What would you do
I have just taken on a new client, and agreed a fee.
Amongst other things, he has a rental property.
He is hopeless at keeping records and consequently has lost his mortgage statements giving interest paid for the year.
I therefore asked his building society to give me the information.
When I received it back, I noticed that the previous accountant had entered incorrect information about loan interest which means that the client has underpaid tax for about three years.
What would you do in these circumstances.
I am inclined to tell the client, tell him I will sort it out - at a fee of course, and if he does not let me sort it out tell him I cannot act.
Going after the other guy is a non starter. He was just " a guy from the pub" who charged him £50.
He came to me as he has recently left employment and started his own business.
Looking for any advice
Janice Wilson
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You're right, it's the only thing you can do
Once you're fully sure there isn't additional interest whatever anywhere and the previous accountant really did enter the 'wrong' figures, then you've got to tell the client and offer to put it right.
If they won't let you you then refuse to act and I assume you have to report to SOCA without telling the 'client' you're doing so?
Good Luck
what does your engagement letter say.
I would deal with the year that I have received instructions otherwise when would we stop.
Money Laundering
Anon - what about the small matter of Money Laundering?
I'd agree advise the client and if he/she wont allow the tax to be corrected decline to act and do the necessary SOCA report.
Clients that arrive this time of the year are often not worth the hassle.
Too late to ignore
Anon the fact is the accountant is aware of money laundering so must report.