Reply to: Mistake leaves taxpayer with huge bill

[northernladuk]

Deep pockets and nuisance value, I wouldn't be at all surprised if Giants PI insurers made a settlement regardless of the details.

I put a claim against a solicitors PI insurance after they messed up a contract check in a property I bought and they were animals. Even if he does claim I'll bet the settlement figure is a long way off the amount HMRC want looking at the details of this one.

I would have thought there will be a lot of risk and cost chasing a decent figure and looking at the guys recent house sale I'm not sure he's got a lot to risk on it. Assuming it's his house.

[Jessica@WhiteFieldTax]

I'm not so sure that you can blame the accountant in this one, although they certainly didn't help themselves.

The notes taken by the adviser at the time say that the shares should be 100% to Mr Raine (paragraph 51). Apart from the first company return, every other one was prepared by him. He signed every annual return. He signed the accounts just below the bit which said who owned shares in the company. He never attempted to transfer any shares, or form a trust, or document anything which showed that she had any beneficial ownership. He was provided with details in 2006 from the accountant which showed the annual return and that he was the sole shareholder.

Can't really see a win if he goes after the accountant.

(That all said, I've just checked to see that what Companies House says is right for MyCo matches my understanding)

Deep pockets and nuisance value, I wouldn't be at all surprised if Giants PI insurers made a settlement regardless of the details.

[Jessica@WhiteFieldTax]

To be fair reading the actual case the summary doesn't really match the actual situation. There is a lot more evidence that the contractor didn't read. For example it mentions that in the fact find it was stated he would get 100% and his lady friend got none. Apparently they verbally agreed this but there are no notes on that. There is lot more evidence to and fro. It's actually quite an interesting read. It's absolutely riddled with errors carried out from both parties from start to finish.

One point that is interesting and aside to the actual case. They argue that Ms Hamilton is was key to the company being a liaison between the company, agents and clients. A point that's made at least twice I saw when scanning it. The same old line most husband and wife setups on here try and argue. The judge said however..



She didn't take a wage but looking at that statement many husband and wife company's are going to struggle if the remuneration to effort provided by the wife comes under scrutiny surely?

Thanks - there are two sides to every story with cases like this, and I hadn't gone back to source.

[Lance]

(That all said, I've just checked to see that what Companies House says is right for MyCo matches my understanding)

You're not the only one

[missinggreenfields]

I would expect there will be a claim on Giants PI, but doubtless the insurers will try and argue that Taxpayer should have accepted responsibility.

I'm not so sure that you can blame the accountant in this one, although they certainly didn't help themselves.

The notes taken by the adviser at the time say that the shares should be 100% to Mr Raine (paragraph 51). Apart from the first company return, every other one was prepared by him. He signed every annual return. He signed the accounts just below the bit which said who owned shares in the company. He never attempted to transfer any shares, or form a trust, or document anything which showed that she had any beneficial ownership. He was provided with details in 2006 from the accountant which showed the annual return and that he was the sole shareholder.

Can't really see a win if he goes after the accountant.

(That all said, I've just checked to see that what Companies House says is right for MyCo matches my understanding)

[missinggreenfields]

How come it opened in 2000 but only started making a profit in 2004? That's a long stint on the bench.

He paid everything out as salary for the first year, then went permie and left the company dormant, then came back to it after that.

[missinggreenfields]

She didn't take a wage but looking at that statement many husband and wife company's are going to struggle if the remuneration to effort provided by the wife comes under scrutiny surely?

Because she had no shares, she had no beneficial interest in the company - she couldn't argue that she had a beneficial interest in the company based solely on the work that she did.

If you split the company between husband and wife, then there clearly IS a beneficial ownership, because both parties own part of the company.

[northernladuk]

Cross posted from Accounting Web:

http://www.accountingweb.co.uk/tax/b...with-huge-bill



Mistakes happen, but I think the taxpayer is entitled to ask why this wasn't picked up and corrected earlier.

I would expect there will be a claim on Giants PI, but doubtless the insurers will try and argue that Taxpayer should have accepted responsibility.

No one wins.

Moral is if something looks amiss pursue it until you are content all is well.

I don't post this to gleefully knock a competitor - could happen to any of us. Sometimes I think how mistakes and problems are resolved is a greater indication of professionalism than them not happening in the first place.

To be fair reading the actual case the summary doesn't really match the actual situation. There is a lot more evidence that the contractor didn't read. For example it mentions that in the fact find it was stated he would get 100% and his lady friend got none. Apparently they verbally agreed this but there are no notes on that. There is lot more evidence to and fro. It's actually quite an interesting read. It's absolutely riddled with errors carried out from both parties from start to finish.

One point that is interesting and aside to the actual case. They argue that Ms Hamilton is was key to the company being a liaison between the company, agents and clients. A point that's made at least twice I saw when scanning it. The same old line most husband and wife setups on here try and argue. The judge said however..

148. Although Ms Hamilton was an officer of the company by virtue of her appointment as
Company Secretary, she was not the beneficial owner of any share(s) in the company.
Ms Hamilton provided secretarial assistance but that did not equate to her having a beneficial
interest in the company. The functions she performed were, on the evidence, not detrimental
to her and effectively no different than those she provided before the formation of the
company.

She didn't take a wage but looking at that statement many husband and wife company's are going to struggle if the remuneration to effort provided by the wife comes under scrutiny surely?

[northernladuk]

Wouldn't he have been caught by settlements even if the share had been done properly? HMRC might not have noticed but the outcome would have been the same?

EDIT : Reading the actual case there was an agreement to give him 100% and they do mention.

“as for transferring shares we would recommend 5 that you do not do this, as
it may alert the Inland Revenue to an investigation under Section 660”.

[SueEllen]

Isn't this the type of carry on that could quite easily have spawned an IR35 investigation as well?

How come it opened in 2000 but only started making a profit in 2004? That's a long stint on the bench.

He found permanent work either in the UK or abroad, then came back and went contracting.

[northernladuk]

Isn't this the type of carry on that could quite easily have spawned an IR35 investigation as well?

How come it opened in 2000 but only started making a profit in 2004? That's a long stint on the bench.

[VectraMan]

If Giant had been a little more proactive, this could have been prevented, or at least, mitigated. So poor customer service for sure. Negligent? Probably not - contractors need to know from day one that they are responsible for the running of their company, no matter how much they hand over to a third party.

Yes as far as HMRC are concerned. But if you pay an expert to do something for you and they don't and it costs you money as a result, then you have a pretty good case for damages. That's rather more than poor customer service.

[SimonMac]

Accountants are only agents of the company, they are not liable for any cockups, that will be you!

[NotAllThere]

It's his own fault for not sorting it out after this.

If Giant had been a little more proactive, this could have been prevented, or at least, mitigated. So poor customer service for sure. Negligent? Probably not - contractors need to know from day one that they are responsible for the running of their company, no matter how much they hand over to a third party.

I started contracting in 1995 - funnily enough with an off-the-shelf company from IAS, the predecessor to Giant. Somehow I was aware of what I was taking on - and that's before internet and email were widespread.

[VillageContractor]

In 2006 Raine noticed that the company accounts did not agree with his understanding of how the shares were held and he asked Giant for copies of the share certificates, which were never provided.

It's his own fault for not sorting it out after this.