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.
- Moneysoft - technical query 185 4
- Let Property Campaign 157 3
- is photo id necessary to set up a direct debit? 37 1
- What would you do? 323 2
- Taxable income for previous years 352 8
- VAT position on EU supplies/commission 69 1
- Depreciation on purchase of software 136 2
- SA302 list of lenders accepting alternative 1,298 16
- App recommendations 321 4
- Defend your local inspector? 617 7
- accountant in Bristol 499 1
- New Company Director PAYE Question 758 20
- Exasperated by HMRC 2,137 19
- How long should one give Aweb … 704 9
- Resident and Non-resident 761 7
- Benefit in Kind - Director loan or not? 164 3
- Client in dispute with Customer over cancellation charge 411 16
- Working Hours Calculation - Rounding Hours up/down 139 2
- Self employed Self Assessment 397 2
- Applying for clearance before 5 years share ownership 172 2
- HMRC arbitrarily amending tax returns for higher rate child benefit charge 355
- Any knowledge of salesorder.com 343
- Chart of account segments; Balance sheet vs P&L 278
- HMRC RTI Filing Problem 251
- Goodwill and the Summer 2015 Budget 251
- Could and would anyone here carry out a hot file review of some non statutory audit work please? 242
- Electric Car 194
- S222 Charge 184
- Foreign Tax on Pensions 172
- What is the best acounting software for online international retail business? 171