Accountant's liability

dllive

Hi. I have an accountant, but if he makes a mistake on my self assessment form or gives me the wrong information (such as what I can claim for) whats the feasibility of getting any HMRC fines off him? Is it a long drawn out process, or is it relatively quick? (I have very simple self employed accounts).

antrobus

Depends.

If the accountant accepts that it was their mistake, then they will likely cough up, or make a claim on their PI cover, and it will be relatively quick. Otherwise off to court you go.

Is this a hyopthetical question?

talkinpeace

agree completely with antrobus

Cook_County

What professional body is your accountant a member of?

dllive

hah! Thankfully this is only a hyopthetical question.

Im thinking about using an accountant, however Ive heard that Im still responsible. I naively thought that thats part of why Id pay an accountant because the responsibility is past to them (as long as the figures Ive provided them are correct). I know now this is not the case, which prompted my original question. Maybe Im just being too paranoid?

dllive

Sorry, I should have also asked: what professional bodies should he be a member of? (I have my first meeting with him next week, so know little about him. If we get on then I shall appoint him).

chrismac1

You should be aiming to get numbers you understand, you should question anything in your accounts or tax return you do not understand. If your accountant is not OK with this, find one who is!

It is your legal responsibililty, your name on the dotted line with HMRC and Companies House. However, hiring a professional makes it more difficult for HMRC to impose high penalty levels for failing to take reasonable care, and various recent Tribunals have thrown out such fines. Plus if the guy has PII cover then any major blunders will be compensated for.

Pennywise

When you get anyone to do something for you, whether an employee, professional, tradesmen or whoever, you can't ABdicate your responsibility, you can only DELegate. You will always remain personally ultimately responsible, so you have to keep in control by keeping an eye on what they do. That doesn't mean questioning everything they do and double-checking it all - but nor does it mean ignoring what they do and not bothering to review it. It's a matter of finding the middle ground and getting the balance right. You can't and shouldn't work with someone who you don't trust, someone who can't explain things to you, etc. If it takes meeting 3 (or more) potential accountants until you find one you're comfortable with, then that's what you have to do and don't be afraid to ask what qualifications they hold, how long they've been a practising accountant, whether they already have similar clients to you, etc.

aveylee

As the Taxpayer you are liable for ensuring you pay the correct amount of tax. You will therefore be liable for any fines or penalties levied by HMRC.
HMRC and the Tax Tribunals do not generally accept 'I left it to my accountant.' as a sufficiently good reason not to impose a penalty.

However your accountant should be exercising an appropriate level of professional ability when doing the job. So if they make a mistake they will likely be liable, but that only applies if you tell them everything.

For accountants look for fully CCAB chartered accountants. e.g members of ACCA or ICAEW. Alternatively members of CIPFA or CIMA who are also fully qualified but in more specialist accountancy fields. You can also look at full AAT qualified (They are not CCAB members but still competent) accountants.

However most important factors are experience and whether they have professional indemnity insurance. You can always ask and good accountants will not only answer but welcome such questions.

John_Pierpoint

Pennywise wrote: »

When you get anyone to do something for you, whether an employee, professional, tradesmen or whoever, you can't ABdicate your responsibility, you can only DELegate. You will always remain personally ultimately responsible, so you have to keep in control by keeping an eye on what they do. That doesn't mean questioning everything they do and double-checking it all - but nor does it mean ignoring what they do and not bothering to review it. It's a matter of finding the middle ground and getting the balance right. You can't and shouldn't work with someone who you don't trust, someone who can't explain things to you, etc. If it takes meeting 3 (or more) potential accountants until you find one you're comfortable with, then that's what you have to do and don't be afraid to ask what qualifications they hold, how long they've been a practising accountant, whether they already have similar clients to you, etc.

This remark is nothing to do with tax BUT when the local authority subcontract work to a contractor, they seem to be able to shelter behind the shield of "that action was made by an independent contractor, we chose to do the work". [ie try taking him to court]

There was a lovely example of this on "Cowboy Builders" (BBC 1) this week, where the house holder was spending a council grant and thus had to use a council "approved" contractor.

I am not advocating that the Eve defence of "It was the snake that was to blame"; having worked with a "failed" personal accountant and heard his stories, I believe it should be the tax payer who carries the can.

mcojoe

To be honest, it's your accountant; the likelihood of the making a mistake on your self-assessment isn't that likely. Even so you should still go through the documentation with him/her to be cautious. You really do not want to be fighting over a £200 fine.