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Previous agent estimated figures

We have taken on client and requested prior year SA returns and found issues

We have been approached to complete 2018 SA return but previous agent wouldn’t supply information. We asked for copy SA returns and found previous four years SA returns have been estimated figures

Two parts to query. One does client require to advise HMRC.

Second if advisor did not get client to sign should he be reported to ICAS.

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14th Sep 2018 21:04

No idea what you mean but it might help if you explained what the estimates were and how material, or otherwise, they are/were to the client's tax liabilities. How did you discover estimates were used?

Were the estimates provided by the client to the former adviser? What information is the former adviser not providing? Why is the former adviser not providing the information?

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By puzzel
14th Sep 2018 20:56

How about getting to the basics.
Request client for prior year accounts and tax returns, they should have had copies to sign, under the prior terms of engagement.
Failing that, request HMRC for the previous tax returns, I assume from your posting it is an individual and self employed.
No, don’t inform HMRC as yet until you get the full information that has been submitted.
Reporting to ICAS, well are they a member and is it worth it?

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By Matrix
14th Sep 2018 21:41

What has the client engaged you to do? Are they saying that they have never seen these tax returns?

Once you have the full facts and if you think tax has been underpaid then you will need to file an SAR report for the client unless he is happy for you to redo all these years. If the client wishes to report the firm to ICAS then they can do so, I wouldn’t get involved.

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14th Sep 2018 22:40

The reason I stopped posting in these is the replies you get. Don’t bother commenting if you haven’t anything positive to say.

Ok here goes again we have found a precious accountant lodged SA tax returns with only a figure in income box. There was no consideration giving for the actual business which is a hotel.

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to stephenward69
15th Sep 2018 01:22

stephenward69 wrote:

The reason I stopped posting in these is the replies you get. Don’t bother commenting if you haven’t anything positive to say.

Your original post didn't make a great deal of sense and some of us were trying to tease out from you exactly what the issue was, how it had arisen and how you identified it.

You give your name and the name of the firm you work for so you presumably want to show a professional image.

stephenward69 wrote:

Ok here goes again we have found a precious accountant lodged SA tax returns with only a figure in income box. There was no consideration giving for the actual business which is a hotel.

That doesn't seem to bear any resemblance to the problem you originally stated: "We asked for copy SA returns and found previous four years SA returns have been estimated figures".

What does "There was no consideration giving for the actual business which is a hotel" mean?

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By Matrix
to stephenward69
15th Sep 2018 08:03

Stephen

Please would you advise why you are unhappy with the replies. I just replied with what I would do and asked some questions.

Regards
Matrix

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to Matrix
15th Sep 2018 12:16

Thank you your reply was appreciate some just being the usual so you are one I thank

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to stephenward69
15th Sep 2018 18:01

stephenward69 wrote:

The reason I stopped posting in these is the replies you get. Don’t bother commenting if you haven’t anything positive to say.

Ok here goes again we have found a precious accountant lodged SA tax returns with only a figure in income box. There was no consideration giving for the actual business which is a hotel.

Well, feel free to stop posting again if you're going to fly off in a hissy fit every time some respondent asks for some very reasonable detail to pad out the query you posed.

I've lost count of the times we've been asked to spin straw into gold. We're accountants, not Rumpelstlitskin.

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By SXGuy
15th Sep 2018 08:29

If a reply is negative, its not for you to pick and chose which ones sit better with your own feelings. Do you want people to not give an accurate reply because it comes across as negative?

I to am confused. Past 4 years SA show estimates, yet further on you say only income declared in SA. Which is it?

Truth is that the client was probably a pita to deal with, agent probably filed estimates in order to avoid late penalties and to cover him/herself because the client wasnt forthcoming with the info.

I find it unlikely any accountant would just randomly file SA's with no instructions.

I do feel for you as from experience I can see headaches for you all round.

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15th Sep 2018 08:42

At risk of stating the obvious, what is supposed to happen is that
1. the client provides his business records & other information to the accountant,
2. the accountant prepares a draft tax return based on those records & information (and possibly a set of accounts too),
3. the client checks & approves the return (and accounts), and
4. the accountant then submits the return to HMRC.
Which of these did not occur in your (new) client's case?
Are you sure that tax has been underpaid as a result?
David

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to davidwinch
15th Sep 2018 12:26

Good afternoon David

Thank you for your reply. I should have taken more time to type original question to assist informative answers like yours.

I view these forums as a way to reach out to professionals like you just for comfort. I haven’t come across something quite as spread over so many years

Above what you mention all makes sense the only point I can confirm is point 1 the rest we can’t get answers.

However I only have what the client tells me and we all know we have to be impartial.

Thank you but all I can tell is the profit shown is to low and I need to persuade the client to have figures prepared to ensue I and they understand the correct sums

I suppose my query is more along the lines of should the client say don’t touch, I am wary of staying involved and want to resign as I can’t professionallt be aware of these facts and just leave it. However other less robust accountants have said just leave it and I’m not happy to

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15th Sep 2018 09:06

Just, wow. Lot of assumptions in the question. I suggest that the first thing to do is establish the facts, rather than assuming.

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15th Sep 2018 10:19

If the previous accountant has not claimed any expenses and your client can't offer any explanation I would be tempted to ask the client for his records from 2016/17. That might throw some light on what has gone on last year you can then make a judgement about the accuracy of the earlier years. If no expenses have been claimed and the client has overpaid their taxes I would think that they will be happy to pay you to correct their returns.
With regard to contacting HMRC the client doesn't need to do that you could do it if the tax liability is wrong.
Do you know that the client hasn't agreed his tax return for certain surely the client would have been told what his tax liability was.
I would do a bit of digging before assuming the previous accountant is the villian you could be taking on a difficult client.

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to lesley.barnes
15th Sep 2018 12:52

Thank you. The records are with precious accountant but bank statement for the year show a accurate picture

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15th Sep 2018 11:09

Thanks for all the positive assistance. The position is the client gave the accountant their bank statements, the expenses and assumed, wrongly the accountant had present the returns to HMRC based on these records. The client should have been more proactive but they are quite laid back and trusted in their agent. When we hve requested copies of returns all we have found is only one entry turnover figure of for example £14,000 split into each of the two partners return of £7,000. This is no correct and my whole post is over two parts.

The returns are clearly wrong, estimated, guesses however we want to word it but without completing the work again we have no idea but I know from this years figures the previous profit figures are much higher than this.

Back to my query. I feel we should redo the work to be accurate but what do you advise??

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to stephenward69
15th Sep 2018 11:46

Personally, I would re-do the work to be accurate. If no error is found, then fine.

I would still not be assuming the previous accountant is at fault. Bottom line is that the taxes acts place responsibility for an accurate Return on the taxpayer, and no-one else. If that taxpayer can't be arsed checking, then the taxpayer is the one at fault.

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By Matrix
to SteLacca
15th Sep 2018 12:31

Why would you recalculate past years? I only do work that I have been engaged to do and am being paid to do.

Per my above post, either the new accountant has been engaged to sort out the past or only from 2018 per the first sentence. If there is a reasonable suspicion of underpaid tax and the client doesn't agree to change the returns then an SAR may be required. I realise it will be difficult if the previous accountants aren't being helpful but the new accountants did not have to take on this work. It seems from further posts that they may have enough information to advise the client whether revised returns are required or not.

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to Matrix
15th Sep 2018 12:53

Thank you

I know from taking a bank download of the year the profit is understated

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By Matrix
to stephenward69
15th Sep 2018 17:28

Have you checked for purchases eligible for AIA? Do you have the partnership tax return?

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to stephenward69
15th Sep 2018 11:52

stephenward69 wrote:

Back to my query. I feel we should redo the work to be accurate but what do you advise??

You use the name and logo of a firm of accountants, which the website describes as having "... offices in Glasgow, Edinburgh, Motherwell and Stirling [and offering] first class accountancy services to both established and startup businesses of all types. Big practice service at small firm rates."

Are you telling me there is no one in that firm who knows what to do when approached by a client who has made incorrect returns?

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By DJKL
to stephenward69
15th Sep 2018 13:46

Have you seen the partnership return?

There should only be one entry in the individual partner returns, their share of profit from the partnership, is the problem this has been entered in the wrong box, in effect each has trading pages rather than a partnership supplement re the individual returns?

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to DJKL
15th Sep 2018 17:52

Thank you yes I have copies of the partnership return and the partners tax returns. The partnership returns just shows an turnover figure, no expenses and then that is shown correctly in the partners individual returns.

Just to give the client comfort I have analysed the bank download and these would be easy to incorporate into a revised partnership return and send to HMRC

However mt main query is relating to what I have a professional responsibility to report. The return has been filed, accepted and no enquiry after a year but I want to do things properly and I am in an area of the real world. I believe what I should do is report this and help client to understand their obligations many other accountants in the are are just saying not your responsibility leave if.

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to stephenward69
15th Sep 2018 20:40

If the returns have been filed and accepted over a year ago then they are almost certainly out of time for amendment, so you are not only chasing a black cat down a dark alley in the middle of the night, you are also making a lot of noise and unnecessarily wasting everybody's time as the cat does not even exist. And I'm not at all sure you'd even know what a cat looks like.

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to Tim Vane
16th Sep 2018 14:42

Schroedinger's and accountancy. Now that's new.

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By mumpin
15th Sep 2018 20:39

Looking at your website you don’t appear to be a member of any accountancy body. Don’t you feel that its slightly hypocritical if you can report the previous accountants to ICAS but there is no possibility of anyone reporting you to any organisation that upholds professional standards?

Your firm offers to produce statutory limited company accounts for £400. I would charge three times that fee and I feel that I’m fairly inexpensive. Can you really work to a high professional standard and charge those sort of fees or are they a “come on”?

Looking at your own history as a Company Director at Companies House you don’t appear to be a model of probity. Obviously Companies House doesn’t display the background to liquidations and resignations so I apologise if I’ve maligned you. I just can’t help thinking that people in glasshouses shouldn’t throw stones. HTH.

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16th Sep 2018 12:33

It seems to me that your position now is that you have seen previous years' returns (or at least one year's returns) and bank evidence which satisfies you that the partnership profits have previously been underdeclared to HMRC.
So I think you must discuss this with the client and recommend (strongly) that the client get the true figures declared. This might involve him asking the previous accountant to re-do the figures or instructing you to prepare correct returns. (Which raises issues about who pays.)
There may be legal issues for the client if he suffers as a result of (alleged) inadequate work by the previous accountant. In other words he may wish to recover additional accountancy fees & any tax penalties (but not any extra tax itself) from the previous accountant.
All you can do about that is recommend the client seek legal advice (i.e. not YOUR advice) on that.
An issue arises if the client instructs you that he will let sleeping dogs lie & retain the benefit of tax underdeclared & underpaid. Then you have a SAR issue to consider.
David

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to davidwinch
16th Sep 2018 11:32

Thank you David. Very good advice and thank you for your guidance as well as a few others I have thanked on the thread.

I think I have enough guidance to know where I stand and will advise the client

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By frankfx
16th Sep 2018 14:39

Chadburn v Revenue and Customs [2016] UKFTT 755 (TC)

Is a tax case worth reading.

Several years of estimated figures came in to question.

You could be the accountant , picking up the pieces.....if the client is willing to pay meaningful fees you will be okay. Otherwise you are likely to have irrecoverable costs to dwell over.

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to frankfx
16th Sep 2018 14:48

Thank you

This is the kind of guidance and advice which is greatly appreciated and I thank you for taking time on a Sunday to send such a reply.

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