Reply to: Accountant Issued incorrect payment

[Manic]

OK, genuine question not trying to bait anyone.

For those who use an accountant, do you not have access to your online HMRC account? Or emails from HMRC when submissions are made?

This could easily have been avoided if you had looked at either of these two bits of information.

I have access to mine and I can submit via Freeagent but my accountant does do it. Don't see any emails to be fair so might look in to that.

I have an accountant and I use Xero. My accountant gives me my draft accountants, I review and sign. Accountant submits return. I then pay the money when due.
I usually know within 1k what my liability is. If I was to receive a rebate I'd immediately question it.

[DeludedKitten]

Funds were used for paying pensions+dividends+salary.

Were the dividends legal if not having this money means that the company is in debt? If so then you will need to rectify that problem as well and sort the tax and NI due.

[northernladuk]

Think I fall into NCOTBAC territory today, I didn't know I had an online HMRC account... I do now and will take action, but this wasn't my default level of awareness.

Sometimes it's better to say nothing.

[fibio]

OK, genuine question not trying to bait anyone.

For those who use an accountant, do you not have access to your online HMRC account? Or emails from HMRC when submissions are made?

This could easily have been avoided if you had looked at either of these two bits of information.

Think I fall into NCOTBAC territory today, I didn't know I had an online HMRC account... I do now and will take action, but this wasn't my default level of awareness.

[northernladuk]

OK, genuine question not trying to bait anyone.

For those who use an accountant, do you not have access to your online HMRC account? Or emails from HMRC when submissions are made?

This could easily have been avoided if you had looked at either of these two bits of information.

I have access to mine and I can submit via Freeagent but my accountant does do it. Don't see any emails to be fair so might look in to that.

[SimonMac]

OK, genuine question not trying to bait anyone.

For those who use an accountant, do you not have access to your online HMRC account? Or emails from HMRC when submissions are made?

This could easily have been avoided if you had looked at either of these two bits of information.

[northernladuk]

My understanding is the source of the problem actually relates to another poor sod of a client (not the OP). The accountant told them to pay their CT, but gave them the payment reference relating to the OP by mistake.

So that company has made a payment of their CT in good faith, but HMRC won't have it, as it was allocated to the OP's company instead, then refunded to the OP. Hence that company will be pestered for a payment that in their mind they've already made.

FreeAgent can't stop an accountant giving someone the wrong payment reference.

At some point the client who made the payment or accountant might spot that that person's accounts showed the CT as nicely clear, yet HMRC showed it as still due. Or the OP/accountant spot that he got a refund that wasn't expected. It obviously has been spotted now, but the OP already got the money and from the sounds of things has spent it.

You would hope that a savvy client getting a big CT refund they weren't expecting might query it...but I appreciate some will just be of the view that the accountant/HMRC must be right and go along with it.

Ah. Right. Thank you for that.

[Maslins]

But Freeagent shows clearly what the figures should be. If they just gave him the printout of the returns it could be difficult to spot the mistake but Freeagent gets it pretty close and shows the figure pretty clearly. If Freeagent said X and there is a big difference with the refund the alarm bells should be ringing.

My understanding is the source of the problem actually relates to another poor sod of a client (not the OP). The accountant told them to pay their CT, but gave them the payment reference relating to the OP by mistake.

So that company has made a payment of their CT in good faith, but HMRC won't have it, as it was allocated to the OP's company instead, then refunded to the OP. Hence that company will be pestered for a payment that in their mind they've already made.

FreeAgent can't stop an accountant giving someone the wrong payment reference.

At some point the client who made the payment or accountant might spot that that person's accounts showed the CT as nicely clear, yet HMRC showed it as still due. Or the OP/accountant spot that he got a refund that wasn't expected. It obviously has been spotted now, but the OP already got the money and from the sounds of things has spent it.

You would hope that a savvy client getting a big CT refund they weren't expecting might query it...but I appreciate some will just be of the view that the accountant/HMRC must be right and go along with it.

[northernladuk]

I don't see that it would stop a mistake like this arising, but assuming the receipt was put to "Refund" --> "Corporation tax", it would throw the figures. Whether it would be/how long until it's picked up on depends on how frequently client/accountant looks at the figures, and how savvy they are. The accountant's evidently spotted the mistake further down the line.

It sucks, and the accountant have clearly mucked up here, but I don't see that it makes them liable for repaying a tax amount that was incorrectly paid to you. Potentially they might refund a portion of their fees as a goodwill gesture.

But Freeagent shows clearly what the figures should be. If they just gave him the printout of the returns it could be difficult to spot the mistake but Freeagent gets it pretty close and shows the figure pretty clearly. If Freeagent said X and there is a big difference with the refund the alarm bells should be ringing.

[Maslins]

Do either of you have Freeagent? Could either of these situations have been avoided if you were on it? Genuinely interested.

I don't see that it would stop a mistake like this arising, but assuming the receipt was put to "Refund" --> "Corporation tax", it would throw the figures. Whether it would be/how long until it's picked up on depends on how frequently client/accountant looks at the figures, and how savvy they are. The accountant's evidently spotted the mistake further down the line.

It sucks, and the accountant have clearly mucked up here, but I don't see that it makes them liable for repaying a tax amount that was incorrectly paid to you. Potentially they might refund a portion of their fees as a goodwill gesture.

[Lance]

Is there a legal route that I can take here?

Yes.
1) Pay HMRC what you owe them.
2) Sue the accountant for losses. But that won't be the money you owe the HMRC. The best you'll get from them is money for your time spent sorting it, any HMRC fines and perhaps some professional fees (lawyers and other accountancy firms). IMO it's probably not worth the hassle.

If you don't have the cash, contact HMRC and tell them what's happened. In this circumstance they'll likely be more able to help by giving you some more time to pay.

No matter what.... You owe it... you gotta pay it...

[Scruff]

As a Director of YourCo. it is ultimately your responsibility for all the Company matters. Financial, Fiduciary, Legal and Contractual.

Although your Accountant has made a mistake, the fact that you transferred the funds to your Personal Account was your decision. You will have to take a personal loan, pay the Corporation Tax o.b.o. YourCo. if you don't have the funds, and want to wind up the Company.

It's a bitter pill to swallow, and most people seem to forget their Corporate responsibilities, or enter into that world out of ignorance.

[craigy1874]

There is no way the accountant will pay it.

It is an error, but you still received money that wasn't yours, so it should be paid back.

Did you not think to question why you had received such a large repayment? You don't normally receive repayments out of thin air.

Best you can hope for is to agree a repayment plan with HMRC. Although the accountant made the error by giving wrong payment details, it is not up to him to collect money.

You have received the funds in error and you should repay them.

[jmo21]

I firmly believe, that the accountancy firm must take ownership and settle the matter with HMRC.

Are you saying you want the accountant to pay it back?

It's a pretty bad error to be sure, but I'd be surprised if the accountant will swallow a large amount like that.

Have you now spent the money personally?

[contractDudeUK]

Hey Dude

Any chance you could tell us the first letter of the accountancy firm?

Mine made a stupid mistake too. I was on an inside IR35 contract, had been for months, and they processed/reported a salary payment as being a dividend. In the end I had to treat it as if it had been a directors loan.

Thanks for the response.

As the case is ongoing, you would appreciate that it is sensitive to name the accountancy firm.