Has our accountant totally messed up?

debsleypig

Help! My husband just got back from meeting with his accountant and I am panicking as the accountant submitted my husband's self assessement tax return, which I had no idea he was going to do.

Basically, my husband is over the tax threshold for the first time this tax year (2011-2012). In 2009-10 and 2010-2011, he claimed expenses/capital expenses on various bits of technical equipment and computer equipment etc. The accountant said that we shouldn't have claimed for the equipment in those years, as my husband was below the tax threshold, and so he wanted to claim them properly in 2011-2012 to reduce our tax bill. The problem is that we get tax credits, and obviously the amount of tax credits we got in 2009-10 and 2010-2011 was partly determined by the profit margin from my husband's business, which was determined by the amount of expenses/capital expenses etc.

What I want to know is whether the expenses can legitimately be claimed in more than one tax year? Surely if the expenses are claimed again this year, it kind of falsifies the profit margins in 2009-10 and 2010-2011 and therefore the amount of tax credits we have received?

Also, if our accountant has messed up, is there anyway we can adjust our tax return? Or is it the case that once it is submitted, that is it? He only submitted it this afternoon. I was expecting him to just hand the accounts back to my husband and then I would do the self assessment return myself, so I could make a decision about this issue before submitting.

Thanks x

peterod1

It sounds like your "accountant" is being very creative in order to reduce your current year tax liability.

If you have already had the benefit of the deduction of expenses in prior years then you cannot claim them again in order to reduce your tax in the current year.

The implication is that the previous years were wrong and therefore more tax should of been paid.

How much expenses are we talking about, if we talking peanuts I wouldn't be too concerned but if its 100's or 1000's then I would be very concerned.

ceeforcat

It sounds to me that your accountant had previously claimed capital allowances on equipment when, without such a claim, your husband would still have been below the personal allowance. I imagine that he is revising these claims in order to keep the profit just at the level of the personal allowance in order that claims are not 'wasted'.

I could be way off the mark though but it is possible.

chrismac1

On capital allowances: these are an election you make. So if you can claim £2,000 for 2009-2010 say then you can elect to claim £2,000 or zero or any number in between. This is one situation where an accountant is worth having, often it is optimal to elect to claim allowances such that your taxable income is exactly equal to the start point for Class 4 NI.

However, having made that election and filed a tax return you cannot change it after a set deadline. For 09/10 this was 31 Jan 12 (12 months after the filing deadline), for 10/11 it is 31 Jan 13 so OK.

If you did change the 10/11 data, then you should inform tax credits of the revised position.

debsleypig

Thanks for the replies. Yes, I managed to find out that you can amend tax returns after they have been submitted, so will look into this.

Please note that my husband has never paid tax before as he was never over the threshold until this tax year just gone. So the accountant was trying to use the personal allowances properly etc as this is the first year that he is having to pay tax.

I have a friend who is a retired tax officer, so will also seek his advice on what to do.

Thanks for your help x