So my accountant of many years has failed to realise that joining of a partnership should result in overlap charge being made due to differing year end dates. This is now two tax returns ago and they are suggesting refiling these returns which will have substantial negative cash flow implications due to additional tax and its efffect on payments on account. They have held up their hands but obviously this doesn't really help me. I want to do the right thing but all income will be taxed regardless. I am very annoyed at this and may want to change accountants but don't want to trigger an audit through changing my accountant. Any advice on how to handle it?
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Why would changing accountants trigger an audit? Never heard such nonsense. Unless you mean the new accountant would want to do an audit? In which case why wouldn't you if they find an error?
Understand your annoyance however it's probably the case that you will just need to pay the tax you should have paid anyway + possibly a little interest.
How much is 'substantial'.
Joining a partnership doesn't affect overlap. Having a year end other than 31 Mar/5 April is the trigger.
I don't know what you're wanting us to say.
If you think your accountants have provided you with a poor service, you need a solicitor, not another accountant.
If you want us to check the figures, we need some figures to check. What exactly have they done ? Understated your profits ? How ?
If you just want a good moan, fine. I agree with you. It doesn't sound like your accountants have done a good job. But I can't be sure about that from what you say.
Either way, you can't sweep it under the carpet by saying HMRC will get their money one day. Not going to happen.
Thanks all. Yes I suppose it was more a moan. They just forgot about it so didn't tax the overlap piece twice.
Forgot ?
Yes, I'd be changing my accountants. This is basic. It's not something easily "overlooked".
The holding up of hands was presumably proactive. In which case, IMHO you have yourself a good accountant already - one that recognises his/her mistakes and rectifies them.
You're not out of pocket (unless there's interest and penalties, and to that extent the accountant might cover your cost anyway) - you're just paying tax now you should have paid a year or two back (your liability, not the accountant's).
Your accountants also dealing with the partnership? If not was there a communication shortfall?
I had an outrageous level of refusal to communicate from a DIYer with an LLP. I only acted for the non admin partner, who had not a clue what was needed
Waited a complete day for the your accountants are useless responders, but nothing.
Assumed that there are accountants dealing with LLP1. If so they should have advised all partners the relevant details from LLP1 tax return sufficiently timely to deal with their own tax returns.
LLP2 different date. Why?
All a bit convoluted for me but trip wires set and successfully worked in tripping up.
Tax dragon is spot on. Actual tax was due, no tax damage to partners, bar interest and late payment penalty and fair play to the existing accountants for holding up hands.
If you think they have integrity, why change?