Tides of change

As a professionally qualified tax adviser (non-accountant) working in an accountancy firm, I can understand the concerns of many in the legal profession about non-lawyers being approved to undertake probate work.

What's interesting is that on the other hand, I have worked with chartered accountants who believe that, unless you have an ACA qualification, you cannot possibly interpret a set of accounts.

I see parallels between this view and some of the objections held by those in the legal profession, to others undertaking probate work.

The reality is that professional services are evolving and consumers expect more from their professional advisers. Compliance work is often commoditised so the unique selling point in a client's mind is the personal rapport they have with their accountant, tax adviser, IFA or lawyer.

We all work in the same heavily regulated environment, with different bodies overseeing the work we undertake. In my view, we have to accept that to act in our clients' best interests, sometimes this means that others are better placed to provide the advice and support that they need at
a particular time.

As long as the person or entity providing the service is appropriately qualified, we have to acknowledge and accept that there is increased competition and greater choice available to our clients.

ICAEW regulation

The most recent and significant regulatory change is that the Institute of Chartered Accountants in England and Wales (ICAEW) is now an approved regulator, and licensing authority for probate work in England and Wales. Subject to accreditation, firms of chartered accountants can now provide probate services for a fee.

For the avoidance of doubt, the accreditation is in respect of preparation of papers to apply for a grant of probate, or letters of administration. It does not permit involvement in any contentious probate matters.

There are two methods under the probate regulations whereby a firm of chartered accountants may undertake regulated probate work. For small firms, the whole entity may become an 'authorised firm', whereby all principals have to be individually authorised.

The alternate route is that the entity becomes a 'licensed firm', where not all principals are authorised and additional requirements are applicable.

Accreditation

Kingston Smith became the first firm of chartered accountants to be licensed under the ICAEW to undertake probate work in October 2014. We currently have five individuals authorised to undertake probate work. We have also had to appoint a head of finance and administration, and a head of private client legal practice with relevant expertise. This appointment has been approved by ICAEW and is separate from the existing management structure of the firm.

To enable us to be licensed, we were required to formalise our approach to probate work. As we have an established inheritance tax (IHT), trusts and estate team, as well as others in the firm being Society of Trust and Estate Practitioners (STEP) qualified, we were already carrying out services linked to probate.

Nevertheless we were required to demonstrate professional experience on an individual basis for all those applying for accreditation.

We also implemented additional safeguards to ensure that no-one outside the accredited group could provide probate-related services, unless under the control of, and overseen by the core accredited team.

Practical difficulties

Many of my fellow partners and senior colleagues raised concerns about their ability to offer a complete probate service to their clients and contacts, as they may not personally be accredited.

Where they have agreed to be named as an executor for their clients, there has been an interesting debate about the practical implications for them as individually appointed executors, and their clients.

Practical difficulties may arise where a partner is named as an executor to a long standing client. Previously there would have been an expectation that the partner would personally oversee the administration of the estate, including elements of the probate work.

Professionals acting in the course of a business have a higher duty of care than lay persons, and an accountant would normally be expected to have a higher level of knowledge than a lay executor, due to the special knowledge and experience that they hold. This is the case even if their specialism is not related to probate work.

Where the firm is undertaking the administration and probate work, that partner's role is now more passive. The accredited team will now deliver the work and report to that partner in the same way as they would to an external executor.

Despite being a multi-office practice, the firm only applied for one office to be approved. This means that within Kingston Smith, any probate work must be channelled through the accredited specialists in the firm.

All engagements and communications need to be supervised, reviewed and signed off by one of those accredited. Procedures have been adopted to ensure sign off by appropriate staff, so practical consideration needed to be given as to the seniority of those persons within a practice who should apply for accreditation.

Non-accredited individuals (irrespective of level of seniority) cannot be responsible for probate-related work, such as the administration of an estate, including preparation of tax returns and estate accounts, but they can undertake those duties under the supervision of an accredited person. Anyone accredited can act on behalf of the legal personal representatives, or be appointed as a professional executor, and charge a fee

Advantage of accountants

Where we are engaged in relation to ongoing tax and accounting compliance matters for clients, accountancy firms are well-placed to undertake estate administration as we have current knowledge of the client's sources of income and assets.

Where there is a business involved, we can assist in very practical ways such as providing interim management and advice. This is where I believe we can add the most value.

I have seen some criticism of accountants approaching probate work as a commodity and not truly understanding how technically difficult the process can be. The implication is that accountants, or those operating within accountancy firms, are likely to provide a substandard service when compared to lawyers. This is simply
not true.

While we're now able to offer a truly cradle to the grave suite of services to clients in a differentiating manner, the reality is that these services are only a small portion of what we do for clients in the areas of wills, trusts, executorships and general financial planning for families.

More importantly clients now have a choice of who to appoint. The safeguards put in place by the collaboration between the SRA and the ICAEW have resulted in a system that should give peace of mind, due to the stringent qualifying and approval process. The industry must recognise the impact this will have going forward.

Lynne Rowland is a private client tax partner at Kingston Smith