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Useless accountants - what to do?

14 replies

oncebitten33 · 21/11/2019 13:40

I set up a small business a while back. Took on a firm of accountants to do my self-assessment tax return for me, as I assumed that would then be straightforward. They basically don't seem to know what they're doing at all, but they won't admit it. There are issues with my last tax return, which I have raised, and they have now refused to do my next tax return on the basis that I don't trust them.
The main issue is a particular tax relief. They don't seem to have any idea how it works in the context of my business. They have given me completely contradictory advice, several times. They simply ignored the relief when they entered the tax return, which has probably resulted in a fairly significant loss to me, despite my highlighting the existence of the relief to them. They are now going back and forth as to what, if anything to do about that. They clearly have no idea what they are doing. I worry that if they submit a correction, that will be wrong too, which could cause problems. And I need to sort out my next return very soon, on my own or with a new accountant.
They've now offered to refund their charge for the last tax return. But that still leaves me with the likelihood that I have lost out financially by the tax relief not having been made use of. I don't know how much the loss is, because they don't know how to work it out. I'm also reluctant to spend a lot of time and money trying to go over the whole thing with another accountant, which would be expensive and might not result in a definite answer.
They've also been chaotic and dodgy about costs. For example, when I originally asked them for a quote for next year's tax return, they tried to get me to agree to pay them whatever they wanted to charge me - without giving any indication of what the cost would be. They weren't even prepared to provide an hourly rate. They kept pressurising me to sign a letter authorising them to do the work, without including any information about costs. I refused.
What would you do?

OP posts:
user1497207191 · 21/11/2019 14:51

Were they qualified and regulated by a professional body? If so, you can complain to their regulatory body to try to get your fees back and highlight their inadequacies. Not being clear with fee structure is a definite breach of the rules of most, if not all, of the main professional bodies.

But, that doesn't solve your immediate problem of correcting last year's tax return already submitted (wrongly) and doing the current one due shortly. For that, you need to engage a new accountant. The main accountancy bodies have online registers of members which you can search to find a local one. Talk to 3 or so, tell them your true situation, tell them what relief you're wanting to claim, ask for quotes re cost, and choose the one who gives you most confidence.

Unless you have a definite trusted recommendation from someone you know and trust, then don't just randomly pick an unqualified/unregulated accountant or you risk the same happening again.

You shouldn't have lost anything as last year's return (17/18) can be amended by 31/1/20, so enough time for someone who knows what they're doing to amend it to put you back in the position you should be in.

oncebitten33 · 21/11/2019 17:17

My business is so small that the tax relief complication means accountants don't want the work. Am having trouble finding anyone, and may have to do the next return myself.
When I told them in person I was concerned that they had ignored several requests for either a fixed fee or an hourly rate, they said that they operated on the basis of trust!
I think they're registered.

OP posts:
Underhiseye2 · 21/11/2019 19:07

How much did they charge you?

Which tax relief are we talking about?

I'm wondering if you can diy

oncebitten33 · 21/11/2019 22:18

Rent a room. I have people staying, and teach them English. The question is how much to apportion to rent a room. The total figure was only a few £Ks.

OP posts:
JosephArmagh · 21/11/2019 23:22

I’m an accountant in practice and I specialise in tax. (And I am not looking for this work).

Rent a room is a very easy relief to claim and I struggle to see how any qualified accountant can get it wrong.

Rent a room lets you earn up to a threshold of £7,500 per year tax-free from letting out furnished accommodation in your home. This is halved if you share the income with your partner or someone else.

The tax exemption is automatic if you earn less than the threshold. This means you don’t need to do anything.

The relief is against the income received gross. No costs can be deducted from it.

Full guidance can be read online here: www.gov.uk/government/publications/rent-a-room-for-traders-hs223-self-assessment-helpsheet

As a previous post has said, you can repair last years return until 31/01/20, so you’ve lost nothing as you know this situation exists and know it can be solved so the decision to act is entirely with you.

I would expect to pay between £275 - £350 plus vat for your SAR from a regulated practice. This means to correct last years and do this years you’re looking at £550 - £700 plus vat. In my experience this is what stops most people using an accountant.

Please remember however, you are not really paying for the 2-3 hours the work takes, you’re paying for the 25 years experience a tax partner has and the constant learning and exams every 2-3 years.

Whatever you do, hope you get everything sorted.

oncebitten33 · 22/11/2019 00:15

Thank you. The problem is that the guests stay, so there is an accommodation element, but also eat meals, have English lessons, are taken out, etc.

OP posts:
JosephArmagh · 22/11/2019 07:36

Read the guide; you’re over complicating it. £7500 of income is tax free. Over £7500 it’s taxable. That’s it. How it’s split is not relevant, it’s all income arising from the letting of your house. (This is why the firm is abandoning you, they don’t want to fight with you and you’re taking their silence as they don’t know what they are doing. I’m a grumpy old git and would tell you what you’re saying is irrelevant and that you are over complicating something very easy)

Underhiseye2 · 22/11/2019 08:02

Another tax accountant here and I agree.

user1497207191 · 22/11/2019 16:06

I think they're registered.

What does that even mean? Registered with whom? HMRC or a professional body? If they're qualified/registered, that should be clear, i.e. ABC Limited, Chartered Accountants, or Fred Smith & Co., chartered tax advisor. If it says Bloggs & Co accountants - they're almost certainly not fully qualified nor regulated by one of the main "chartered" regulatory bodies.

JosephArmagh · 22/11/2019 16:55

Hi user1497207191

That’s not strictly correct.

The top 4 firms of accountants in the world are regulated by a number of bodies but do not state in their names who these are.

You will find it at the base in their letterhead, however a complaint is - from the facts given - without basis.

The OP has lost nothing even if they do not believe what the accountant has done is correct because they have been offered a refund and can correct the return (if it’s incorrect) without loss to them.

user1497207191 · 22/11/2019 17:08

The top 4 firms of accountants in the world are regulated by a number of bodies but do not state in their names who these are.

I really don't think the OP was using a top 4 firm.

JosephArmagh · 22/11/2019 23:16

user1497207191 I think you’ve deliberately missed the point.

The regulator name is not automatically included in the firm name.

My firm is a local high street firm and we do not include the regulator in our name.

It’s at the bottom of our letterhead and it’s on the website in the about us stuff, but we don’t sing and dance about it.

Oncebitten33 · 23/11/2019 10:26

I have researched Rent a room relief, and am very confused, as are the accountants. I don't think rent a room can be used against fees for English lessons, just because the student is staying in your house?! But maybe things like meals can be included in it?

OP posts:
user1497207191 · 23/11/2019 15:32

I don't think rent a room can be used against fees for English lessons, just because the student is staying in your house?! But maybe things like meals can be included in it?

Meals, cleaning and similar services - yes, tuition no.

www.gov.uk/government/publications/rent-a-room-for-traders-hs223-self-assessment-helpsheet/hs223-rent-a-room-scheme-2019

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