Posting as anonymous as am so upset about what i've done (or not done). Please be gentle - need genuine advice as an accountant who is admitting a big cock up on behalf of a client...
I have a client who runs two businesses. One business was set up 10 years ago - shareholding of which was 50:50 mother and daughter.
They decided to open another (same industry) business 2 years ago, but the accountant who prepares their accounts (not me) suggested they do it as a completely separate company so that if the 2nd business failed, it wouldnt affect the first business, which had been running successfully for 8 years already.
The new company was set up - same shareholding as before (50:50 mother / daughter) but on a new site, different staff, different management, different customers, separate PAYE scheme & payroll / bank accounts etc. The intention was for the new business to be completely self sufficient & separate from the first.
I run both the payrolls of the 2 businesses. In my error, I have just come to realise that I have claimed employment allowance for both payroll schemes when this wasnt allowed. Whilst its no defence at all, I had no idea about the connected business rule surrounding the employment allowance - the basic gov.uk website only mentions companies in the same group - I wouldnt classify these 2 companies as being in a 'group', but merely having shareholders in common.
An accountant friend alerted me to the legislation around connected companies and interdependency of businesses and the claiming of the allowance yesterday. I've spent hours researching the subject & have had to come to the conclusion that i've royally cocked up here by claiming the allowance for 2.5years (2nd business was set up part way through the 2016/17 financial year).
Rather than flame me for being a complete moron (don't worry, i've already done that myself) I am now faced with the quandary of what to do next. Obviously meet with the client to advise them of my error. Advise them to admit to HMRC what has happened and then go about re-setting the payroll statuses for the last 3 tax years to repay the allowance. This will cost my client around £8.5k, which I don't think they can afford in one go. I have professional indemnity insurance - can they sue me for negligence to cover the claim? I would obviously comply completely as I feel its entirely my fault. Has this happened to anyone else, and what did they do? Am I a complete idiot for not knowing this piece of legislation?
I've been up all night worrying. I only have a handful of clients as I do this on a part time basis (i'm a mum with 3 young kids - again, no defence) but it has made me realise that I just don't have the capacity to familiarise myself with all the legislation. I only take on 'straightforward' clients - turning down anything that i'm not comfortable or familiar with. I thought I was doing ok until this, and now wonder whether i'd be best to resign & pack it all in.
Any advice would be much appreciated. I pride myself on getting everything just right for clients, so i'm terribly upset about this oversight