Breaking the rules - How do people get away with it.

**Clare@InTouch** · 9 July 2014, 17:52

The accountant says "meh, you signed the accounts and tax return, you're legally responsible, you signed our terms, your problem" - if they are morally defunct enough to offer that type of advice they're unlikely to be there for you when it goes wrong!

This is why it's important not to just take what your accountant tells you as gospel. Question then, and make sure you're happy with the advice.

You're the one who will face HMRC, although you may have recourse to a professional body or Court if the accountant was negligent.

**eek** · 9 July 2014, 18:09

Originally posted by Tomo1971 View Post

After having a scare (well, actually still going through it to an extent) over an EBT I went Ltd in 2010 and said, bar any honest mistakes, Im gonna stick to the straight and narrow where the business accounting is concerned.

After speaking to several other contractors who work in the same sector as me, seems their accountants tell them all sorts of weird and wonderful ways of saving money.

* Buy a laptop every couple of months, sell it on eBay, pocket the money and say it was damaged at work (as we work outside in all sorts of weathers and with lots of other careless people, this could be feasible)
* Put absolutely every receipt through the business.... One put his family flights to Egypt through the business

How can accountants condone this and what happens if someone gets investigated?

Paging NLUK for his examples as he has a humdinger where I think every expense including all household food went through the company..

**TheCyclingProgrammer** · 9 July 2014, 18:14

Originally posted by Tomo1971 View Post

* Buy a laptop every couple of months, sell it on eBay, pocket the money and say it was damaged at work (as we work outside in all sorts of weathers and with lots of other careless people, this could be feasible)

Maybe its because I'm tired but I'm struggling to see how this benefits anybody...

* Put absolutely every receipt through the business.... One put his family flights to Egypt through the business

You get away with it until you have a random compliance check, at which point HMRC discover either a) your company has been getting corporation tax relief on things that aren't wholly and exclusively for the business or b) your company has been providing BIKs without paying the appropriate tax/NIC or c) both of the above. And then they bend you over.

This is why its important to have a good grasp of the rules yourself. You'd be amazed at how often people turn up on here who have been claiming things they shouldn't with the excuse "but my accountant said it was OK".

Of course, the reality is that many people will get away with stuff like this. HMRC simply don't have the resources to review every single tax return they receive. They will pick some to investigate based on risk analysis and I think they also pick random batches for checks too. That's the best they can do. Its a lot easier for them to target things like mass avoidance schemes as they can normally target many people in one fell swoop and the recovered tax is likely to make it more worthwhile.

**Tomo1971** · 9 July 2014, 18:18

Originally posted by TheCyclingProgrammer View Post

Maybe its because I'm tired but I'm struggling to see how this benefits anybody...

Thinking about it, me too.

Unless it could be bought really cheap and sold 'as new' at a price difference better than the tax saving?

**BrilloPad** · 9 July 2014, 18:20

I worked with someone whose accountant insisted his company pay him £10k as a finders fee for the contract. They were the only accountants doing this. 50% were rejected, 50% got through.

HMRC cannot check everyone.

**TheCyclingProgrammer** · 9 July 2014, 18:26

Originally posted by Tomo1971 View Post

Thinking about it, me too.

Unless it could be bought really cheap and sold 'as new' at a price difference better than the tax saving?

Well yes, there is that. If the difference between the new and used price is less than your marginal rate of income tax, as a means of "extracting" funds from the company it works out better off.

Not only is it tax evasion, its also likely to get you in trouble with the VAT man (assuming you're VAT registered) if they catch wind of it.

**northernladuk** · 9 July 2014, 18:30

As a director you have a legal responsibility to run your finances properly. Your accountant only provides you a service. You sign the paperwork to say its correct. Just because you have an accountant doesn't mean you are in the clear. It's your responsibilty to make sure things are right and proper. Wholly and exclusively for the business is a pretty simple concept and pleading ignorance won't work. Am sure the accountants will get in to a lot of trouble as well but don't think for a minute its not your problem.

**northernladuk** · 9 July 2014, 18:32

Oh yeah... And don't listen to other contractors. Lying toss pots the lot of em.

**Tomo1971** · 9 July 2014, 18:46

Originally posted by northernladuk View Post

As a director you have a legal responsibility to run your finances properly. Your accountant only provides you a service. You sign the paperwork to say its correct. Just because you have an accountant doesn't mean you are in the clear. It's your responsibilty to make sure things are right and proper. Wholly and exclusively for the business is a pretty simple concept and pleading ignorance won't work. Am sure the accountants will get in to a lot of trouble as well but don't think for a minute its not your problem.

Totally agree NLUK....

As i said, already have the EBT thing hanging over my head so not even tempted to try and fiddle anything Ltd Co wise, just not worth the risk, however small that risk is.

Breaking the rules - How do people get away with it.