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self employed client not accepting my opinion

what would you do

Self employed security guy is claiming £10/day for meals. They are not itinerant. They travel from home to a huge sea port every day. They say 'their mates have put the £10/day in theor tax returns..why cant I?'

I have shown them links to Gov.uk and other links showing that this only applies to employees and because their journeys are not outside a usual pattern, they cant claim these costs but he is completely adamant he wants the costs in his tax return.

Do I include them and then put a disclaimer in my cover letter, or hold fast and dont include and he goes to another accountant?

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21st Jun 2018 08:23

You are instructed by your client, and he's not actually asking you to do anything illegal. He's only asking you to do something that, if HMRC challenge, is likely to be refused with the additional tax, interest and penalties for the year of challenge, plus in all probability the preceding five years.

I'd include it with the disclaimer and a stark warning of the consequences in the event of a challenge.

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to SteLacca
21st Jun 2018 08:48

Eh? If it's likely to be refused then is it not a deliberate error? Sounds like evasion to me.

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to the_drookit_dug
21st Jun 2018 09:16

If it's entered clearly on the Return, then how is it evasion? It's making a claim that they have received advice is not allowable, but fully disclosed to HMRC giving them the opportunity to challenge.

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to SteLacca
21st Jun 2018 12:03

SteLacca wrote:

If it's entered clearly on the Return, then how is it evasion? It's making a claim that they have received advice is not allowable, but fully disclosed to HMRC giving them the opportunity to challenge.

Surely that's not right. It's self assessment and unless you have reasonable grounds for believing that a deduction is due, claiming that expense is, as others have said, making an incorrect return - deliberately. Full disclosure doesn't enter into it. If I submit my return disclosing (in the 'white space') that I've made a huge capital gain but I haven't completed the CG pages, that doesn't mean I have submitted a correct return, does it?

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to Accountant A
21st Jun 2018 13:53

Actually, it would. Whilst the requirement to file a Return is laid down in legislation, the format isn't, and provided that you provide the information to enable HMRC to assess you to tax based on that Return, then you have complied.

There was a tribunal case (though I forget which) where this came up.

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to SteLacca
21st Jun 2018 14:06

SteLacca wrote:

Actually, it would.

I meant, just putting "I have made a big gain", but that's by the by. If there is no reasonable technical argument for claiming a tax deduction for an expense then if you do so, you have made an incorrect return. It's that simple. If there is some reasonably credible but debatable technical support then, by all means, disclose and claim.

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21st Jun 2018 09:13

If your guy is really self-employed then Caillebotte v Quinn is relevant. (My gut feeling is that he is really an employee in disguise).

Personally I would cease to act as I guess that the fees concerned are not worth the aggro.

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By SXGuy
21st Jun 2018 09:14

I often hear clients say 'my mates do it' and 9 times out of 10 I reply with, and are your mates accountants accepting it? To which the reply is usually 'erm'.

Point is his mates may well think they are claiming for meals and give those exp to their accountant, but what they may not know is whether their accountant is writing it back for tax purposes.

Often what someone thinks they are claiming for isn't always the case.

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21st Jun 2018 09:28

You are instructed to advise. You give advice. If your advice is unwelcome you have to consider if there is sufficient common ground between you to continue to act.

What you do not do is compromise your integrity by making entries in a tax return you do not agree with because some bloke down the pub says its OK.

All this stuff about a dislaimer is chaff to protect the coward.

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21st Jun 2018 09:33

Is the fee worth your integrity and peace of mind? I doubt it
Who gets kicked when the penalties come in --- you will and be expected to sort it out free
I vote ex-client

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21st Jun 2018 10:10

@ OC (OP).

(1) If you are a member of ICAEW (I would surmise that other accountancy bodies have a similar stipulation) then you MUST NOT submit a Tax Return (on behalf of a client to HMRC) which YOU BELIEVE to be incorrect - this comment is correct entirely regardless of whether or not the client holds the same belief and indeed entirely regardless of whether it subsequently transpires that your belief is incorrect.

(2) From a legal perspective, submitting a Tax Return to HMRC which contains incorrect and/or incomplete information renders the client/taxpayer liable to Penalties under taxation legislation (and in some instances, albeit very unlikely in the circumstances to which you refer, criminal proceedings).

(3) If the client were to subsequently take legal action against you for submitting a Tax Return on his behalf which YOU believed to be incorrect, then he would potentially have a valid right of action against you for negligence (with a consequent deleterious effect on your PI cover).

(4) Almost certainly, the client to which you refer is clearly the same client in respect of whom you posted a question recently here:-

https://www.accountingweb.co.uk/any-answers/security-guy-travel-expenses

[I mention this point to assist members in gaining an overview of the client].

Basil.

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By Mr_awol
21st Jun 2018 10:11

I'd be quite firm on this one. If his mates are doing it, then his mates are wrong. That's all the explanation you need to give, and the chances are he will leave to go to the same back street chop shop his mates are using.

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By Maslins
21st Jun 2018 10:23

For me there's two different situations:

- something you think is a bit suspect, you query it, the client says it's valid, and you have no strong evidence otherwise. For things like this, we'd just claim them.

- something you know isn't valid, you tell the client it's not valid, and they say claim it anyway. For us it would then depend on the size of it. If it's trivial, we'd reluctantly just go with their wishes. If it's significant, we'd tell them to find another accountant and consider our ML obligations.

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to Maslins
21st Jun 2018 10:47

Maslins wrote:

For me there's two different situations:

something you know isn't valid, you tell the client it's not valid, and they say claim it anyway. For us it would then depend on the size of it. If it's trivial, we'd reluctantly just go with their wishes.

Why? Because you don't want to upset the little darling?
Anyway, in my experience a client would never say, 'claim it anyway' when advised they can not.

You: You can't claim that.
Client: Claim it.
You: Oh alright then *reluctantly*

Seriously?

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By Maslins
to andy.partridge
21st Jun 2018 14:05

andy.partridge wrote:

Why? Because you don't want to upset the little darling?
Anyway, in my experience a client would never say, 'claim it anyway' when advised they can not.

You: You can't claim that.
Client: Claim it.
You: Oh alright then *reluctantly*

Seriously?


Because I'm not going to fall out with a client or file an SAR based on what could be a tenner of expenses that shouldn't be claimed. If it's a much larger amount, I would.
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to Maslins
21st Jun 2018 15:07

Run that by me again. You tell a client that they can't claim something and they 'instruct' you to claim it so you do.

I find it hard to comprehend that you get yourself in that position, but you say you do. Then you go back on your advice because you don't want to fall out with the client?

I don't know why it would mean you would fall out with the client, either. If it's trivial as you say they won't care if you don't claim it. Your position makes no sense.

Who do you work for, Jellyfish & Co?

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By Maslins
to andy.partridge
22nd Jun 2018 09:13

As you say, it's advice, nothing more.

I don't think it's worth arguing for ages with clients over trivial things. Same should apply to internet forum posts.

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to Maslins
22nd Jun 2018 09:42

I don't argue with clients over trivial things and without compromising my integrity. That's the difference between us.

This is a debate not an argument. If you think this is an argument and you are so keen to avoid them I can see why you take the decisions you do.

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By mumpin
21st Jun 2018 10:55

Put it in the accounts where he can see it.
Put it as an addback on the IT Comp.
Job done.

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to mumpin
21st Jun 2018 17:47

mumpin wrote:

Put it in the accounts where he can see it.
Put it as an addback on the IT Comp.
Job done.

Would you show him the tax comp, or keep it as an internal secret document?

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21st Jun 2018 13:46

Do the Accounts including the claim but don't submit. Send an invoice with an additional item for hotel stay. He calls and asks what it is. You say I took a few days away while I thought about it. He says 'you can't do that'! You say 'there you go!

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21st Jun 2018 13:50

Plan B. You say 'if England win the World Cup I'll claim it'. Job done!

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By OC
21st Jun 2018 16:08

Thanks All. Have emailed the client saying their mate is wrong. Gave them website links to back up my position.

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to OC
21st Jun 2018 16:33

In the last hour I have had a client seek to claim £500 for a suit, shirts and ties for work, saying that a colleague tells him it is allowable.

I explained the position, provided a link, told him about uniforms and safety clothing. Turns out the colleague was in a job where expenses were allowable but he is not. Client said thanks, leave it out, sorry for troubling you.

If your client is reasonable, there will be no problem. Have confidence in that.

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