Misfiled Return

strapkass

I manage a modest trust fund in respect of my late mothers IHT allowance.
In my opinion, my appointed accountants were making errors of judgement when communicating with HMRC and so I took control of the returns. In my initial dealings with HMRC it transpired that the accountants had incorrectly filed the returns from 2014-2016 as a non-discretionary trust instead of a discretionary trust resulting in monies owed plus interest to HMRC, but thankfully no late payment penalties. The accountants have admitted their mistake in an email to me and offered to pay any interest, late payment fees and offered to re-submit the accounts. Obviously as I had already discovered and submitted the correct accounts and payments in my dealings with HMRC, I do not need or want the accountants to re-submit. I do however want reimbursement of interest payments and the accountant’s fees for 2014-2016. I also have a written letter on their company letterhead admitting their error, yet still they ignore my emails and have not settled my invoice for interest incurred to HMRC and accountants fees for 2014-2016. Can I reclaim the accountancy fees for 2014-2016 together with any interest paid to HMRC. Is this something I need to deal with through the small claims court or am I wasting my time?

Pennywise

strapkass wrote: »

Can I reclaim the accountancy fees for 2014-2016 together with any interest paid to HMRC. Is this something I need to deal with through the small claims court or am I wasting my time?

You can claim your extra costs resulting from their error, i.e. interest etc. You can't claim their accountancy fees because they DID do the work you've paid for and DID offer to correct their mistakes. What does the letter of engagement say about errors and rectification?

strapkass

To be honest, I've been with them in one form or another for over twenty-five years and don't recall a letter of engagement. Under the original business owner, an ex-tax inspector, it was a chat and a handshake. Over the years since he retired, the firm has expanded and sadly, due to its size, has got steadily worse in my experience. Point is that having taken the work away from them due to errors of accounting and judgement and having been notified by HMRC that the accounts were wrong, I had all but completed the task in dealing with the work anyway. In any event I didn't want them to continue with my accounts for the aforementioned reasons and I simply didn't trust them to do the job properly. It seems ridiculous to me that I should allow them to rectify their mistakes when I've in effectively fired them for incompetence in the first place doesn't it?

jimmo

The whole ethos of financial compensation is to put you back to where you would have been if the guilty party had done a good job.
You paid for a service, the accountants provided a service, albeit a faulty one. Having acknowledged their failure, the accountants offered to repair the damage they had done, free of charge I presume, and pay any interest and penalties arising from their failure. If you had accepted their offer you would have been in exactly the same position as you would have been if they had done the job right in the first place. You pay the tax, they pay everything else. If the accountants had refused to correct their failure you would probably be in a better position to reclaim their fees.
Not the same thing, I know, but if you take a look at the motoring forum you will find a number of threads where people bought used cars from traders over 100 miles away and, when the cars broke down within the guarantee period, they had a choice, get the car back to the dealers for them to fix for free or get it repaired locally and pay the bill themselves. The one thing they couldn't do was to get it repaired locally and expect the dealer to pay the bill.
You are in a similar position. You chose to repair the damage yourself rather than entrust the accountants to make good the damage.