Scenario:
An acquiantance approached to check if his current Accountant calculated his tax correctly. Did some workings and found out that though tax was correctly correctly, certain steps or methods could have saved him from being a 40% tax payer. He then asked us if we could take over as his Accountants and this where the pandora box opened. The acquiantance has 3 properties (mortgage free) commercial/residential mix which are actually in joint name with the wife. Interestingly the Accountant declared 100% income on the husband's name and submitted a separate tax return for the wife for a property she owns separately and 100%.
Implications: Husband would most likely become a non 40% tax payer after the income is split with wife.
Questions: We would now have to go back to disclose/amend the wife's and husband's tax return. I believe I would use DDS service to report the wife and pay the tax but how many years we go back and how do we get husband's tax returns amended and potentially get the 40% incorrect tax he paid?
Thank you for your time and help.
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Replies (4)
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Have you checked there is no change to the beneficial ownership in place that gives 100% of the income to the husband. How many years does this error go back?
Thank you Lesley.
Yes checked that. They have not undertaken any such exercise. This error goes back more than 6 years for sure. I am waiting for him to bring the Accounts. Any suggestion would be appreciated.
The answer should be in the link below re self-assessment time limits to correct errors (which can act for or against HMRC/taxpayer) and taxpayer obligations thereto.
https://www.accountingweb.co.uk/any-answers/taxpayer-duty-to-inform-hmrc...
If the accountant has been negligent then HMRC may make a discovery assessment per this case:
http://financeandtax.decisions.tribunals.gov.uk//judgmentfiles/j11054/TC...