Accountant says I owe £2,200 ‘ASAP’

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I’ve had my accountant for the past couple of years. Over the past year there’s been a few issues which I’ve had to flag up - letters from HMRC saying my business owes X, or him saying a refund for £1500 he said I was getting I’m now not (which I’m the end I did get as I challenged it with him).

He said he’d do my OH’s self-assessment as he’s a shareholder in my business at no extra cost. OH has two jobs, which accountant knew, one being a permanent contract and one being 0 hours.

Last week OH received a letter from HMRC saying he owed over £4k!!!!!! 😳

Emailed info to accountant who said he didn’t owe that but did owe £2,200, and it needed to be paid ASAP!?
He said he didn’t get the P60 for one of the jobs, so didn’t include it in the accounts for that year. He didn’t ask for it, and I didn’t know he needed it as he did ask for one but not the other!?

I don’t know if I’m BU, but surely if I pay my accountant to do my accounts he should get it right, and if he doesn’t there should be some liability on his part?
I pay him as I’m not an accountant and he is supposed to be the expert!

Plus we’re now expected to find £2,200 to pay HMRC ‘ASAP’ because of the accountants error.

As a small business this is a huge chunk of money to just find, and that is why I pay my accountant, to take the stresses away from me regarding tax/HMRC etc. His attitude is just ‘Yeah, you need to pay this asap’ which is also annoying me!

Company A he earned £7,379.78.
Company B he earned £35,629.
He also took £9,200 in dividends that year, but £5,000 was tax free.

Hi OP, I'd consider changing accountants to someone who better appreciates your circumstances and limited knowledge of accounting. To me it doesn't sound like this one has done much wrong but if you need a bit more (for want of a better phrase) handholding then find someone who will do this.

I started my business 4 years ago and I honestly have no clue about this stuff

This is concerning OP. If you are running a ltd company of course it's possible to struggle along with little to no knowledge of accounting and business accounts but it's really not advisable. You will continue to run into situations like this if you don't keep an eye on your business yourself. I'm sure you could learn the basics in a few months during your spare time. Good luck.

It's a difficult one, as it looks like he mixed them up somehow and you could complain about that, but at the end of the day, your OH knows that he has two jobs, he knows that he has to check the form before signing. He should have picked up that only one job was on the form.

he is responsible, you can't just blame the accountant for everything. Your OH should have picked it up, as he should have been expecting to see two jobs. If he wasn't sure what he was looking at, or that the figures were mixed up, he should have queried it.

Your OH does need to accept some responsibility here for not checking it correctly.

You ask the accountant to complete the form and ensure that everything is given the correct tax treatment, but it is up to you to check that it is all on there.

Like I said, my accounts have never been an issue, it's OH's self-assessment where things go wrong and we get letters from HMRC.

OH also paid tax on his two jobs when he got paid monthly.

Going by those figures, on the surface it looks like he has gone into the higher rate tax bracket and so would have paid a higher tax rate on the remaining income over his personal allowance and lower tax rate.

Your accountant should be able to explain it all though and give you a copy of the tax calculation which shows the breakdown

Yes, I ask for all forms of income to include P60's from ALL employment

I don't see how anyone can plead ignorance after providing 1 P60 but not the other

bob, you undermine your own assertion on the second point by what you say in the first one. The OP WAS genuinely ignorant of the P60 requirement partly because the accountant failed to ask for them all.

Agree with Bobs, he's gone into the higher rate tax bracket there.

OP - I pay the same as you and in addition my accountant runs payroll. He is a Chartered accountant and seems to be much more diligent and proactive than yours.

Your accountant was dilatory.
But your were naive (at best).

I employed an account when I was self employed. He told me I didn’t have to make student loan repayments as I was self employed. I just took him at his word.... turns out he was wrong and I got a fat bill off HMRC with a 3 month deadline to pay after which point court proceedings would begin.
I complained to him. He was like “whoops sorry”. Might as well have said “my bad”.
I had the money to pay but have always done my own self assessment since.
I don’t think you have any recourse.

@familycourtq yeah course you check anything before it is submitted on your behalf. Legal, tax, whatever. You may come a cropper if you don't.

Firstly, unfortunately the tax liability does fall on your DP as it would have been due if tax return was completed properly in the first place.

Ordinarily an accountant would ask for specific pieces of information he or she knows will be included in a tax return (so if there had been two P60s last year, we'd ask for the same again) and would also ask for any other information which might be relevant to the tax return. We aren't mind readers (though many days I wish I was!) so if there's something new, we're not going to know about it unless you've told us.

So, if there was no reason to suspect the accountant shouldn't have realised there was a P60 missing, or he failed to request the right information, I would argue that he should reimburse you for any interest or penalties your DP has incurred at the very least. He (or you) can call HMRC and request further time to pay if it's going to make it difficult for you. In the circumstances I would suggest the accountant calls HMRC as he can then admit any responsibility on his part and see if that mitigates the liability at all.

I think your relationship with the accountant is probably at an end and would suggest you try and find someone new. Take recommendations if you can from friends/colleagues, etc.

It is certainly not an argument that HMRC would accept if it came to court. "I didn't realise that I had to hand over all my P60's because my accountant didn't ask for the second one". Ignorance is no excuse in their book.

The tax is owed correctly, it just wasn't picked up at the time, so the accountant is not liable for the tax owed, just the fact that it wasn't reported accurately (if indeed they are liable).

If you want to complain OP, then put it in writing to the accountant, you could ask them to pay any interest or fines that you may have incurred.

For all those saying the accountant should ask for everything, what happens if you have done something in the year that they don't know about how can they ask for it specifically?

What normally happens is that an accountant will ask for details of things included on the previous year's tax return and then ask if there has been any additional sources of income in the year eg new job, new dividends, capital disposal.

Maybe in the letter it should have been spelt out that the 2 P60s would be required if had both jobs in the previous year, but if that hadn't been specified clearly I would still expect an individual to work out that if one P60 is required all P60s for that year would be required as you need to include all taxable income on your return and employment income is taxable income. That really isn't rocket science.

Also your OH as the taxpayer needs to review and sign the tax return, it is his responsibility that everything is included. The 2 employments would be shown in the tax return, so why didn't he query that there was only 1, before approving it. Lesson learnt in that you don't just sign something without looking at it.

so he can't be expected to remember every detail of your and your OH's affairs

Er, yeah, he can.

But as he doesn't, I hope you sack him as soon as this mess is sorted OP, & get some seriously good recommendations to a professional who understands his role better.

So you asked an accountant to file a self assessment for your dh taxable income but you didn't provide the full income details. He did the job based on what you supplied, this is on you.

How come he took £5k tax free dividends given its 2k that plus the extra earnings is where it comes from

Does he pay tax on his other earnings as surely him getting dividends if he does get taxed is just a hassle and probably seen as HMRC as a way of you getting more tax free money

Anyway it’s immaterial if the accountant should have done better you signed the forms and it’s your tax that is owed because he went into a higher tax bracket

I think you need to get learning quickly about how it works

Agree with pp, as a business owner you need to educate yourself a bit more. It really needn’t take that long but it’s worrying that you admit to knowing very little about the finances and tax.

The accountant may not be great, and tbh now this has occurred you’re best off finding a new one. But it does sound as though your dh has been remiss in just ‘not realising’ that he was paying a lot less tax than he should have been. And I don’t get why he would realise the importance of one p60 but not the other

I think you need a new accountant.

I think you need to get learning quickly about how it works

Agreed, but having an accountant who will be more pro-acive in protecting OP's interests is also imperative.

If this were mine, he would have remined me about the P60's - along the lines of "you did a P60 last year, so where is this one?"
Part of their remit is to ensure - no matter how idiotic it might make the client feel - that client is not screwing up through ignorance.
Mine is not afraid to atek me through the basics time & time again to amke sure nothing is missed.

The fact that I am liable should the calculation be wrong is neither here nor there. I would be - but he makes sure I don't feck up.
As the client, I'm allowed to forget/not know about a routine file submission. As the professional, he would be appalled at himself if he failed to check.

How come he took £5k tax free dividends given its 2k

It was £5k tax free in the tax year being discussed,

quartz2208, the tax free dividend allowance in 17/18 was £5K, it was reduced to £2K after that

How does he owe over £2000 of tax on under £8000 of earnings?

It is certainly not an argument that HMRC would accept if it came to court…Ignorance is no excuse in their book.

Which is why when someone pays an accountant, they should be able to expect the accountant to anticipate and know about all the info.

Have you engaged this accountant as an agent or a principal? I will assume the former, as principal engagements are relatively rare.

Agents do not have responsibility for the tax returns - the responsibility rests solely with the person who signs it and HMRC expects that the signatory (i.e. DH) has checked it and is happy that it is correct.

It would seem your DH missed the fact that a large chunk of his income was not included in the return.

A good accountant should be able to anticipate what information is needed based on prior years, so you would not be unreasonable to engage a new accountant, but as agents it is not their responsibility to ensure the information is complete and correct.