dela

A few years ago I was an IT contractor, and honestly ran the company as straight as a straight thing - no dodgy expenses etc.

Since I closed the company in 2002 I have had the Inland Rev. after me for both underpaid Corporation Tax and Income tax. To a total of £10k....
Money I haven't got and if I had I would rather buy a nice scoob....

Given that I went through one of these accountancies who do everything for you (company secretary, books, tax returns etc.) - what are my chances of busting the accountant for getting his sums wrong?

Anyone got experience of this?

cheers,
dela

DAVE-W

My parents are now going through exactly the same.

The accountant now has two weeks to sort the mess out (time set by us) or we go legal (and i kneecap the **** one dark evening)

What on earth do we pay "Professional" accountants for?

We will also be informing the company's professional body of their incompetence.

Dave

Spoon

Certainly haven't got any direct experience of that scenario but if you paid an accountant to do your work then at the very least you want to know the calculations to warrant the IR pursuing you.

Are you saying you think the figures are wrong or is it just wishful thinking?

If your accountants figures are correct then it's a no brainer, pay up or have the IR follow your every move till you croak it I'm afraid.

ProperCharlie

Yes, but IT contractors were (in the view of the IR) exploiting a loophole in tax legislation by setting up as limited companies rather than work as direct employees. It may turn out that the company concerned did their end of things according to the letter of the law, but the IR decided at some stage that these arrangements aren't accpetable.

Nicci

Sadly at the end of last year my other half had the inland revenue chasing him 5 years after paying an accountant.

Turned out the account never paid the inland revenue, so my other half had to pay what was due plus interest (even though he has paid the tax already).

He had to sell his car and take out a loan to cover the unexpected cost.

The Inland revenue have now traced the accountant and are going to try to reclaim their money, which will be paid back to the accountants customers (sadly a few were ripped off).
I think it will be a miracle if the money is returned.

Just be prepared for the worse and hope that it doesn't arrive.

Good luck.

harvey

iTrader: (48)

Taking action against an incompetant, corrupt or dishonest accountant is not easy. I am sure that the small minority that fall into this category take great comfort in that knowledge. Unless you have the stomach for a long and difficult journey which will take far longer and more effort than you can imagine, then you are probably wasting your time.
The starting point would be to get in touch with the particular accountants professional body. Any other accountant should be able to verify that for you.
What do you want to achieve?
Nail the accountant? For what?
Reduce your current problems with the revenue?

Unless you are determined, you may be best to look for another competant accountant, to do his best for you with the Revenue. He would also have an overview on the past performance of your previous accountant. Selecting the right man for the job is the key to sorting it in the best possible way for you.
Lots of guys will tell you they have a good accountant but you really do need a good guy on side for you without another bad experience so he needs to be a specialist in your type of business and dealing with this sort of thing so be very careful when others make personal recommendations.

Harry_Boy

Is he a qualified accountant, or an 'accounting service' ie a book-keeper? If the former, then make a complaint to his professional association. They will be obliged to investigate and if appropriate pursue the complaint.

dela

thanks for the input guys..

They are a proper accountancy company, so a complaint to the governing body is probably a good start.

I've seen a few ambulance chasing companies about that will take on professional negligence cases - but I'm loathed to deal with those sort of people as much as I am the revenue.

Revenue are getting quite shirty now - though it might be worth asking if they will hold off while I get another accountant involved.

DAVE-W

it's a hell of a long story but they have actually admitted that the reason for the IR problem is that they "pressed the wrong button" when doin their calcs for a particular year

tw@ts..... one in particular is definately havin it

Dunk

iTrader: (1)

Write to the senior partner at the firm & outline your issues, what action you want taken & apply deadlines. If they fail again, threaten to refer them to their Institute & again define what you want by when. Then let 'em have it.

D

TurboKitty

Were you working as an employee of your own limited company at the time?

ProperCharlie

Long time no see, TK.

dela

Yup - I was sole employee of my own company

Diablo

dela - are they chasing you personally or the company?

dela

the company was closed about a year ago - so they are coming after me directly.

Diablo

On what basis?

TurboKitty

But was it a *Limited* company?

As far as I can see, the income tax is a personal liability but the Corporation Tax is a company liability. I could be wrong on this though because the rules can get confusing.

If it was a Limited company and the company has since been wound up, I'm not convinced they have grounds to chase you for the corporation tax.

Diablo

Thats where I'm heading, but need more info from dela

Diablo

TK, for it to be corporation tax it would have to be a limited company.

SPEN555

Hold fire before going after the Accountant, the Inland Revenue could have made a right ar$e of it as they can be good at that at times.

You say you were an IT contractor. Reading between the lines here, you didn't set up a company which had your fees paid to it did you and then you and take your income by dividend? They brought out legislation a few year ago on this to stamp it out. You may have fallen fowl of this on the last year of the company in 2002. The accountant should have made you aware of this at the time though.

Damian.

Harry_Boy

Known as IR35. Only applies if you were solely contracted to a single client/customer. The revision was designed to stop ppl setting up limited companies as a vehicle to avoid personal income tax in circumstances where they only deal with one client. Does not apply to consultants dealing with several clients.

If the company ceased trading some time ago, then it would still be liable for corp tax incurred & outstanding for the period when still trading. Unlikely that it would have been wound up without signing off final tax liabiliites.

Sprint Chief

Careful! This is not the full story. You can still be caught under IR35 with multiple clients, and you can be outside it with one client. Furthermore you can be caught for some of your clients and not for others! It is a hideous piece of legislation.

Also if it is an IR35 case then you may find your accountant is not liable, unless s/he declared the company wasn't caught - but most accountants will not go this far.

Harry_Boy

True - the rules are very much 'open to interpretation'. My previous post was very much a generalisation.

Taken from the official "IR35" definition:-

The purpose of the rule is to remove opportunities for the avoidance of tax and Class 1 National Insurance Contributions (NICs) by the use of intermediaries, such as service companies or partnerships, in circumstances where an individual worker would otherwise be an employee of the client or the income would be income from an office held by the worker.

Sprint Chief

IR35 and the legislation surrounding it is a nightmare - I've spent a frightening amount of time understanding what I can about the legislation, negotiating contracts carefully with clients and then getting them checked by a third party employment law expert!

Of course the worst thing is that IR35 is a form of corporation tax so can be chased up to six years after the work took place - yet is based on a personal taxation calculation - it is sad that a labour government has put in place legislation that shifts the risk and cost of "disguised" employment from the large corporations to the small freelancer.

Edited to add, sorry deviating the thread here, back to the original question ---=>

I guess one of the problems of being post closure of the company is that any tax investigation insurance will have now lapsed - the cost of dealing with these things really can mount up

You could try posting up a question on AccountingWeb, (.co.uk not .com!) you will need to register but I find they are very helpful.

dela

It was a Ltd company.

They came after the Corp. Tax as the company was winding up, a year ago. So I had to pay that 5k back then.

A year later, they have come back for income tax. The legislation you talk about Damian is IR35, and during this time I stopped paying dividends and moved over to salary, like a good boy.

The reason I believe the accountant is negligent is that whilst trying to sort out the Corporation Tax liability issue last year, he juggled things about and called some income dividends. Hence a year on they are banging on about unpaid income tax on dividends, that weren't actually taken as such.

What a mess.