A client who came to us last year, after a botched incorporation by their previous accountant which nearly cost them £53,000 in VAT, is now blaming us for them supplying the wrong figures to HMRC for tax credits.
Due to them drawing significant sums from the company, we had to declare a large dividend to clear their overdrawn loan before the end of November, otherwise they would have had £7,500 of s.455 tax to pay on 1 December 2012. As a result of this large dividend they may have to repay tax credits.
We do advise on tax credits if asked but specially exclude this from our ToE, and only act if requested.
I feel like we were stuck between a rock and a hard place, they couldn't have afforded the £7,500 last December and not declaring the dividend would also mean higher rate tax in future years to clear this! And the overdrawn loan occurred because of errors caused by the previous accountant that we had to correct to save them the £53,000 in VAT.
So, we have saved them over £60,000 on one hand but they will lose some tax credits on the other, which they wouldn't be getting in future anyway as they have too much joint income on an annual basis if you exclude the corrections we made.
You can't win sometimes!
Anyone else helped someone out only to have it shoved in their face?