Client had a VAT inspection. It turns out VAT EDR should have been 2 years prior to what it was. Under FRS for the period, client now owes £20k. Profit per annum is ~£30k. Client is now a Ltd Co but was sole trade at the time of VAT registration (VAT number TOGC, so liability for £20k lies with Ltd Co).
We took this client on at about the time they actually registered for VAT. Previous accountant is known to be somewhat dubious, and on the face of it he has clearly failed to advise our client correctly (he has no professional body membership).
My immediate thought is £5k for formal insolvency is cheaper than £20k VAT - it will take the client years to pay that off, if indeed HMRC would allow that. Would an insolvency practitioner have more clout to be able to pursue the previous accountant for negligence, if that turns out to be the case?
Any other pearls of wisdom? Frankly, I'm dumbfounded by the extent of this, and just so upset and cross for my client.