Brother owes HMRC - pay owed to accountant!

[Deleted User]

Brother has lot of hassle recently with HMRC - all his fault. Finally, got an accountant to sort out the mess of his own doing.

Anyway, HMRC now want £2500 up front, then £250 a month.

Hes managed to rope our Dad in to give him £2K (which I'm not happy about but thats another story). He says hes got to pay accountant the money he owes HMRC.

He owes accountant £700 for fees - fair enough. But doesn't sound right paying to accountant so that he can forward to HMRC?

Anyone got any experience of this?

My Dad is the type where 'cash is king' but I keep telling that A.) If brother gets large wad in his hand some of it will be relocated to the pub, B.) I don't know about this paying accountant for HMRC owings idea, and C.) No-one wants £2000 cash as payment for something because its not appropriate to have that amount of cash lying around.

(Unless of course, its paying for a used car or something off a stranger of course).

pjclar02

I would recommend paying the HMRC debt directly to HMRC. There is no need for this to be routed through an accountant. I have come across accountants in the past who ask clients to route the money through them to HMRC, so they can settle their own bills in preference to the tax debt.

Pennywise

Some clients/accountants prefer to work this way, but it's entirely up to you/them as to how it's done.

All I would say, is that you need to tell the accountant what you're doing if you decide to pay directly to HMRC, so that the accountant knows what's going on.

He may have a genuine reason for wanting the money to flow in that way, or he may just think it's easier all round.

I've got some clients who can't remember when/how to pay, or can't work out how to pay electronically by BACS etc., and so I have to keep explaining it to them year in year out which is painful and time consuming. Some clients paying different taxes (i.e. VAT, PAYE, Corp Tax etc) constantly use the wrong reference and the money ends up in the wrong account which takes time to correct. I don't have a client account and don't accept client money for their tax, but I am sorely tempted sometimes as it would make things a lot easier as I could make sure it was paid at the right time, into the right account, using the right reference.

Given your brother is clearly unable to look after his money and his accounts properly, you may well find that the accountant was trying to do him a favour and your suspicions are probably unfounded.

Someone needs to talk to the accountant to find out his reasons.

If this is all second hand "he said, she said" stuff, then you don't even know if the accountant asked for it at all - could be the brother just saying that to get his hands on the money himself!

heretolearn_2

As above, we don't take client's monies for this either, but it is how some accountants work so it's not necessarily a dodgy thing as you seem to assume. If they do, the money should be in a separate client account and not mixed in with their money.

what we quite often do, however, is ask them to send us the cheque - made out to the HMRC - which we then forward to the HMRC for them. As Penny says, this is a good way of tracking that they make the payment, on which date, how much and to ensure it goes to the correct HMRC account.

However, HMRC is switching to mostly online payments now so we won't really be able to do this so much.

If it's a proper accounting firm, and no some fly-by-night bloke working out of his spare bedroom, I don't think you need worry about them running off with a couple of grand of your brothers money.

antonic

There is no need to include the accountant in the process, your brother can make the payments himself by :

Direct debit
BACS/CHAPS payment
Debit or credit card payment over the phone or
BillPay

He MUST quote the CORRECT reference number when he makes the payment or it can go to the wrong type of tax (eg SA instead of VAT), or if makes a payment WITHOUT a reference number , it will sit in HMRC`s suspense account waiting to get allocated and the first he will know about it is when he gets letters for defaulting on his repayment arrangement.

Hope this helps.

Cook_County

I prepare several hundred US and UK tax returns every year; but would never dream of holding client money. It wpuld simply add business risk for me. Find out why this is needed.

dtaylor84

antonic wrote: »

There is no need to include the accountant in the process, your brother can make the payments himself

Or indeed the brother could give dad the reference and dad could BACS it straight to HMRC. No chance of it ending up in the pub then.

John_Pierpoint

My sympathies are with the accountant.

CKhalvashi

pjclar02 wrote: »

I have come across accountants in the past who ask clients to route the money through them to HMRC, so they can settle their own bills in preference to the tax debt.

So have I.

My accountant owes me about £20k at the moment, that I've lent her in the course of my personal duties.

We will get it back, but I think it'll take a little time!

CK

[Deleted User]

Thanks for help.

Dad went to accountant and wrote cheque out payable to HMRC. Accountant wanted to do it that way and they will send it off.

Sounds ok.

pavirano

Why not take expert financial advice?