As a sole practitioner I have having everyone’s nightmare scenario and have discovered an error in the clients records that ideally I’d have discovered much earlier. I am aware of my failing and don’t wish to be made to feel worse but I would appreciate some guidance on how to proceed to set it right.
Basically, a director has a lease company car. We declare this a benefit and pay the tax and class 1A NIC. The problem is that I have found that he has been claiming 45p per mile from the company. He pays for all fuel privately. In two of the years the company has paid the insurance and in two I need to ask who paid it. He uses FreeAgent and records mileage to recharge to customers. I hadn’t realised he was then actually paying this to himself.
So this goes back to 2015/2016. Approximately £12,000 has been overclaimed.
I need to amend the corporation tax and his personal tax. He has no director’s loan account that we can use. So he either needs to pay the money back or declare extra dividends in each tax year and pay the tax.
Any advice very gratefully received. How best am I to amend the corporation tax and his personal tax going back to 2015/2016? Also I’m hoping that HMRC will be kind given that this is an unprompted disclosure. Thank you.