Reply to: VAT Flat rate blunder by my accountants

[kaiser78]

Hi there,

I have the exact same problem as you 'Contractor79'.
My accountant put me in the wrong percentage bracket for 3 years...

You cannot entirely blame your accountant - both you and OP should have spotted this before signing the form or surely discussed with your accountant what FRS category you should fall under. Did you not receive a confirmation letter from HMRC confirming this ?

[eggtastico]

I thought HRMC dont do refunds anymore & instead your supposed to adjust future payments?
maybe seek advice from another accountant?

[Danielsjdaccountancy]

If the overpayment/underpayment of VAT is below £10,000 then you can simply adjust this on your next return, no need to file a separate form.
What you do need to ensure however is that the flat rate you are paying is the same as what HMRC have on record for you.
If you are looking to change your percentage retrospectively then I would recommend writing to HMRC and then try appealing. I'm sure if you asked your accountant they would do this for you as they should be authorised agents.
Personally I have found the revenue to be more thorough when I write to them.
Good luck!

[LFC77]

Help!! Same problem here!

Hi there,

I have the exact same problem as you 'Contractor79'.
My accountant put me in the wrong percentage bracket for 3 years.
as such, Ive overpaid by a lot and want to get it back.

as your dilemma was 2 years ago, I was wondering what the outcome was, did you manage to recoup it from the VAT 'man'??

any advice would be very much appreciated as I'm hitting a brick wall trying to get it back, the HMRC are saying its my own fault and its not In their ''Policy'' to reimburse my error, (my accountants should I say)
I want to just underpay on my next return to make up the error but I'm worried what the outcome will be..?

Very Very frustrating!!! any help out there???
Thanks in advance

[thunderlizard]

I did exactly the same thing (my fault, not the accountant's). The error was only half a percent difference, and only lasted a few months, so we just underpaid the next VAT return by the appropriate amount.

I put the company in the right category but then operated the wrong percentage on my calculations, so HMRC must have been able to see there had been overpayments (they didn't exactly jump up and down and shout about it though!). If you've put your company in the wrong category and operated the 'right' percentage for that category, it might be harder.

[contractor79]

RE - Can I sue my accountant?

Who signed the flat rate application form, you or the accountant? If you, I think you stand very little chance of suing your former accountant.

I'm not sure who signed it, thanks

[Robot]

My previous accountants put me on an incorrect flat rate category meaning I paid a higher rate than I should have for 2 whole years, it's only now my new accountants spotted this error and this error has cost me many thousands of pounds.

HMRC have advised me that they will not retrospectively reimburse me for the additional taxation that I've paid (no surprises there, one way traffic as usual)

Can I sue my accountant? Are HMRC telling fibs?

RE - Can I sue my accountant?

Who signed the flat rate application form, you or the accountant? If you, I think you stand very little chance of suing your former accountant.

[contractor79]

I shall appeal to them about this unjust approach. Had I paid too little no doubt they'd be after me very aggressively, demanding payments, fines, interest.... heck they even do that when I HAVE paid my tax, so incompetent they are

[Tax Lord]

My previous accountants put me on an incorrect flat rate category meaning I paid a higher rate than I should have for 2 whole years, it's only now my new accountants spotted this error and this error has cost me many thousands of pounds.

HMRC have advised me that they will not retrospectively reimburse me for the additional taxation that I've paid (no surprises there, one way traffic as usual)

Can I sue my accountant? Are HMRC telling fibs?

It depends on the amount you have over paid. You/your accountant should calculate your vat in the normal manner for the next quarter, deduct the over payment and pay the difference. Also include a covering letter as to why you have done this.

[krytonsheep]

If you look at the HMRC FRS notes under 'What if I get the sector wrong?' it just says...

We will not normally check your choice of sector when we process your application. So if you have made a mistake you may pay too much tax or too little. Paying too little could mean that you are faced with an unexpected VAT bill at a later date.

It doesn't say what happens if you pay too much, but I would imagine this would be seen as a VAT error, and your new accountants can adjust for this on your next VAT return (that's just a guess though).

[BrowneIssue]

My previous accountants put me on an incorrect flat rate category ...

HMRC have advised me that they will not retrospectively reimburse me for the additional taxation that I've paid (no surprises there, one way traffic as usual)

Can I sue my accountant? Are HMRC telling fibs?

I am disappointed with the response you got from HMRC. The VAT people (Customs & Excise) used to be fair and the Inland Revenue unfair; the former behaviour seems to be getting scarce since their merger.

Regarding the accountant, yes you can seek recompense. Ask them for compensation in writing. If that goes nowhere, are they chartered? If so, threaten to complain to their professional body (determine that from the letters after the accountant's name). If that does not work, actually complain to their professional body. You can ask your new accountant to assist you in this.

If you can show the accountant cocked up despite you giving them correct information, you should be able to get some form of compensation.

NB when I say 'you' I do of course mean 'your ltdco'.

[BrilloPad]

Interestingly I am paying too little FRS......

[Archangel]

Zog clearly does not understand FRS.

I'm sorry though, I don't know the answer to your question. Does your new accountant not have a view?

[contractor79]

huh?

[xoggoth]

I believe they may only refuse repayment after a longer (6 year?) period or where you in turn have overcharged clients and are likely to just pocket the refund. It's called "unjust enrichment". Never used flat rate but can't see how that can apply to a contractor anyway, don't you just charge all clients the normal standard rate? That's correct for the service you provide. Their advisors often have little idea what they are doing so I would pursue it further.