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2022

Cleaning up the books or focus on getting it right moving forward?

Cleaning up the books or focus on getting it...

Is it more important to go back and fix up the books 100% accurately or to focus on moving forward and getting things right from now on? 

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13th Feb 2012 13:11

Too little information given

It is always beneficial to focus on getting things right, but cannot say whether you need to go back or not as not enough info given. Are we talking about tax errors or a minor filing problem?

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17th Feb 2012 15:16

Give them the Fishing Rod - not the fish

Rather than physically amending records, is it not better to be pro-active?  If this client is likely to go repeating mistakes/errors, where goes an advisor stand?  Professionally, we ought to advise, and, if necessary, physically amend the records.  Don’t forget that HMRC can ask to see the books of prime entry, and if a zealous inspector were to seize on the error, he/she would surely mount an: “if you chose to leave out/make errors, then the records are unreliable and so were the resulting tax bills”.  Beware of ignoring these fundamental problems, as should such scenario occur in the future, who is the client going to blame?

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to stacynext21
17th Feb 2012 14:24

Hmm

MartinLevin wrote:

Rather than physically amending records, is it not better to be pro-active?  If this client is likely to go repeating mistakes/errors, where goes an advisor stand?  Professionally, we ought to advise, and, if necessary, physically amend the records.  Don’t forget that HMRC can ask to see the books of prime entry, and if a zealous inspector were to seize on the error, he/she would surely mount an: “if you chose to leave out/make errors, then the records are unreliable and so were the resulting tax bills”.  Beware of ignoring these fundamental problems, as should such scenario occur in the future, who is the client going to blame?

 

The client will try and blame the advisor which is why the advisor should keep written records of everything they agreed and more importantly, didn't agree, to do for the client

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By Mini Me
21st Feb 2012 10:06

@ShirleyM

Agreed and inevitably it depends on the circumstances.

Clearly getting the current year and future years sorted must be a priority, but you can only do this if the client is willing to buy into the process. If they don't, then you should question your position. A key issue I usually raise is why the client has allowed the situation to arise and be left uncorrected for so long. More often than not, the prime records are ok, and it is the accountant that has not done a proper job.

Bear in mind that, even though the business records checks aren't now going to be as prolific as originally floated, they will still be around and could give rise to a penalty issue which the client need to be aware of.

For earlier years, it rather depends on what the problems are, and how long and why they have been occurring. Realistically, you have to take into account your client's attitude - if you believe it is innocent, I would probably  be inclined to ignore previous years or make (say) a one year adjustment, especially if the errors are small and/or matters of judgement. If deliberate, I think you have bigger issues - you would clearly need to have a conversation with your client about penalties and related matters.

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