Have I been Conned?

[spud5706]

I recently got referred to a tax advisor to see if I could save any tax with my business.

I have £100,000 in my business acccount and when I met with the tax advisor he told me he could get ALL my money out and I would only have to pay 10% tax on it so I agreed and paid his £6,000 fee.

Well it turns out that he is closing the company and making an application to customs under ESC C16.

Now I knew we would have to close the company to do this but what I didnt know and was never told at our meeting was that I was going to have to pay 10% tax PLUS 20% corporation tax, I feel this has been GROSSLY missold to me.

He also said that after closing the company I would have to trade under an LLP in the future with a ltd compnay as a partner and to set this up would be another £6000 so all in all I would have to pay £12,000 for this 'Tax Advice'.

Now I have spoken with the guy and asked for my money back which he refused, what is my next course of action? Do I need to take him to court and is there any professional body I can report him to?

Also as far as I can work out I would have to pay £30,000 tax on the £100,000 plus his fees of £12,000 taking it to £42,000, does anyone know what the tax would have been to take this £100,000 from the company in salary and dividends because as far as I can see this guy has conned me by selling it to me as 'get the money out at 10%' rather than telling me the truth that I have to pay 10% + corporation tax and would his plan actually have saved me any money?

Any help is appreciated with this.

Thanks

[SueEllen]

You should have found out if he was in a professional body before you agreed to pay him.

Now you need to look at the documents he gave you and see if he is in one. All regulated professionals tend to put the professional body they are in on their paperwork. Alternatively you need to google and phone up every single taxation body you can find i.e. The Chartered Institute of Taxation | Home to see if he is in one.

BTW the second lot of advise isn't true so don't pay him any money. I suggest you use the forum search tool to find out when you can open up another company once you have closed one. (HINT- search for how to close down a company then read the threads.)

[spud5706]

Thx for the reply, yes hindsight is a wonderful thing I wish I had checked everything over more thoroughly beforehand.

Do you know how much tax I would have had to pay without this advice though because if it is less/the same incluidng his fees them he has advice is obviously not fit for purpose.

regards

[Fred Bloggs]

Yes, it is correct, you will pay corp tax at 20% and capital gains tax at 10%. What he has suggested, any accountant would have told you for free. Indeed, if you'd done your research you would have found it out for yourself easily enough. The snag with closing a Ltd Co and then starting the next day with another Ltd Co is that, AFAIK, HMRC can see through such a pheonix like arrangement and tax you accordingly. That is why he would have said you would need to work as a LLP after you did the ESC 16 thing, I think. IANAA, it's a bit late now, but you really do need to DYOR.

[anothercodemonkey]

I wouldn't be asking on here if there were tens of thousands at stake. You want to go to a solicitor and see if you have a case. Get yourself to a lawyer pronto.

[MarillionFan]

Obviously the OP has been naive. Effectively he has paid for and taken the advice. Unless it can be expressly shown he has been mislead the tax advisor has done his job. Bloody expensive advice, but another example of someone trying to avoid paying their dues and looking for every which way to reduce paying out.

Keep it simple next time.

[Wanderer]

Have I been Conned?

Yes, your accountant should have given you this advice for free.

I have £100,000 in my business acccount and when I met with the tax advisor he told me he could get ALL my money out and I would only have to pay 10% tax on it so I agreed and paid his £6,000 fee. Well it turns out that he is closing the company and making an application to customs under ESC C16. He also said that after closing the company I would have to trade under an LLP in the future with a ltd compnay as a partner and to set this up would be another £6000 so all in all I would have to pay £12,000 for this 'Tax Advice'

The ESC-C16 is if you are ceasing to trade. Trying to do a merry dance around the issue by starting up a LLP / LTD combination is asking for trouble in my opinion.

Now I have spoken with the guy and asked for my money back which he refused, what is my next course of action? Do I need to take him to court and is there any professional body I can report him to?

So, who referred you to the tax advisor? If it was your accountant then you have to ask what their relationship with the tax advisor was. Did the accountant make any money out of this? With fees of £6,000 for doing a few hundred pounds worth of advising and work, you have to wonder....

I would fight back and take the advisor to small claims court for a refund of £5,000 (the most you can claim in small claims and leaving the advisor with £1,000 for work done which is more than a fair price). You MUST get professional legal advice on this - try the Citizens Advice Bureau, but be careful you don't go engaging some expensive lawyer who will milk you for even more money....

[BolshieBastard]

I recently got referred to a tax advisor to see if I could save any tax with my business.

I have £100,000 in my business acccount and when I met with the tax advisor he told me he could get ALL my money out and I would only have to pay 10% tax on it so I agreed and paid his £6,000 fee.

Well it turns out that he is closing the company and making an application to customs under ESC C16.

Now I knew we would have to close the company to do this but what I didnt know and was never told at our meeting was that I was going to have to pay 10% tax PLUS 20% corporation tax, I feel this has been GROSSLY missold to me.

He also said that after closing the company I would have to trade under an LLP in the future with a ltd compnay as a partner and to set this up would be another £6000 so all in all I would have to pay £12,000 for this 'Tax Advice'.

Now I have spoken with the guy and asked for my money back which he refused, what is my next course of action? Do I need to take him to court and is there any professional body I can report him to?

Also as far as I can work out I would have to pay £30,000 tax on the £100,000 plus his fees of £12,000 taking it to £42,000, does anyone know what the tax would have been to take this £100,000 from the company in salary and dividends because as far as I can see this guy has conned me by selling it to me as 'get the money out at 10%' rather than telling me the truth that I have to pay 10% + corporation tax and would his plan actually have saved me any money?

Any help is appreciated with this.

Thanks

Sounds like you have been banjo'd!

Didnt it occur to you to ask how he was going to minimise your taxation?

Seems to me he told you what you wanted to hear and didnt ask many questions.

[northernladuk]

Thx for the reply, yes hindsight is a wonderful thing I wish I had checked everything over more thoroughly beforehand.

Do you know how much tax I would have had to pay without this advice though because if it is less/the same incluidng his fees them he has advice is obviously not fit for purpose.

regards

This is nothing to do with hindsight. It is just plain simple common sense.

[VectraMan]

I have £100,000 in my business account and when I met with the tax advisor he told me he could get ALL my money out and I would only have to pay 10% tax on it so I agreed and paid his £6,000 fee.

And that's correct. You can get all YOUR money out and only pay 10% tax. But what made you think the company wouldn't also have to pay corporation tax on its profits?

It's quite normal for companies to keep retained profits from previous years that have had the CT paid (or will be paid), and it's that situation that he's addressed, quite reasonably because anybody in the position of company director would surely have a basic understanding of what a company is and how it works.

I don't think you have anything to complain about. £6000 for something you could have easily found out in half an hour by yourself, yes sure, but that was your choice.