New responsibilities come with continuing prosperity

First, the good news; then the bad. The first is that accountants in practice are standing on the brink of an extremely profitable 12 months – easily their most profitable since the heights of the last boom at the end of the 1980s.

The bad news is that their success this year will be won at the expense of deeply unhappy clients – both corporate and individual – reeling from the combined offensive of the Inland Revenue, Customs & Excise and two political administrations, the Tories until May and then Labour. In the face of these assaults, clients will be driven deeper into the arms of their accountants in search of new systems of fiscal protection (they too must spend to save). Fatter fees will flow, though such is the importance of swelling UK tax receipts, client satisfaction may not.

Make no mistake about it: 1997 will be the year that tax collection assumes blitzkrieg dimensions as politicians and civil servants pry, probe and peek into every conceivable source of precious revenue with which to fund their social and political ambitions.

The aggressive anti-corporate thrust is made clear in the Finance Bill now laid before Parliament. A raft of new anti-avoidance measures shows the Treasury means business and is prepared to pursue its ends inventively.

Take, as just one worrying example, taxation based on consolidated accounts.

Never attempted before, this measure, which may well be extended from leasing and loan arrangements to other contexts, is a step too far. Clearly, consolidated accounts were not designed for tax purposes, and for the Revenue to imagine otherwise is a deeply worrying trend. Worrying, that is, for companies: tax partners would be less than human were they not salivating at the prospect of the extra work coming their way. The anticipated assault on transfer pricing as practised by the multinationals will have the same effect, with clients relying ever more heavily on their tax advisers to outwit the Government.

At a personal level, self-assessment will deliver a bountiful crop of new clients, particularly to hard-pressed high-street accountants, as the full horrors of the new system reveal themselves. Hector may well have been striving manfully to alert 8.5 million in-scope taxpayers of what’s coming, but most will still be panicking before very long. Massive public resentment will quickly build up, and the trick for accountants will be to ensure Kenneth Clarke (or Gordon Brown) is the object of hostility, not the accountants themselves.

Whatever, it all spells new fee income for the profession, as does the change of Government. Even if Labour proves to be a sheep in sheep’s clothing when it comes to personal taxation, new corporate imposts are inevitable and advisers will be in further demand.

Not that the economy should falter (a Labour victory has long been factored in), and continued growth should deliver fee income rises for firms well above this year’s 6% average.

In return for their best year since 1990, accountants should offer something in return: full plc-style accounts, as pioneered by KPMG and Ernst & Young.

The more willingly accountants go down this route, the more quickly a new liability regime will follow.