Accountant says I owe £2,200 ‘ASAP’

[peakyblinderoriginal]

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!

OH's dividend that year was £9,200, but £5k of that was tax-free, so I think he only paid £315 in tax for that.

If his wages were £43k, the £9k dividend would push him into higher rate tax bracket, so the tax on some of the dividend would be 32.5% not 7.5%.

Most accountants are able to pre populate their client's tax returns now with data held by HMRC on pensions and employment income. It is possible that the information downloaded from HMRC was incorrect.

HMRC's system is pretty poor. Of all the tax returns I've done this year so far, only a handful have had all the expected information come through from the HMRC system. They're veeerrrry slow to update their systems and feed through the data. So, basically, we hardly ever bother using it other than to check whatever is on there matches what the client has given us. There's also lots of things it will never show, so we are more or less fully reliant on what the client tells/gives us.

If I was to instruct a good accountant to do what I need, how much should I be paying?

Define "good". What's important for you? Speed? Advice? Cost? Qualifications? Do you want online or face to face?

You could get an excellent "one man band" qualified ACA/ACCA accountant for that amount or even less, but some people don't like one man bands because you don't get an immediate response if they're off ill, on holiday or on a course.

You could pay double for an online firm where you get almost immediate answers to questions etc but where you'll be just one of hundreds of clients on a conveyor belt system, usually dealt with by an unqualified call centre style of worker.

Like absolutely any service provider, you have a wide choice and like dating, you may have to kiss a few frogs before you find your price, i.e. the accountant/firm that fits your needs best.

Kazzyhoward - I'm happy to do it online, don't need to meet them, and qualifications aren't that important as long as they can do the job.

I just want someone I trust, someone that will let me know a couple of months in advance what I need to pay in corporation tax and self-assessment, and who might come back on email queries after a few days.

I'm not that demanding, my invoices are low volume/high value (maybe 2-4 per month) and I do all the online reconciliations myself.

In terms of fees, how long is a piece of string? A CTA qualified friend is charged out by her firm at £650 per hour!

@Usernumber whatever it is

Not a joke nor am I dim. If you read the OP properly you will see that the accountant only gave the OP the money he'd said she was initially entitled too after she challenged him. That tells me he was going to keep it for himself. Ergo, a crook.

Why do you need to pay it ASAP?

Self employed/self assessment tax is paid in January and July so unless it was for the tax year ended April 2018 (in which case I'm guessing you also missed the filing deadline?) But if it was for the tax year ended April 2019 no self assessment tax is due until January 2020.

If your DH also has a second job where he pays tax through payroll he has the option to have his tax code adjusted and repay it that way over time.

Your dh was charged 7.5% tax on his taxable dividends, but this was based on his taxable earnings being below the standard rate of tax of £33 500 for the year.

I would expect that his allowances are offset against his first job and he pays BR (basic rate) on the second.

On the combined income of £43,008 he had personal allowances of £11 500 meaning he should have paid tax on £31508 @ 20% circa £6,300.

His tax on his dividend income was under calculated as £2,200 of this should have been at 32.5%. He therefore owes an underpayment of 25% on £2,200 ie £550.
Is that what has happened? The £4,000 and the £2 200 being the GROSS income?

Sunshine it is standard practice to ask clients if they would like to take a refund of tax and then make a larger payment on account a few months later, or if they wish HMRC to offset the overpayment against the next payment due. There is absolutely nothing dodgy about that. Refunds are usually paid straight into the client's own bank account rather that into a client account held by the firm of accountants as the area is so tightly regulated.

Frangi it was the 2017/18 tax return with incorrect employment pages which have just caught up with them.

Do you happen to know any of his other clients, Peaky? I do wonder if the male clients get a rather better level of service

Do you happen to know any of his other clients, Peaky? I do wonder if the male clients get a rather better level of service hmm

The "client" in question is the hubbie, so is a male client!

Personally, I think some of the problem is that the hubbie isn't dealing directly with the accountant which in my opinion, as an accountant, can be a problem due to poor communication etc. I never work like that. I always insist on dealing directly with each spouse, even to the extent of never posting husband and wife tax returns in the same envelope. Some clients think it's a pain, but that's tough! I really don't want to be communicating via an intermediary, even if it is husband and wife. When a H&W want to form a joint company, where one is the main earner and the other is passive just to share the income etc., I still insist on meeting/talking to the other before I take them on as a client just to make sure both clients know the score re tax and other obligations/responsibilities.

Kazzyhoward - do you want to be my new accountant????

Senua Actually, our engagement letters effectively give us the right to ask for anything and everything from our clients. How on earth do you think we can do our job without it?
The OP wrote "I don't know what [the 'accountant'] can and can't get (well I do now) so only sent him what he asked for." To me that reads that the OP expects the 'accountant' to discover the missing numbers, that the information will somehow magically transmit from the employer to the employee's OH's tax adviser.
Of course the information (the whole information) has to come from the client!!

I don't understand how you thought he'd be able to calculate the tax correctly if you hadn't told him about all the income. Or why you're flying off the handle as if it's his fault you held back info.

It sounds like a lot of this is you misunderstanding the tax system/what you're being told, eg the netting off repayments point a pp explained. You also sound a little bit aggressive about it all which maybe doesn't make it so easy for your accountants to explain things to you. And if you're kicking off to them like you have here you probably aren't taking it in anyway.

My accountant isn't the best but he does give me a list of exactly what he needs whether I know he needs it or not. It means nothing is missed

Have you verified the underpayment as being the difference of 25% tax on £2,200 dividend due to your dh having used £31,500 of £33,500 standard rate allowance against earned income.

From your posts I think the underpayment is £550, 25% of £2,200.

@senua actually it does. If we are authorised as the agent for a client, then the information does come magically to us. Thank you HMRC for this fabulous feature 😍. It's made my life a lot easier 👍

I don't think you can collect an underpayment of tax through your tax code if the amount owed exceeds £1.000.

minibroncs - how am I ‘kicking off’ or being ‘aggressive’?! I think as others have said, a lot of accountants have a list to give their clients so things don’t get missed.

Gobsmacked at those saying There accountant is not to blame.

Legally OPs husband is responsible, but what’s the point of hiring a professional if you know everything you need to submit and have all the correct info in order!? What is he doing for his fee if not explaining what HMRC requires and keeping them proactively informed of what they owe!?

*the accountant

I'm confused - has the non declaration of the second earnings created a tax liability that shouldn't exist and is so surely it can be corrected? Or did the liability always exist but it was a surprise to OP?

it was the 2017/18 tax return with incorrect employment pages which have just caught up with them.

Ah ok - thanks @Hoghgyni !!

Agree with @BlueMoonRising he’s an accountant not psychic. He’d have asked for the P60. That means all of them! YRBVVVU.