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Accountant in a pickle over business records

13th Oct 2016
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The first tier tribunal has allowed an appeal in part against adjustments HMRC made to a London accountant’s income tax and NI position.

In a recent tribunal [Olayinka Ayeni v HMRC (TC05329)] chartered certified accountant Olayinka Ayeni of New Cross accounting firm OA George & Co appealed the adjustments in respect of both his accountancy business and property letting business, plus also against late payment penalties and surcharges.

On giving evidence at the hearing, the tribunal found Ayeni to be an honest witness, but commented: “evidence was often quite vague and this was not helped by the fact that in many cases there was an insufficiency of documentary evidence to support his oral evidence.”

In a table summarising the particular matters that were in dispute – including deductibility of life assurance premiums, expenses and loan interest, among others – the Revenue repeatedly found that there was “insufficient evidence”.

In his concluding remarks tribunal judge Jonathan Richards said Ayeni was entitled to a deduction against profits of his property business in relation to certain property expenses. He added that he was also entitled to deduction against profits of his accounting firm for a proportion of life assurance premiums of £4,603 in the tax year 2006-07 and £3,218 in the tax year 2007-08.

However he said no adjustments needed to be made to Ayeni’s taxable profits for 2007-08 in respect of his argument that his entitlement to a deduction for loan interest had been understated.

Ayeni and HMRC officer Gill Cawardine did not reach an agreement on the deductibility of £14,857 of expenses, but the tribunal concluded that Ayeni was entitled to a deduction against profits of his property business only for rates of £808 incurred in 2007-08.

Ayeni received additional taxable income of £6,259 (not £12,519) in his property business in 2008-09 and he will be able to set expenses of £5,290 against that income.

The judge added that Ayeni had no entitlement to flat conversion allowances in 2007-08 or 2008-09, and that the late payment penalties and late payment surcharges were due, but that they need to be recalculated as a result of the overall decision.

His liability to income tax and NICs will also have to be recalculated.

“However, except insofar as necessary to give effect to those adjustments, the appeal is dismissed,” judge Richards concluded.

 

Do you think the judge came to the right conclusion? Have you ever had to represent a client or yourself in a similar case?

Replies (15)

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By mjshort
13th Oct 2016 19:33

Trivial adjustments by HMRC?
Can we not dispute items with HMRC without them being a headline new item in this website?

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By MissAccounting
14th Oct 2016 10:45

I dont really see how this warrants an article? If there is no documentation to back up the expenses then he cant claim them as a deduction? Case closed and hope his clients find a new accountant sharpish!

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Replying to MissAccounting:
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By dmmarler
14th Oct 2016 10:59

This is a Chartered Certified Accountant, so it does deserve an article.

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By MissAccounting
14th Oct 2016 11:04

What, because hes the first and only ACCA to have turned rogue? Come on, there will be dozens from all of the professional bodies that have been up to no good and they dont get their own article on here.

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By Balancing
14th Oct 2016 11:58

It is a relief for me to see something like this. In my experience of questionable behaviour from a chartered accountant there is only cover up! The firm he works in (in which he is a Partner no less) and ICAEW were not interested in many questionable points in relation to professional conduct, ethics and basic accounting. It seems that the concern of the firm and 'regulatory' body was not to ensure professional ethical behaviour with their members and public trust, but to avoid negligence claims by denying transparency.

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Replying to Balancing:
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By Tom 7000
14th Oct 2016 11:59

Balancing wrote:

It is a relief for me to see something like this. In my experience of questionable behaviour from a chartered accountant there is only cover up! The firm he works in (in which he is a Partner no less) and ICAEW were not interested in many questionable points in relation to professional conduct, ethics and basic accounting. It seems that the concern of the firm and 'regulatory' body was not to ensure professional ethical behaviour with their members and public trust, but to avoid negligence claims by denying transparency.

So Balancing....the ICAEW are in charge of all the ACCA accountants now....wow think of all the extra revenue they will get.....

:)

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blue sheep
By NH
14th Oct 2016 11:10

just wasted 3 minutes of my life, a non story

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Replying to NH:
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By Dib
14th Oct 2016 17:05

You should learn to read faster :o)

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By Ammie
14th Oct 2016 12:03

Given some of the comments on another recent thread I am not at all surprised of the findings.

The mind boggles at the thought of the extent of service being provided to his clients.

I suspect this is one case of very many where someone is "trying it on", sadly, I also expect many get away with it and boast about it too.

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By Balancing
14th Oct 2016 12:38

"So Balancing....the ICAEW are in charge of all the ACCA accountants now....wow think of all the extra revenue they will get.....

:)"

Well, they will be pleased with that ;) It seems that missed revenue/subs is the main thing the ICAEW discipline over. Oops, sorry if I missed that point of yours, but it's still a concerning issue for me.

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By johnjenkins
14th Oct 2016 13:25

I'm not saying that this article does pose a problem but I have had a few clients buying stuff on the net with very little back up documentation. I know this case is different but Robert has quite rightly given some attention (that's a beer you owe me Hugh) to the fact that not all expenses can be proved and the tribunal has accounted for that when summing up.
A common sense decision.

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By rememberscarborough
17th Oct 2016 13:28

Oh come on!! All internet expenses can be proved if you really want to. It only requires a bit of organisation (and a printer) together with access to bank accounts/credit card statements. People who "can't" provide evidence usually don't want to....

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Replying to rememberscarborough:
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By johnjenkins
17th Oct 2016 14:48

Right, how many fuel bills do you get that are practically unreadable. Yes you know how much went through the bank, but not how much was for [***] etc.
There is also a "can't be bothered with all the internet rigmarole" (for some people it can be a minefield) scenario.
I still say it's a common sense decision.

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By JessicaRain
15th Oct 2016 00:03

I wonder if the HMRC will set time and personnel aside to look through some of his clients' tax affairs. After all, he must have been applying similar 'laid back' principles to his clients accounts.

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By AndrewV12
16th Nov 2016 12:48

It just goes to show that Olayinka Ayeni was way over the edge, his defence is laughable, but yet again he was not hit for six, just rapped over the knuckles and had to pay a little more tax, its makes you think.......

“evidence was often quite vague and this was not helped by the fact that in many cases there was an insufficiency of documentary evidence to support his oral evidence.”

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