Looking After Older Clients

Looking After Older Clients

With the news that AIB are going cashless in many branches it got me thinking about how we look after clients. My view is that what AIB are doing is a backward step. Going digital makes sense but not at a cost to customers who need cash services and will go elsewhere to get them. And if they go, they won’t be back to take out loans, mortgages, pensions, or other services. They will get them from the other bank up the road. In our business we use technology and must move with the times. The main purpose of that is to help our clients have the best customer service. Make it easy for them to do business with us but the personal element is vital. We had a call from a prospect, and we will look at

• Initial meeting
• Look closer
• Issues
• What we fix
• Summary

Initial meeting

Brian Young contacted our office manager Deirdre. She is the lady that is the first point of contact with the business and is always there to help. She set up a meeting that Brian was happy to pay for. We charge for an initial meeting as it will take an hour or more of our time and we can give as much advice as possible. We are trying to understand the issues and see where we can help. For Brian, he is coming into an office where he doesn’t know anyone. There is a getting to know you element for him too.

Brian is 75 and married to Betty who is 74. They don’t have a child and the damn thing gone wild! His sources of income are

Betty has two sources of income

Brian felt he was paying too much tax on his pensions but didn’t know why so he wanted us to have a look. He brought his last payslip from his employer pension. He was paying a lot of tax on that but that didn’t tell us the full story. We needed to take a closer look.

Closer Look

To take a closer look we had to set Brian up as a client on ROS. We completed the agent link form and got access to his tax records within a couple of days. What we get to see is all his tax details for the last 4 years and what way his taxes are set up for 2022. From 2018 to 2021 we can see all his incomes, except the UK pensions. We can also see what tax he has paid on the employment pensions and the ones from Irish Life

He wouldn’t pay tax on his state pension, but Revenue collect tax on this by allocating tax credits to it. For example

We couldn’t see any income for Betty which didn’t tie in with what Brian told us

Issues for older clients

The two main findings were

1. Brian was paying tax as a single person, so tax credits and rate band were that of a single person
2. The pension that Betty was getting wasn’t a state pension in her name. It was an increase for a qualified adult. Brian was paying tax on that.

Brian’s state pension increases by the amount of Betty’s pension. Revenue allocated credits to cover the taxes on that. Brian’s credits for 2022 as a single person are

His lower rate band is €36800. His total pensions to include the increase for Betty and excluding the UK one is about €45000. As a married person, his tax credits should be

His lower rate band, as a married person, should be €45,800. You will see that his tax credits were €1945 lower than they should be. Plus, his tax rate band was €9000 lower than it should be. On his income above €36000 he was paying tax at 40% but should only pay 40% once his income goes over €45800. This is a loss of €1800. The total loss is

This is only for 2022 and we looked back to see if what is happening now is what happened in the last few years. We looked at the numbers for 2018 to 2021. Brian had overpaid taxes by €11000 which is an average of €2750 for each year. In all the 4 previous tax years he paid tax as a single person.

What we fix for older clients

We do a proposal for Brian and Betty to fix the two things we can

1. Taxes for the current year
2. Tax refunds for the tax year 2018 to 2021

They accept our proposal, and we get to work. By sorting out the taxes for this year it will mean that Brian and Betty are paying the correct amount of tax. They will save about €3700 but will be set up right going forward for 2023 and future tax years too. Once they are set up right there should be no need to file tax returns in the future.

We will file tax returns for the last 4 years. Under the four years rule, you can’t go back any further. Once we file the tax returns they will get their tax refunds of €11000. We will return all their income including the UK pensions. But we can also claim for costs, like medical expenses, if they haven’t claimed them before.

Once we have done that, they will no longer need us, and we will stop being their tax agent.

Summary

While there will be a happy outcome for Brian and Betty, it is not always the case. People can owe tax and not realise it too. The main thing is that the client pays what they owe, but no more. The important thing is that the client is looked after. When providing a personal service, we are happy to meet the client. And provide all the services that the client needs. The client must play their part too and having an e-mail is a start. Older clients are very trusting and want that personal service. They want to know that we have their back and are there for them through good times and bad. If we don’t, they’ll go to the other accountants up the road!

Unsure about your taxes and need help? If so, Start here

“You can live to be a hundred if you give up all things that make you want to live to be a hundred”  Woody Allen