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If accountant wrongly entered VAT ammounts is he liable?
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If an accountant's book keeper wrongly enters invoices, and then subsequently the VAT is wrongly entered to the Vat four years ago and it has only just come to light via the VAT Man - who says although invoices entered wrongly the customer is liable to pay the outstanding ammount 21,000!
But that a claim should be made against the accountants firm.
Where does one start!
Hope you can understand what I am trying to say, I am trying to be brief!
Any advice please (Small business)
But that a claim should be made against the accountants firm.
Where does one start!
Hope you can understand what I am trying to say, I am trying to be brief!
Any advice please (Small business)
Answers
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As far as HMRC are concerned it is you that has to pay as it is you that owes the tax not your accountant.
I would guess that a firm of accountants might/should have insurance to cover things like this. I think it's called professional indemnity insurance. I could see that an individual bookkeeper might not as the cost is quite high. If the accountant did your bookkeeping then I'd go back to them and ask them what went wrong and tell them that you hold them liable and see what they say. It might depend though whether they did the bookkeeping then asked you to check to see if you agreed with it.
I would guess that a firm of accountants might/should have insurance to cover things like this. I think it's called professional indemnity insurance. I could see that an individual bookkeeper might not as the cost is quite high. If the accountant did your bookkeeping then I'd go back to them and ask them what went wrong and tell them that you hold them liable and see what they say. It might depend though whether they did the bookkeeping then asked you to check to see if you agreed with it.
A registered auditor must have PII insurance in order to trade.
The same is not necessarily true of book-keepers - which is why they are just book-keepers.
It depends on the nature of the contractual arrangement with your book-keeper - you will probably find that his/her liability is limited to the extent of the fees.
Has the business actually lost money because it has wrongly under-collected input VAT from customers - for which it is now liable to pay to HMRC? - or is this merely a book-keeping error that has hidden the 'true' extent of a liability that was always there anyway? (In which case there is no actual 'loss'.)
The same is not necessarily true of book-keepers - which is why they are just book-keepers.
It depends on the nature of the contractual arrangement with your book-keeper - you will probably find that his/her liability is limited to the extent of the fees.
Has the business actually lost money because it has wrongly under-collected input VAT from customers - for which it is now liable to pay to HMRC? - or is this merely a book-keeping error that has hidden the 'true' extent of a liability that was always there anyway? (In which case there is no actual 'loss'.)
I used a professional accountants for all of my bk keeping and salaries.
I used to have a franchise (a shop and worked full time on the shop floor) and used to get invoices for goods either not received or damaged (which I sent back) these over a period of 4 years ran into about 70 invoices, I was constantly trying to get credit notes for them - only got credit notes when I gave up the franchise (after 16 years)
Every quarter I used to send all my paperwork to my accountants office, including a statement of account from the franchisor, I used to mark off the invoices that I held as "do not pay or do anything with as under dispute"
The a few weeks later I used to receive a letter from the accountants with their bill and the VAT slip, which I simply had to sign and return either with a cheque or without.
I never got any workings out of the VAT and (wrongly) assumed that as I was using a well respected Accountancy firm all would be ok, I always used to have a quick check but the last 4 years of the franchise I had quite bad health problems and consequently had to give the franchise up.
I left the franchise, owing as I thought nobody anything, a guarantee that all my staff who had been with me for many years would be kept on (they were).
I then get a letter from the VAT querying the invoices, it then transpires that the accountants had entered the invoices in question and recalimed the VAT on them during this 4 year period although I never paid the Franchisor and in fact at the end of the franchise they were written off ( as they should have been)
After meeting with the VAT people, it also transpires that the VAT upon seeing that I had withheld the invoices noted that on quite a few occasions the VAT was entered incorrectly as the accountants did not have the actual invoices - the VAT said this was "most improper" and suggested that I should claim under the accountants
I used to have a franchise (a shop and worked full time on the shop floor) and used to get invoices for goods either not received or damaged (which I sent back) these over a period of 4 years ran into about 70 invoices, I was constantly trying to get credit notes for them - only got credit notes when I gave up the franchise (after 16 years)
Every quarter I used to send all my paperwork to my accountants office, including a statement of account from the franchisor, I used to mark off the invoices that I held as "do not pay or do anything with as under dispute"
The a few weeks later I used to receive a letter from the accountants with their bill and the VAT slip, which I simply had to sign and return either with a cheque or without.
I never got any workings out of the VAT and (wrongly) assumed that as I was using a well respected Accountancy firm all would be ok, I always used to have a quick check but the last 4 years of the franchise I had quite bad health problems and consequently had to give the franchise up.
I left the franchise, owing as I thought nobody anything, a guarantee that all my staff who had been with me for many years would be kept on (they were).
I then get a letter from the VAT querying the invoices, it then transpires that the accountants had entered the invoices in question and recalimed the VAT on them during this 4 year period although I never paid the Franchisor and in fact at the end of the franchise they were written off ( as they should have been)
After meeting with the VAT people, it also transpires that the VAT upon seeing that I had withheld the invoices noted that on quite a few occasions the VAT was entered incorrectly as the accountants did not have the actual invoices - the VAT said this was "most improper" and suggested that I should claim under the accountants
Continuation...under the accountants Insurance - as this was not professional.
The VAT originally when quering the invoices wrote on many occasions to the accounts and received no reply, eventually they received a reply saying I had the invoices in question as they had never had them and also the file of the workings out of the VAT. - But I know I did not have this file only the invoices.
10 months later after many phone calls/letters from myself and the VAT "the file" was found.
I have written on numerous occasions to the accountant and have had letters back saying he will be in touch within the next few weeks (the last time Dec 07) to date I have received nothing.
I know I have to see a solicitor (as the VAT suggests) my problem now is the solicitor is a personal friend of the accountant, and although I have used him for years and he dealt with the franchise exit - do I get another solicitor?
Just to add, my illness in the last 4 years was a massive brain heamorrage and also my business used to turn over around 350,000 .
We have paid the VAT via a loan, but I feel strongly that the accountants should hold their hands up here and contribute.
Thanks for listening !
The VAT originally when quering the invoices wrote on many occasions to the accounts and received no reply, eventually they received a reply saying I had the invoices in question as they had never had them and also the file of the workings out of the VAT. - But I know I did not have this file only the invoices.
10 months later after many phone calls/letters from myself and the VAT "the file" was found.
I have written on numerous occasions to the accountant and have had letters back saying he will be in touch within the next few weeks (the last time Dec 07) to date I have received nothing.
I know I have to see a solicitor (as the VAT suggests) my problem now is the solicitor is a personal friend of the accountant, and although I have used him for years and he dealt with the franchise exit - do I get another solicitor?
Just to add, my illness in the last 4 years was a massive brain heamorrage and also my business used to turn over around 350,000 .
We have paid the VAT via a loan, but I feel strongly that the accountants should hold their hands up here and contribute.
Thanks for listening !
On what you present here, it sounds as if you have a case. Clearly your auditor / book-keeper will have PII.
You don't have to use a solicitor and I certainly wouldn't entertain using one who is a personal friend of the accountant - although the profession is supposed to declare a conflict of interest to you if he feels he cannot represent you.
As you are currently considerably out of pocket, it may be worth hiring a second solicitor to write a letter setting out your loss incurred and where you consider the liability lies. The trouble may be the detail to which any new solicitor would have to be briefed before he could get that far (and hence the cost).
You don't have to use a solicitor and I certainly wouldn't entertain using one who is a personal friend of the accountant - although the profession is supposed to declare a conflict of interest to you if he feels he cannot represent you.
As you are currently considerably out of pocket, it may be worth hiring a second solicitor to write a letter setting out your loss incurred and where you consider the liability lies. The trouble may be the detail to which any new solicitor would have to be briefed before he could get that far (and hence the cost).
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