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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Original poster

to think that dividends included in the calculation for student loans

68 replies

ginplease83 · 10/08/2016 16:40

is actually quite basic.

Just had a £5k tax bill from the HMRC the week before I go on maternity leave (great). I draw dividends from my Ltd company as well as a small salary and my accountant has confessed that he didn't realise that you have to include dividend payments when you calculate how much student loan you need to repay.

I found out this from the student loan website- AIBU that the accountant is pretty stupid to not know this?

PS. I am not disputing i have to pay it. But i would have liked some notice!!!

OP posts:
panegyricS1 · 10/08/2016 20:56

I'd put in a formal complaint, making it clear that I expected the firm to pay the interest.

Then, in future, I'd find a better accountant or do it myself.

If you're struggling to find the money to pay the bill, call HMRC's debt management helpline. They can set up a plan for you.

Egosumquisum · 10/08/2016 20:58

This reply has been deleted

Message withdrawn at poster's request.

Chippednailvarnishing · 10/08/2016 20:59

If he's in practice, he theoretically should have insurance that will cover costs arising from his mistake.

SouthWestmom · 10/08/2016 21:03

I'm not getting this. Did you ask him to do the student loan deferment forms yourself? Or are you paying them, but just not enough?

BristolLFR · 10/08/2016 21:06

Are accountants regulated? I'd be making a complaint to the professional body if they have one. I'd ask them to stump up, or to check if they have any sort of liability insurance for wrong advice.

I got a similar tax bill when work cocked up the tax on a taxable benefit. HMRC will let you pay it off over 3 years if you ask nicely, but they don't tell you that unless you ask.

trilbydoll · 10/08/2016 21:07

I'd expect someone offering personal tax services to know what they were doing. I have never worked in personal tax, nor do I have ATT or CTA. Therefore I wouldn't offer to do personal tax returns because I'm very aware there's a lot I don't know.

Having said that, I did know student loan repayments are due on dividend income. I'll do your tax next year OP, I'm clearly one step ahead of your current advisor Grin

SouthWestmom · 10/08/2016 21:11

I did personal tax , I wouldn't factor in student loan repayments unless I was made aware of it. I'm not understanding the mechanics of what has happened.

Original poster
ginplease83 · 11/08/2016 00:12

He is the MD of the firm and he's a friend of the family which complicates matters.

Noeuf- he knew I had student loan owed but only calculated it on the basis of my salary not the dividends I've taken when my business actually and finally made a profit. He claims (despite that he has been an accountant for 30 years) he was not aware of that he needed to include dividends. I didn't know either, assumed he was doing what he knew- I'm a clinician not an accountant. Paid what he told me. The HMRC saw it, realised it was wrong and tore apart my tax records and have come to me with 3 years of bills.

Fair enough, I owe them £5k as I've had dividends to some degree over 3 years. I have no issues paying what I owe but I'd like to pay it at the right time and not have surprise scary tax letters. They've (HMRC) waived the interest. I'm going to ring them to find out whether I can pay in instalments tomorrow

OP posts:
SouthWestmom · 11/08/2016 22:38

Oh you poor thing. In that case fine, i'd be livid. I would always have either put a disclaimer to the effect that I had not considered student loans or I would look it all up and do it properly.
Hmrc have been helpful when we needed to make instalment payments.

Original poster
ginplease83 · 12/08/2016 00:04

That's good. I'll try them. I'm going to vote with my feet and go elsewhere. I'm checking through his figures for my husbands return too and am coming to a different figure. He never gives me his workings, is it acceptable to ask for them?

OP posts:
merrymouse · 12/08/2016 00:21

Is the interest just the normal interest accrued on a student loan or has there been an additional charge for late payment?

its a big bill to pay all at once, and you would have thought that questions on his self assessment software would have triggered him to sort this out earlier.

However, are you more out of pocket than you would have been if the correct procedure had been followed?

merrymouse · 12/08/2016 06:54

Cross post.

It wouldn't be unusual for him not to give you his workings, but if you need the figures to check you have been paying correct tax, he can't really refuse to give them to you.

I wonder how he thought the student loan scheme worked? It would be a pretty obvious tax dodge if you never had to pay back the money if you only received dividends - no accountant can know everything, but it's the kind of thing that should have thrown up questions and he should have checked.

topcat2014 · 12/08/2016 07:07

Anyone can call themselves an 'accountant' and offer services to the public.
A degree on it's own does not, in all honesty, make that person a qualified accountant.

You need to look for someone with a chartered qualification (of which there are a few types), and maybe even a separate tax qualification on top - although that is not as common.

Ask to see confirmation of the professional indemnity insurance.

However, at the end of the day it is the tax payers responsibility to ensure their return is correct. If I had a salary of £16k and £20k of dividends, for example, and my student loan repayments were only about £200 I would think, as a taxpayer, that was a bit low.

The only loan repayments made during the year are the PAYE ones. Payments due on other income would be declared and paid as part of the self assessment.

HereIAm20 · 12/08/2016 19:27

You are paying him to complete and advise on your tax affairs. If you have been fined or are going to have to borrow to pay any amounts due you will have suffered foreseeable financial loss which he should reimburse you as he has been negligent and in breach of his contract too. He should aldo reimburse you any fees he charged too. He may chose to do this personally rather than through his insurance as there id usually a large excess.

HereIAm20 · 12/08/2016 19:30

Excuse typos - stubby fingers on iphone!Grin

lashesandflashes · 12/08/2016 20:30

I'm a chartered accountant and yes he most definitely should have known that. That's why you pay him £400. I would ask for a rebate in light of his incompetence. If you get the mix of salary and dividend right you can minimise the repayment.

And yes to PP talking about proper qualifications. It's quite basic.

lalalalyra · 12/08/2016 21:11

I'd be double checking every calculation he'd made for you - what else did he not realise about that might come back and bite you on the arse?

PersianCatLady · 12/08/2016 21:26

Why would you not think that your income in whatever form was not relevant when calculating student loan repayments?

Also I am shocked that an accountant did not know this but I am confused that you say that he confessed this to you as therefore he must have found out about it?????

Original poster
ginplease83 · 12/08/2016 21:50

I have no idea why i assumed that. I took what he told me as red and paid what he asked me to and when he told me to. I'm NOT trying to dodge tax, I just like to keep my financial affairs in order and thought paying an accountant would do that.

He would have received the letter the same time I did. I opened it and was 'WTF?' and sent him a scanned copy. He then had to call his adviser (?!) to find out. However by then id googled it and found out that you did and did my own calculations. He then sheepishly emailed me that actually they had made a mistake and he was 'very very sorry'. I asked him how many other clients he had who were in my situation.

Lalalalyra- I have done and now I'm disputing what he's put on my DH's return. Its only £200 out but even so, I don't want any more scary HMRC letters.

I have today been engaging a new accountant who is a specialist in our industry. He seems to be a world apart.

OP posts:
PersianCatLady · 12/08/2016 22:02

I have today been engaging a new accountant who is a specialist in our industry. He seems to be a world apart
It sounds like you have taken steps towards putting things right.

Maybe the previous accountant had been in the business for a long time and hadn't kept up with some of the more (not so) recent developments?

Original poster
ginplease83 · 12/08/2016 22:28

Its amazing, the quality of the letter I received after our discussion was so different and he's the same price. Though Id pay more to have a better service- his team are useless at responding to emails.

Now I've got to work out how to tell my accountant that I'm leaving- he's a family friend but my DM isn't bothered.

OP posts:
PersianCatLady · 12/08/2016 23:04

how to tell my accountant that I'm leaving
To be honest seeing as he wasn't doing the job you were paying him for properly I am surprised you feel so bad about leaving him.

Original poster
ginplease83 · 13/08/2016 01:11

Part of me wants to ring him up and have a bloody big go at him (35 weeks pregnant and raging hormones) this isn't the first mistake he's made but it's definitely the biggest by far. However I won't. He's a friend of my dad who passed away earlier this year (I've had a sucker of a year) so i don't want to make it awkward for anyone.

OP posts:
lalalalyra · 13/08/2016 01:43

You're not making it awkward for anyone. The man who failed in his job and landed you with an expected 5k bill made it awkward.

If he was a decent sort he'd be telling you about insurance or the likes that he has that would fix this for you.

panegyricS1 · 13/08/2016 18:15

He should be grovelling. He's rubbish!