I have another client moaning over his tax bill. This a corp tax bill. The previous accountant prepared the accounts and corp tax return relating to Sept 09 accs.
The client was shocked to receive a reminder from HMRC to pay up £7k. He has started another limited company with someone else and is intending to close down his limited company in question.
He said he cannot not pay the tax bill. I referred him to HMRC Business Support, he says he just does not have the money. He recently paid £18k on his self assessment.
I did explain to the client I have not inolved in preparing Sept 09 accs so really there was nothing further I could do.
I think the key problem was the previous accountant did not let the client know in advance about his CT bill. This is a shock for him. The client must have received CT return and accs but probably did not register with him.
The client is expecting me to make this bill disappear. In the end to get him off the phone I told him that I will get back to him tomorrow.
I think I will pay him a visit and explain things to him face to face.
Any other ideas?
Replies (8)
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Corporation tax demand
Sadly 'twas ever thus but don't put up with the grief
Suggest that if the company is no longer viable and able to meet it's liabilities when due it is insolvent and should cease trading.
His reaction should be interesting
they always say that
You will get used to it.
I wouldnt bother with a meeting, its very simple - they made a £35,000 profit, they have a £7,000 tax bill.
Two ideas
Rather than referring client to Business Payment Support, why not call them yourself and arrange deferment? That will at least demonstrate to client that you are acting in his interests. As you say, you cannot make the tax bill disappear, but you can help to ease the pain. If client does not appreciate that (most reasonable clients will), I suggest you ditch him. Clients like that are just not worth the bother.
Secondly, what is trading like to date? Any chance of a loss carry-back, even on a provisional basis?
One further thought - £18k on self assessment recently? I assume the July instalment. Considering the income required to generate a liability of that size, I would have thought £7k should be easily manageable - especially if deferment can be arranged.
"why not call them yourself and arrange deferment?"
They've told us that they will only deal with th etaxpayer when we've attempted this.
Interesting
Perhaps it's part of their tougher approach to Time to Pay applications, but I have not had one application made by myself rejected yet. Some tough questions have been asked on occasion, but not once have I been advised by HMRC that they would speak only to the taxpayer.
A client to be wary of unless...
Assuming that the previous accountant properly advised (*) the taxpayer then the taxpayer MUST have been aware of the forthcoming tax liability.
Could be one of those clients who signs things without reading them (eg. accounts, eg. CT600) and then afterwards claims ignorance.
VERY important to identify these sort of troublesome clients from day one and get everyting in writing to them, verbal communications will be "forgotten" or denied by some such clients when it is convenient to do so.
Having said this, there is an outside chance of the previous advisor not properly advising (*) the client, at worst submitting CT600 online to HMRC without client having seen the CT600.
(*) "Properly advised" means - specifically telling the client that the tax bill is arising and when it is payable.
Time to Pay
I've had a few clients who have been unable to meet their tax liabilities on the due date.
In all cases we have kept in touch with HMRC and have offered to pay something every month. It may take a year or even longer to clear the arrears, but HMRC have been very considerate and have accepted in every case.
You could offer to pay £1,000 per month or if funds are tight you could offer to pay £500 per month (+ explain why more cannot be paid). The amount is negotiable with HMRC.