Is an accountant liable for not incorporating my business?
Hi, I asked my previous accountant 3 times whether i should be a sole trader or a limited company. The first time when i set up my business in July (by this time my PAYE from my previous job for the tax year in question was already close to the 40% tax bracket). The 3rd/last time I asked (a few months later in the same tax year) was when my total earnings for the tax year had reached 6 figures. My business, costs and trading were fully known by my accountant and they had committed in writing to making my income tax as efficient as possible. I was finally incorporated in late January of the last tax year - 6 months after setting up my business and after generating a 6 figure total income for the tax year to that date.
This is not a 'kick the accountant' question. More a genuine desire to know whether the accountant (by not providing any information on the risks/benefits of sole trader versus limited company status when asked 3 times which was the most efficient status - and by stating in writing that they were on top of my accounts and would make my accounts tax-efficient) was potentially negligent in their advice and action? The accountant had committed in writing to taking care of all communication and interaction with HMRC and had stated in writing that they would minimise my income tax. I changed accountants last year as I felt I could not get proper answers.
My new accountant has just completed my sole trader accounts and self assessment and, as a consultant with relatively low costs, I now have notable excess profit liable to tax at 40%
My new accountant has stated that a limited company would have been far more beneficial to me tax-wise and that the decision not to incorporate will result in tens of thousands of pounds additional tax payment.
Am i being unreasonable in expecting to have a case to seek some form of financial redress? Or is it simply a case of you win some, you lose some when it comes to accounting advice? Note my accountant is ACCA accredited.
- How much would you charge for an interim audit? 624 9
- Anyone else experiencing issues with sage 50 payroll 76 3
- Company Share Buy Back 96 2
- Charitable Payment 203 4
- Are any of you members of The Institute of Financial Accountants - Accountnats certificate 918 15
- Unpaid share capital 243 3
- Company car in the LLP 164 2
- Physiotherapy 336 4
- Time to react ? ? ? 223 1
- New build property to be rented 150 4
- Are you going to Tick and Bash on 21 May? 1,871 52
- Hello 355 2
- Sage 200 question 101 1
- Spanish Assets taxation - UK Residence 95 2
- Ltd Co and Fully Paid Shares 158 5
- RTI and Advances to Employees 165 3
- Sorry - another PPR question 210 4
- Private company division 310 5
- Outstanding Loans 217 3
- Networking 877 7