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We're Tax Advisors not Tax Police
In the end of the day responsibility for the accounts as far as HMRC is concerned lies with the client. If we disagree then we should put it in writing to the client to cover our backs and explain the risks to them.
But I've come across business owners who say my accountant wont let me claim this that or the other, most of the time their accountant is wrong and they are losing out on money. My point is let the client take the risks they are comfortable taking.
I agree, up to a point
However, would you prepared to defend those claims to HMRC, or would you just throw in the towel?
If you can't support your client 100% then best not to get in that situation in the first place.
It's my reputation at the end of the day
I don't know what it counts for now but in the old days of a local tax district with local inspectors then I knew that my more fastidious approach stood all my clients in good stead with HMRC following investigations. I was able to argue a corner I had decided on and not shuffle and look at the floor as Id rather hoped I'd just get away with it!!
As a practice that tried to get it right I am happy that we got less enquiries than other careless or even dodgy practices. Ok so I don't have numbers to back that up but I didn't feel like we got many and certainly there appeared to be a point to the ones we got not just casual fishing.
Where something big did come to light (20+ years undeclared letting was one) we were able to advise the client and negotiate as good as outcome as we could as the client was willing at that point to then play ball. Another one((again letting income - but that included an invented new boiler complete with invented plumbers invoice) we sacked the client as we wouldn't put it through and he was insistent.
There will be errors and missing bits and bobs from time to time and that is when we must be pragmatic. So I'm not going to refuse a client a £250 spend at Halfords in the company card if there's no receipt and he normally takes the company car there for repairs but I am going to query 2 covers when he's away overnight on a business trip and I once refused to even put a strip club through as entertainment the client was suitably embarrassed lol
M
learning the hard way
Its not possible to check every transaction but obviously you can concentrate on the risk areas and spend time on those areas. Unless you do the book-keeping you are dependent on the client booking everything correct but what I have found most have a casual approach hence the errors and I do correct or clear up where I can and the amounts are material but not possible to do everything. I seem to pick up clients that are either behind with the book-keeping then with deadlines approaching they just quickly manage to do the book-keeping over six weeks and then there are so many errors.
From 2015 I have changed my approach for new clients and be in control. I perhaps have been little pressurised to meet their deadlines in the past and been naive. I have taken on clients which I needed being still relatively new to practice but have been totally disorganised hence causing me problems
However, now its going to be my way or the highway. I have changed the engagement letter so clients know what is expected. I will try to educate them more from the outset and be even more involved in their business. Try to anticipate potential problems, be wiser if this client is going to be lax with record keeping which mean more risk of errors. Scrutinise the accounts and take more time over them.
I noticed sole practitioners seems to be more meticulous than larger practices who seem just to be filing service and do not really spend any time looking at the accounts and picking up errors. I recently picked up a client from a smallish practice and they just filed the accounts without asking any questions to the client. I normally have at least 10 questions.
Knowing your
client is the key. When HMRC do a investigation (full blown) they will want to know how much they spend on toothpaste.
So if you know your client and their expenditure you should know if the accounts are reasonable. If they don't look right you go hunting. If it's as you think it should be then it is not worth spending time on looking for a packet of crisps claimed as travel.