How can I make a complaint about an accountancy firm?

noddy75

Pennywise wrote: »

Are you sure you were with an accountancy practice? It sounds far more likely that you were with an umbrella or service company management firm. It is very rare for a proper firm of accountants to sign your VAT returns and have control of your bank account - professional institutes and PII insurers don't like that kind of thing. It sounds like you signed up to a "fully managed" company administration service - that is quite a difference from the normal relationship between a client and an accountant. If you had been clear from the outset that you had signed over the entire running of your business to such a firm, then you'd have got more relevant and appropriate replies. Are you aware of the "managed service companies" legislation brought in last year which effectively stops the payment of dividends from companies such as yours that are managed by another firm rather than yourself? Is your new accountant aware of this? If you have been taking a low salary and dividends for the past 18 months, you could have quite a potential tax bill! As you have still not said whether they were regulated or not, I take it that your previous company management firm weren't with one of the "chartered" bodies. Neither have you said about your new "accountants" - are they "chartered" or not. To avoid falling foul of the managed service company legislation, you need to run your own company yourself - that means at the very least, being responsible for your own payments, i.e. writing the cheques yourself! As mentioned above, you can only claim to an accountancy body if the firm is regulated by that body. If the firm in question isn't a proper firm of regulated accountants, your only complaint is to trading standards and to be honest, I can't see that being much use as they're more concerned with people being ripped off financially rather than get involved in arguments over whether a particular service was good enough or not. Put it down to experience, and learn from it - make sure your new firm is properly regulated!

Oh dear, I think this may be the case . My new accountant is regulated and chartered. I have just spoken to him and he said the old accountants were more of a 'managed service company'. Since the company was formed at the beginning of 2007 I have been paid in a combination of salary and dividends. I have paid all the normal taxes such as VAT, payroll and NI, and Corporation tax (of £11,000) for 2007. I got paid monthly by a combination of dividends and salary and was given a dividend tax voucher at the end of the tax year (April 2008). I got about £40,000 in dividends over the year and about £7,000 in salary for the 2007. I also paid quite a bit of tax from my personal tax return. I have just spoken to my old accountants and they have said this is legal although my new accountants have said this is questionable. Not sure who to believe or what to do. I feel sick. I am an honest person and would never knowingly not pay tax. Should I phone the IR and tell them I owe tax?

noddy75

jimmo wrote: »

No. I have been watching this thread with quite a bit of interest and I think I have learned quite a bit in doing so but when you ask should you phone IR (HMRC) you are coming into my territory.
If you don’t mind a bit of straight talking, you seem to have come to the realisation that your old “accountants” are not really accountants and you may be in a bit of a mess taxwise.
Your new accountants are regulated and if they give you bad advice there is definitely a complaints procedure through their professional body.
If you cut out the political correctness your new accountants are saying that the old “accountants” have been taking irresponsible risks on your behalf.
If you have done wrong it is always better to confess before being challenged by HMRC but even when confessing a good professional will save you a lot more than his fees.
You now have a qualified and regulated accountant. Let him handle the whole issue.

Thanks for your advice Jimmo, will speak to my new accountant. However, if my old accounants have been doing something illegal taxwise then shouldn't I be telling the police. I'm very aggreived that I am going to have to pay a lot in taxes because a company I was employing to do the tax legally (and in all the papers I have looked through and detailed on their website they say they do everything 'strictly legally') have been acting illegally. Shouldn't this company be shut down, I thought breaking the law was illegal? Is what they were doing actually illegal or not? I am now very confused. If it was illegal and the taxman will now be after me, then how can they continue trading? Should I contact the police?

Cook_County

I would suggest your company instruct a solicitor to handle future dealings with your previous adviser to protect yourself and your company; unless your company has legal expenses insurance in which case you should contact your insurers first.

silvercar

I have paid all the normal taxes such as VAT, payroll and NI, and Corporation tax (of £11,000) for 2007. I got paid monthly by a combination of dividends and salary and was given a dividend tax voucher at the end of the tax year (April 2008). I got about £40,000 in dividends over the year and about £7,000 in salary for the 2007. I also paid quite a bit of tax from my personal tax return.

You've paid tax and have tax vouchers. You can sleep at night.

You new firm may not be 100% happy with the way your old firm acted, but it sounds like the old firm weren't actually crooks.

Be content that the new firm will have things under control and let bygones be bygones.

Worst case scenario is that the tax people start digging around your old tax affairs, they may voice unhappiness at the way things were done, but I can't see major fraud having occured.

You now have a pucka firm dealing with your affairs and should let them get on with it.

Pennywise

silvercar wrote: »

You've paid tax and have tax vouchers. You can sleep at night.

You new firm may not be 100% happy with the way your old firm acted, but it sounds like the old firm weren't actually crooks.

Be content that the new firm will have things under control and let bygones be bygones.

Worst case scenario is that the tax people start digging around your old tax affairs, they may voice unhappiness at the way things were done, but I can't see major fraud having occured.

You now have a pucka firm dealing with your affairs and should let them get on with it.

No, there is a potential problem here. In early 2007, a new tax law was introduced that was aimed at "managed service companies" which the OP has already confirmed was probably the case. Managed service companies were prevented from paying dividends and had to pay out entirely in salary, with tax and NIC deductions. If his firm did fall within the definition of "managed service company", which it sounds almost certain it did if the "accountants" did everything like raising invoices and authorising payment, then he shouldn't have been paid by dividends at all. I'd agree with Jimmo and Cook_County - just sit back a while, let the new accountant think properly about what has happened, and then follow their advice as to what to do next.

noddy75

Pennywise wrote: »

No, there is a potential problem here. In early 2007, a new tax law was introduced that was aimed at "managed service companies" which the OP has already confirmed was probably the case. Managed service companies were prevented from paying dividends and had to pay out entirely in salary, with tax and NIC deductions. If his firm did fall within the definition of "managed service company", which it sounds almost certain it did if the "accountants" did everything like raising invoices and authorising payment, then he shouldn't have been paid by dividends at all. I'd agree with Jimmo and Cook_County - just sit back a while, let the new accountant think properly about what has happened, and then follow their advice as to what to do next.

thanks for that advice Pennywise, are you an accountant by any chance? How much would I be liable to pay back would it be PAYE and NI on the dividend amount? I am trying to set aside a huge chunk of my savings in case I have to pay. thanks. Incidentally I got all my contracts checked for IR35 by a very well regarded specialist IR35 solicitors firm and they have all been considered 'outside IR35' but don't know if this relates in any way to the Managed service companies tax issue.

In relation to all of this I am now considering closing my Ltd company. I am just stressed beyond belief and my new accountants are being really unhelpful. I am thinking about going back to a permanent position or working as self employed and submitting a tax return every year (or possible under a legal umbrella style company). If anyone could point me in the direction of a good umbrella I would be very grateful.