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Client not eligible for SEISS - accountants error

2019-20 Tax Returns not submitted on time

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Hello

We have recently taken on a new client who was unhappy with his previous accountant.  They told him that they sent his 2019-20 tax returns to HMRC on time, but HMRC had no record of receiving them.

When our client asked for copies of the tax returns (it's a partnership with two partners), he was sent handwritten tax returns and told that they were sent by normal post, no date given, no proof of postage.

Our client has a trail of text screenshots where the previous accountant clearly blames HMRC, that it is probably on a pile of unattended post etc and that the penalty notices are probably "fake".

We have since submitted the tax returns (mid March) as this was the first our client knew that they hadn't been received was when he had HMRC late filing penalties.

To add insult to injury, this has now put paid to their fourth SEISS grant and their shop has been severely impacted by the lockdowns, it would have possibly been around £2000 per partner they could have claimed.

I've been on the SEISS chat facility to ask if there is an appeal process but they flat out said no, nothing exists, try claiming Universal Credit.

Any ideas - small claims court against accountant? Can't think of any other advice to offer.

 

Replies (26)

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By Duggimon
14th Apr 2021 12:19

There is a clear material loss to the client, although it may be tough to prove the accountant didn't send the returns.

It's a legal question though, I would suggest a solicitor would be the best port of call, there is, so far as I know, no way the client is going to get the money from HMRC.

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Replying to Duggimon:
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By paul.benny
14th Apr 2021 12:30

Duggimon wrote:
... it may be tough to prove the accountant didn't send the returns....

The lack of evidence of submission and issue of penalty notice are somewhat persuasive. On the other hand, if client didn't approve return, it shouldn't have been submitted anyway.

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By I'msorryIhaven'taclue
14th Apr 2021 12:26

How did the client normally authorise tax returns? And did he sign or otherwise approve / authorise the most recent (handwritten) returns that the ex-accountant claims to have posted?

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By Paul Crowley
14th Apr 2021 12:35

If a proper firm of accountants them they will have PII
Those details available on request
Send a formal letter (better if good solicitor sends it) stating case and requesting details of insurer

If letter of engagement exists then look at complaints procedure
It should state who to address, and also that if you are not satisfied the Regulatory body that you could complain to

No decent accountant failed to file by 28 Feb this year, knowing full well that the filing was essential to be able to claim: those were last year's rules, clearly going to be the case for this year.

But handwritten tax returns probably means a kitchen table unregulated and uninsured trader.

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Replying to Paul Crowley:
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By Matrix
14th Apr 2021 12:36

I assume by “you”, you mean the new client. The new accountant can pass on this info but should not get involved.

Handwritten probably suggests old school.

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Replying to Matrix:
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By Paul Crowley
14th Apr 2021 12:49

If old school then knew the paper filing deadline was different to electronic

Also should know that recorded delivery may not show arrival but does confirm sent.

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Replying to Matrix:
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By JoandToby
14th Apr 2021 12:55

Yes thank you. Ive told the client we cant get involved directly but have suggested he contact a solicitor for advice, its worth a try at least.

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Replying to JoandToby:
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By Paul Crowley
14th Apr 2021 13:03

If insured then it should be a walk in the park
Figures to small for most PII companies to consider the costs of a defence

If uninsured then just confirms HMRC opinion of the unregulated. Whoops regulated by HMRC.

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By jonharris999
14th Apr 2021 14:25

You will get nowhere with an appeal to HMRC re SEISS in these circumstances. The number of appeals accepted is tiny. I agree with those saying above that governing body complaint and professional negligence claim is the way to go.

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By SXGuy
14th Apr 2021 14:38

People still file paper returns? I think I received one last year.

Still at least I haven't seen any of those simple (not so) assessments in a few years. Silver lining and all that.

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Replying to SXGuy:
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By JoandToby
14th Apr 2021 14:56

I was surprised that accountants were still filing paper ones!

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Replying to JoandToby:
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By Paul Crowley
14th Apr 2021 15:12

They are not
Otherwise tax return filing is cut down to just six months a year.
Sounds made up to pretend sent once they realised it was not just late filing penalties that was the issue

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Replying to Paul Crowley:
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By JoandToby
14th Apr 2021 15:34

My thoughts exactly Paul

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By I'msorryIhaven'taclue
14th Apr 2021 16:02

Do HMRC still return unsigned paper returns to the taxpayer?

(They used to up until 2015. See https://www.gov.uk/hmrc-internal-manuals/self-assessment-manual/sam121030 and jump down to "Signatures".)

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By Duggimon
14th Apr 2021 17:16

We have to file multiple paper returns every year, though not by the restricted deadline. Perhaps it's only in Scotland but there remain a number of HMRC exceptions where the gateway will calculate a different (and wrong) tax figure to our tax software and reject the return.

Entirely irrelevant to this thread but that's how I roll.

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Replying to Duggimon:
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By Paul Crowley
14th Apr 2021 17:47

Iris warns that HMRC may reject on a few of ours, but it is too sensitive.
I go ahead and file and Do a manual check on the relief ordering.
Only ever had one reject and paper to be filed, as you say normal time limits if HMRC cannot get the tax correct on their software.

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Replying to Paul Crowley:
By Duggimon
15th Apr 2021 07:58

The official calculation from HMRC miscalculates pension relief for anyone with trade/employment income in the intermediate band and dividends taking them in to higher rate. It's not hundreds or even dozens of clients, but it's several.

Of course, that's a slightly different issue as IRIS uses the official calculation and also gets it wrong and gives no error, but those returns are paper returns with cover letters.

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By Paul D Utherone
14th Apr 2021 17:53

As others have said one for a solicitor not you, but

- has the client confirmed that they were sent a return to approve & sign before 31 Oct 2020?
- did they sign the returns and send them back to the old accountant (and have they got evidence that they did so - I presume so as the accountant says that they posted them to HMRC)?
- do the copies provided now as evidence of submission by the old accountant show signatures?

If the answer to any of those is NO then the chances are that HMRC would have returned the forms as unapproved / lacking a wet signature.

Not that I have submitted a paper return in years now (probably since the days of queues of accountants on the stairs at the local HMRC office with boxes of returns to deliver), and this is just me, but as a matter of course I still tend to spin down the client list at HMRC Online at the end of Jan each year to make sure that there are none showing outstanding.

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Replying to Paul D Utherone:
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By Paul Crowley
14th Apr 2021 20:49

We have tracking on the tax software that is reliable
Gives state of play and can be listed by client manager
But check HMRC quite regularly
Find the occasional client dropping off or submitting self.

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Replying to Paul Crowley:
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By I'msorryIhaven'taclue
14th Apr 2021 22:23

Nobody's yet embarked on this tack, but suppose there was some underlying reason why the outgoing accountant didn't submit returns prontissimo. (And yes, yes... I get that he's burnt his bridges (p*ssed on his chips, no less) by embarking on a somewhat dubious defence of it being lost in the post.)

Suppose this poor old ex-incumbent didn't file because this is an undeserving, non-paying, time-consuming, Pareto-style client from Hades!

I'm just supposin'. Other side of the coin, so to speak.

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Replying to I'msorryIhaven'taclue:
Kitten
By Hazel Accounts
15th Apr 2021 01:01

Yes, I agree first thing to check with the client is if he can demonstrate that he received the tax return(s) for approval, and even better show he returned them signed before due date. Even if he didn't keep copies, which seems to be the case, there may be a letter (given they were handwritten I assume not emailed!) and maybe some sort of invoice from the accountant.
The fact the accountant is being defensive sort of implies this is the case but your client would need some evidence like this to go forward with any sort of legal case/PII claim.

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@enanen
By enanen
16th Apr 2021 09:42

Avoid being dragged into a dispute where you do not really know the back story and you cannot resolve the issue. Suspicion versus evidence. Has the client filed all his returns in the last 4 years on time and always paid his tax on time?

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By Michael Davies
16th Apr 2021 09:45

You do wonder however how much “post” HMRC are sitting on.Don’t they log post as it comes in,and then it may just sit there not processed ?

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Replying to Michael Davies:
Kitten
By Hazel Accounts
16th Apr 2021 10:23

I could be wrong but I think some clerical staff open and log post and even scan it in. I called HMRC about something fairly recently and the agent confirmed that they could see I'd sent a letter (say about 3 weeks prior although I can't remember exactly) but it "hadn't been allocated yet"....

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By richard.snape
16th Apr 2021 15:00

Had the clients previous year returns been submitted on paper or online might be another pertinent question.

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Replying to richard.snape:
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By Paul Crowley
16th Apr 2021 20:40

Spot on
New agent could easily check filing date.
Client should know if he signed paper handwritten returns.

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