Accountant did not understand SA
An accountant lost a first tier tribunal appeal because he “did not understand how self assessment worked”, a tribunal judge ruled.
Mohammed Drammeh, trading as M&D Accountancy Services, “calculated” the amount of tax that he thought should have been deducted from his client, Bernard Bediako, and included that figure on the 2013-14 return, rather than using the information stated on his client’s P60.
On the 'employment page', Drammeh increased the tax due in the tax deducted box from the £1,212 shown on the P60 to £3,102. He then added in the ‘other information box’: “T Ltd employment – additional information. This employer declares wrong deduction on tax certificate and the PAYE records are inaccurate. Please investigate.”
When HMRC opened an enquiry into Bediako's return, Drammeh reasoned the SA return: “[T]here are repayments due in all and no payment due to HMRC; this is because of negligent by HMRC system of obtaining tax payers accurate data or employer’s malpractice for tax avoidance. Taxes have been deliberately misrepresented. (sic)”
Since neither Bediako nor Drammeh responded to HMRC’s plea for evidence and an explanation of the figures used, HMRC imposed a penalty notice. When Drammeh eventually called HMRC in February 2015, five months after the information was requested, he said he was “under serious pressure and busy with work”.
Later, Drammeh protested that HMRC’s was supported by “false and wrong information supplied by the employer” and that the “tax codes and payroll system is misleading and illegal”.
In April 2015, HMRC closed the enquiry, amended the self assessment form, and issued a penalty notice of £567.18 for carelessness. However, Drammeh requested the issue be taken to a tribunal. “I am not satisfy with you for the way of handling this enquiry (sic),” he wrote.
Made up his own calculations
When pressed by the tribunal [TC05054] in April 2016, Drammeh admitted that he made his own calculations. “On the gross amount I take into account any expenses due and any personal allowance and the tax based on the rate,” he explained. But he did not deduct expense figures or personal allowance.
The tribunal explained to Drammeh that the only information required was the tax deducted by the employer as shown on the P60 and how the numbers from the boxes fed through into the computation of his final liability. After hearing this, he acknowledged the figure was wrong.
Drammeh initially claimed the mistake was the result of miscopying the information, but he backed away from this stance once he was reminded of the extra information he provided on the form.
The tribunal recognised that Bediako had appointed an agent to act for him. But HMRC decided against reducing his penalty because, like Drammeh, he did not contact them either.
Judge Anne Redston said: “HMRC repeatedly made direct contact with Mr Bediako: he received the original opening letter; he was asked in that letter to provide his bank statements… We also observe that Mr Bediako knows generally how to contact HMRC: before instructing Mr Drammeh he regularly called to discuss his outstanding debt, and HMRC helped him to complete his 2009 tax return.”
The tribunal upheld the amendment and penalty, and dismissed the appeal.
As we approach self assessment season, Drammeh’s handling of his client’s tax returns serves as a reminder to accountants to be accurate when completing SA returns.