A client of mine is negotiating to purchase a UK limited company. As part of the due diligence it has been established that the company has not filed any P11ds since it started although there has been qualifying benefits in kind for the past few years which should have been declared.
We have also established that there was a genuine mistake on a vat return resulting in a signficant under declaration last year. Both these matters were flagged to us by the company accountants who were only engaged last year. Regardless of whether my client buys the company or not what obligations are there on the directors and their recently engaged accountant to ensure these matters are corrected. Does it constitute fraud if the owners ignore the recommendations of their accountants. If the directors are adamant that they will not rectify these ommisions where does that leave the accountants?
Needless to say, my client has decided that they will not proceed unless they put their house in order.