Accountants and contractors

[northernladuk]

I get the impression if you fess up they tend to be quite collaborative, though I have zero personal experience of this.

I saw the numbers of HMRC investigations the other day for the past few years - remarkably low compared to the number of small / medium companies but that is off the point of your post!!

A book keeper friend of mine explained that if you can prove due diligence and you have attempted to carry out whatever part of your expenses to the letter but get it wrong they are pretty lenient. If you have blatently taken the piss or shown utter disregard to the whole process they will throw the book at you. Although they are looking at the finances they also take in to account how seriously you take your responsibilities. She said fess'ing up once your caught did not cut it if you have shown disregard for your responsibilities.

Seems to make sense to me and would hope this is the case.

[Martin at NixonWilliams]

He has got a specialist in (he did have insurance!)

He mentioned something about the specialists giving him advice about sending his accountant a notice of a potential claim against his PI insurance. Something about being able to show HMRC that he was acting in good faith based on advice from an accredited professional and that it was a professional relationship rather than a mates-rates one.

Good to hear he's got in the specialists, having insurance might saving him a few quid in this situation.

If the accountant has been negligent he may have a case and yes this probably would help in his defence against HMRC. In my opinion, he will probably get penalised under 'careless' (15%-30% penalty) but the specialist might be able to successfully argue 'reasonable' (0% penalty) based on the professional advice he was given.

Will be interesting to see how he eventually gets on.

Martin

[northernladuk]

We have the same here which is why I asked the question about liabilities here...

http://forums.contractoruk.com/accou...abilities.html

[SneakySimon]

Fair Enough

I get the impression if you fess up they tend to be quite collaborative, though I have zero personal experience of this.

I saw the numbers of HMRC investigations the other day for the past few years - remarkably low compared to the number of small / medium companies but that is off the point of your post!!

[craig1]

"He mentioned something about the specialists giving him advice about sending his accountant a notice of a potential claim against his PI insurance. Something about being able to show HMRC that he was acting in good faith based on advice from an accredited professional and that it was a professional relationship rather than a mates-rates one"

Doubt HMRC will go for that. If they do, I am going to get the same accountant and then when I get investigated explain that my Playstation 3 and 53" plasma TV were used to search for jobs on jobserve!!

It's more to avoid bad faith and intentional evasion penalties rather than get away with the tax. He's already resigned to the large tax bill but wants to pay it back without the big penalties that can come these days.

[SneakySimon]

"He mentioned something about the specialists giving him advice about sending his accountant a notice of a potential claim against his PI insurance. Something about being able to show HMRC that he was acting in good faith based on advice from an accredited professional and that it was a professional relationship rather than a mates-rates one"

Doubt HMRC will go for that. If they do, I am going to get the same accountant and then when I get investigated explain that my Playstation 3 and 53" plasma TV were used to search for jobs on jobserve!!

[craig1]

Hi Craig1

Sounds like your friend has been very badly informed, if he's currently under investigation it might be worthwhile him taking some specialist advice and get a professional to deal with this (if he hasn't already appointed one) because he could be in for quite a hefty tax bill at the end of this unfortunately.

Martin

He has got a specialist in (he did have insurance!)

He mentioned something about the specialists giving him advice about sending his accountant a notice of a potential claim against his PI insurance. Something about being able to show HMRC that he was acting in good faith based on advice from an accredited professional and that it was a professional relationship rather than a mates-rates one.

[jmo21]

Craig, please update the thread when you get more info, it will serve as a good forewarning to all others and give us all a good laugh

[Martin at NixonWilliams]

Just a short story to reinforce the message that others have posted in the past about getting a specialist accountant if you intend to use one.

A good contractor friend of mine has repeatedly ignored my advice that his small-business accountant friend who does his books is a pure-bred idiot who has no clue about the specific circumstances of being a contractor. Based on advice from his accountant he has been:

- continually claiming travel expenses despite being based in the City of London for the last 8 years. His accountant gave him the advice that the clock reset when he changed contract and location wasn't the trigger. His travel expenses to London this year have topped £10k
- continually expensing lunch every day and dinner when he goes out, even at home. His accountant gave him the advice that as long as he paid on the company card that it was a legitimate business expense.
- purchasing goods that are either 100% personal or at least with significant dual-use purposes then claiming in full. His accountant told him that as long as he could show SOME business usage that it would be claimable in full.

He received a notification of audit last week and is sweating a bit now that he's taken further advice.

Hi Craig1

Sounds like your friend has been very badly informed, if he's currently under investigation it might be worthwhile him taking some specialist advice and get a professional to deal with this (if he hasn't already appointed one) because he could be in for quite a hefty tax bill at the end of this unfortunately.

Martin

[Alan @ BroomeAffinity]

To be fair that's not because he's not a specialist accountant, that's because he's a terrible accountant. IMO.

[craig1]

Just a short story to reinforce the message that others have posted in the past about getting a specialist accountant if you intend to use one.

A good contractor friend of mine has repeatedly ignored my advice that his small-business accountant friend who does his books is a pure-bred idiot who has no clue about the specific circumstances of being a contractor. Based on advice from his accountant he has been:

- continually claiming travel expenses despite being based in the City of London for the last 8 years. His accountant gave him the advice that the clock reset when he changed contract and location wasn't the trigger. His travel expenses to London this year have topped £10k
- continually expensing lunch every day and dinner when he goes out, even at home. His accountant gave him the advice that as long as he paid on the company card that it was a legitimate business expense.
- purchasing goods that are either 100% personal or at least with significant dual-use purposes then claiming in full. His accountant told him that as long as he could show SOME business usage that it would be claimable in full.

He received a notification of audit last week and is sweating a bit now that he's taken further advice.