined and predictable over the long term.

    1. Get all your deductions – a tax consultant can help you easily identify all possible deductions throughout the year and advise you on how to make strategic decisions for year-end deductions. An experienced and skilled tax consultant can suggest several ways of saving money without breaching tax laws or complicating your financial situation. For instance, a tax consultant can find significant deductions or tax credits you might have not known about, or identify a tax-free income, helping you save hundreds or even thousands of pounds, in return for a relatively small fee.
    2. Save time – it takes several hours to dig up records, compile, check for write-offs and double-check all documents and previous tax payments before your start to file your taxes. On the other hand, if you hire tax consultants, they’ll maintain all your tax records and documents systematically using specialised software applications and file tax returns on time.
    3. Ongoing advisor – hiring an ongoing advisor or tax consultant can help you with continuous updates or advice whenever you need them. This will help you to plan your income and taxes efficiently and effectively without getting into financial complications.  
    4. It’s always safe and legal – as already mentioned, tax consultants will always be on top of tax laws and regulations, so whenever you have doubts about the tax preparation you can call them and make sure your returns are accurate. Hiring a registered tax consultant will ensure that your tax records are always safe and legal.

    When should you hire a tax advisor?

    If you are wondering whether you need a tax advisor, it depends on the situation, your ability, and preferences. Generally, the more complicated your return is, the better it is to go to experts.

    Complications can arise if:

    • You are self-employed
    • You own a rental property
    • You have foreign accounts or investment accounts
    • Preparing tax returns on your own takes too much time
    • You need systematic tax planning 
    • You are being audited

    The complexity of the case means that by using professionals you can save time, reduce the chances of errors and find potential tax savings that even the best tax software fails to.

    Irrespective of the complexity of your income, as experienced tax consultants we can assist you in the preparation of tax returns or prepare tax returns on your behalf and file them on time, while adhering to all tax laws and regulations.

    If you need further assistance or understanding of tax preparation, please feel free to call us on 0203 0111 898 and our team here at WIS Accountancy will be happy to help.

     

     

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