Distressed - stolen tax refunds?

Capricornian

Hi MSE folks,

Please help me and give some advice as I am in deep dillemma right now. I engaged a tax accountant to help me re-organise my past 4 years' taxes. I am always on PAYE and full time perm employee so there is nothing too complicated about my tax matters when it comes to Self Assessments. I do have very small amount of unclaimed expenses that needed to be put in and to check whether it is applicable to get some tax refunds back. I started a limited company recently so that I could accept some contracting work and my tax accountant said that this could also be used to reduce the Personal Self Assessment past taxes as it's a startup costs that has taken place (not sure if this is correct). The total expenses for these were just under 2k.

I engaged the tax accountant in May and gave my spreadsheet of all unclaimed expenses, NI, UTR and Online tax filing activation code that he said was necessary to activate filing tax online. I waited and waited without a word from him thinking that he needs to comb these through and come out with the breakdown on the Self Assessment. I thought the process was that I will get to review the SA that he filed online, sign it (or e-sign it) then the Tax Office will issue the refund to me, for which I will then pay him separately for his service.

However 3 weeks ago (August) his accounting firm sent me an invoice. The invoice was nearly 3k for his service and this was in addition to our initially agreed fees. I then went back and ask to see my prepared Self Assessment and a clarification of the extra fees because I was never aware of them. Our agreed fees (on email) was only 200 pounds and his firm's website also quoted 'Fixed fee guarantee' service.

He then sent me a copy of my Self-Assessment and told me that I am being ungrateful as he has secured such a high tax refund. I was unable to get him to explain how he had came up with such a high expenses (about 10k) when I only gave him a spreadsheet of 2k expenses and neither did I have a chance to sign to agree that the SA was accurate. I also asked him if he has decided to make his new fees proportionate to the tax refunds but he reacted defensively.

I called up Revenue to investigate only to learn that he has made the tax refund directly to his firm's account since May through the online tax return process!! I dont really understand how the online filing process of hmrc could pay someone else without my authorisation, unless they assumed that having an online account with my name means you can do anything you want. How he has managed to do this under my nose, is still the biggest mystery but the pain is that he has taken the tax refunds and messed up my tax accounts, either pretending to be me or pretending that I have agreed to it.

The Revenue currently does not have any records of my authorisations or my agreement to the SA, apart from a record of his bank account details that has been paid out in May. Failing to understand how he has came up with some numbers to mark up my expenses, I have politely asked them (him and his Office Manager) to pay back the tax refund for which I will pay it all back to HMRC so that I could get another accountant to have it rectified. I will also pay him for his service at an initial agreed fees but they refused to do that.

Instead, they sent me the balance of the tax refund forcefully after taking a 30% cut of it (old fixed fee plus extra costs), knowing what my bank account numbers were. It made it looked like I have agreed to the extra charges. The firm then sent me a revised invoice for the original fees and added the caveat - 'Fixed Fee agreements are conditional upon no extra work orders for tasks over and above the fundamental work load agreed. In the case of extrapolated information been forwarded and/or coming to light after the inception of a fixed Fee agreement, a detailed log of all extra work done, and any associated costs will be forwarded with Extra work Order Invoice(s) '. This is followed by a separate invoice that made up the extra charges. I think this is to cover up the tax refunds monies they took by adding up the extra charges and sending me a revised invoice last minute.

They now refused to talk to me and have provided no explanations whatever in regards to my tax assessments and to show any Letters of Engagement for the extra fees. I am now left with a lot of worries that the Tax Office might look at my tax files in the future and suspected an abnormally high claims for which I have to pay back part of the tax monies that they have taken (I didnt receive). To add to the stress, I have just learnt that there is no common ombudsman to manage accounting firms. Their website displays the ICAEW logo but I think the company can do that when they have just one of the employee who is a member, not the company collectively who is a member of ICAEW.

Please help me! What can I do from here to recover parts of my missing tax refunds? Ideally, I want to recover these sums from the cowboy accounting firm and paid it all back to hmrc and clean up my tax files. I have thought of going to the police but it may potentially make matters worse as it will take a longer time to investigate and it may not help me with recovering the missing tax refunds that they have taken. I will still be stuck with returning the tax refunds to hmrc under my name should the revenue argues that this issue is between me and my old accountant. :mad:

Please give some advice. I am having sleepless nights over this. Proactively getting my tax affairs organised is now turning to be the worst nightmares.

ILW

Have you been to the accountants offices demanding your money yet?

Nicola_Ed

Hi

Summarising your question you appear to have 2 problems:-

• The tax returns filed by your accountant may well include inflated expenses.

• You have been charged more than the expected fee for the preparation of these returns.

I would strongly recommend that you deal with your problem with HMRC first. You need to ask HMRC for copies of the returns submitted by your accountant and compare the expenses claimed on the returns to the figures you submitted to your accountant.If, as you suspect, the expenses on your returns have been artificially inflated,you need to advise HMRC of the error. This could be done by arranging a meeting at your local office.

I suspect that your accountant used your own login and password to file your return (as oppose to using one he may have as an accountant) HMRC would assume the return was being filed by you ( as he had your password) and would have no reason to query the bank account number provided for the repayment.

If there is tax to be repaid to HMRC you may not have any recourse to HMRC to recover this from the accountant if he has used your own password. I think this is more of a legal issue which is outside of my experience.

As for the inflated fee you were charged – again this is a legal issue but I feel you may end up costing you more to engage professionals to deal with this than you might recover from him.

You may end up a lot worse off at the end of this process than you were at the start.This is no fairness in this situation and I sympathise with your plight.

pjclar02

Hello there

First things first - if the accountant submitted the tax return without obtaining your agreement or signature, then I suspect this amounts to fraud. That they ticked the box authorising HMRC to release the refund to them, without your signature or consent, is almost certainly fraud. Generating £10,000 worth of expenses from your summary of £2,000 of expenses is probably also fraudulent. Therefore, I think the Serious Organised Crime Agency (SOCA) would be interested in the situation.

I also believe that if theu display the ICAEW logo on the site, then something like at least 50% of the owners must be members of the ICAEW, and therefore you have recourse to the Institute in the first instance. What you have described will be in breach of several clauses of the ICAEW code of ethics.

One or other of these routes will eventually get you to where you need to be, but I suspect if you threaten one or other of these routes you may find the accountant starts responding to your queries again!

potus64

To put my thoughts into the pot, I'm an accountant and to file a tax return and request money to be paid into one of our client deposit accounts we need to have a signature from the client. Obviously you have not given consent for the tax refund to be paid into the accountants account so therefore they have stole your money. I would write a letter to the accountants and send it recorded delivery informing them if you do not receive your full tax refund in the next 3 days of them receiving the letter you will contact the police.

If they don't reply you will have to involve the police. They will not be able to provide proof that you requested the tax rebate to go to them so therefore you should receive the full rebate. At this point seek out another accountant and make sure they are regulated by an accounting body.

Good luck