I run a tiny media company (limited) and have recently changed accountants. On preparing this year's unaudited company accounts, the current accountant has found errors in the previous accounts. The errors are an understated bank balance brought forward of £2600, a VAT debtor omitted and a rent deposit put through as rent and the debtor omitted. In total a sum of £3,400. As the company already had an accounting loss, the loss brought forward will just be reduced so no tax outstanding.
The current accountant believes these are 'material' and 'significant' errors and is insistent that both the accounts and tax returns should be prepared from scratch in case there are more errors and refiled to HMRC and Companies House. My previous accountant has suggested putting a journal through this year’s accounts reducing rent costs by the sum and the other amendments to be made as balance sheet adjustments with no need to amend the prior year’s tax return.
I have contacted HMRC and they are saying that the amendments should be made online and refiled. The old accountant refuses to do this unless I re-engage them as my accountants, the new one will only agree to make a prior year adjustment together with a letter to HMRC to disclose the errors and inform them that the losses claimed are incorrect. They want me to pay for a completely new set of accounts.
Please can someone give me some advice as I’m now in the position of either forking out money for more accounts to be done or attempting to make these changes myself online as advised by HMRC as an alternative option.
I would be grateful for any thoughts before I begin the search for yet another accountant!