Accountant forgot to sent Tax return

soolin

macman said:

Pennywise said:

MattMattMattUK said:

HampoP said:

MattMattMattUK said:

In theory your accountant could be regarded as liable, it depends on the terms and conditions you engaged them under. Most accountants, in normal times, if they made that mistake, would pay the late filing/payment fees on behalf of the client, however the SEISS payments make things more complicated. You might find that you can claim under their insurance, you also might be able to take them to court for the loss, but that would be a lot more complicated.

Is there a reason that the filing was left to the last minute?

He claims they had a family emergency illness and had to rush to look after a family member and forgot. 

I do not mean why the accountant did not file on 31/01, I mean why was it left until 31/01 in the first place, which is the last minute, having had since April the previous year to file. 

Yes, I agree.  When was the info actually provided to the accountant?  I have a 3 month rule, so my T&Cs specifically deny any responsibility for late filing implications if I don't get ALL the information by the end of October each year - that's already a good 7 months after the tax year end, so plenty of time for clients to get their info to me.  99% of them do it.  That gives me plenty of time to do my work, allowing for holidays, sickness time, family emergencies etc.  The OP needs to check the letter of engagement with the accountant and check when all the information was provided.  If the accountant had all the info for a few months, then yes, they're responsible, but if the info had only been provided the week before the deadline, then the OP didn't leave enough time for the work to be done and to cover contingencies etc.

Quite possibly, but then I'd expect the accountant to contact the client no later than, say, 48 hours prior to the deadline, and to inform them that they would not be able to file within the deadline. They then have the option of filing themselves. 

I agree. My husband uses an accountant and he often leaves it late and accountant reminds him that he needs x amount of time to complete the return. We send information, accountant sends us copy of return and asks us to sign it and return it to him with a statement saying it is correct (this is all done via secure email), and usually we then get confirmation from accountant within 12/24 hours that return has been submitted. 

I would consider us at blame if we failed to return the signed tax return within a certain time frame , but would consider accountant at fault if they failed to submit it once confirming they have received it back from us safely. 

Jeremy535897

The Institute of Chartered Accountants in England and Wales suggests that the letter of engagement includes something along the following lines:

   "to provide us with information in sufficient time for your tax return to be completed and submitted by the due date following the end of the tax year; to do this, we need to receive all relevant information by 31 December; if feasible, we may agree to complete your return within a shorter period but may charge an additional fee for so doing."

It was not helpful that 30 and 31 January 2021 were Saturday and Sunday.

macman

Surely the lesson here is that if you are using a one man/woman band then you have to consider that illness or domestic emergency could render the whole operation non-functional, and plan your supply of return info accordingly. My own accountant requests that all tax return data is supplied by end October, and reserves the right to charge extra if it's not.
A larger company will have the resources to deal with a large influx of late returns: a one-man band clearly cannot. 

unholyangel

macman said:

Surely the lesson here is that if you are using a one man/woman band then you have to consider that illness or domestic emergency could render the whole operation non-functional, and plan your supply of return info accordingly. My own accountant requests that all tax return data is supplied by end October, and reserves the right to charge extra if it's not.
A larger company will have the resources to deal with a large influx of late returns: a one-man band clearly cannot. 

It's up to the provider to have a contingency in place - their staff cover (whether one man band or not) is entirely within their control and therefore their risk to bear. 

Will be interesting to see if any cases like thi succeed. It may be due to a mistake of the accountant's but legally (professional bodies aside, who may have their own additional rules) I can't see a solid claim. 

To explain, normally losses are only recoverable under two limbs. 
Direct losses - these are losses which arise in the natural course of events, it would be obvious to the world at large that such a breach would cause such a loss. 
Indirect (aka consequential) losses - these are losses that don't arise in natural course but from special circumstances. These are only recoverable if they were in the parties contemplation at the time they entered the contract. 

Anything beyond these two are deemed too remote and are not recoverable. 

Can you see where I'm going with this? Seiss wouldn't be a direct loss and it's a bit of a stretch as an indirect loss - unless your accountant can also predict the future. 

There's an argument to be made with previous grants being based on timely returns that this one would be too, but would it be reasonable to expect the accountant to know it would include the 19/20 return? 

MattMattMattUK

unholyangel said:

macman said:

Surely the lesson here is that if you are using a one man/woman band then you have to consider that illness or domestic emergency could render the whole operation non-functional, and plan your supply of return info accordingly. My own accountant requests that all tax return data is supplied by end October, and reserves the right to charge extra if it's not.
A larger company will have the resources to deal with a large influx of late returns: a one-man band clearly cannot. 

It's up to the provider to have a contingency in place - their staff cover (whether one man band or not) is entirely within their control and therefore their risk to bear. 

Will be interesting to see if any cases like thi succeed. It may be due to a mistake of the accountant's but legally (professional bodies aside, who may have their own additional rules) I can't see a solid claim. 

To explain, normally losses are only recoverable under two limbs. 
Direct losses - these are losses which arise in the natural course of events, it would be obvious to the world at large that such a breach would cause such a loss. 
Indirect (aka consequential) losses - these are losses that don't arise in natural course but from special circumstances. These are only recoverable if they were in the parties contemplation at the time they entered the contract. 

Anything beyond these two are deemed too remote and are not recoverable. 

Can you see where I'm going with this? Seiss wouldn't be a direct loss and it's a bit of a stretch as an indirect loss - unless your accountant can also predict the future. 

There's an argument to be made with previous grants being based on timely returns that this one would be too, but would it be reasonable to expect the accountant to know it would include the 19/20 return? 

I would say that it was the balance of probabilities would fall on the side that having submitted the 19/20 return would be a requirement to claim SEISS 4 so I think it would be reasonable to challenge that in court against the accountant or their insurer if they refused to pay out. SEISS 5 might be harder as it involves future trading patterns.

Jeremy535897

unholyangel said:

macman said:

Surely the lesson here is that if you are using a one man/woman band then you have to consider that illness or domestic emergency could render the whole operation non-functional, and plan your supply of return info accordingly. My own accountant requests that all tax return data is supplied by end October, and reserves the right to charge extra if it's not.
A larger company will have the resources to deal with a large influx of late returns: a one-man band clearly cannot. 

It's up to the provider to have a contingency in place - their staff cover (whether one man band or not) is entirely within their control and therefore their risk to bear. 

Will be interesting to see if any cases like thi succeed. It may be due to a mistake of the accountant's but legally (professional bodies aside, who may have their own additional rules) I can't see a solid claim. 

To explain, normally losses are only recoverable under two limbs. 
Direct losses - these are losses which arise in the natural course of events, it would be obvious to the world at large that such a breach would cause such a loss. 
Indirect (aka consequential) losses - these are losses that don't arise in natural course but from special circumstances. These are only recoverable if they were in the parties contemplation at the time they entered the contract. 

Anything beyond these two are deemed too remote and are not recoverable. 

Can you see where I'm going with this? Seiss wouldn't be a direct loss and it's a bit of a stretch as an indirect loss - unless your accountant can also predict the future. 

There's an argument to be made with previous grants being based on timely returns that this one would be too, but would it be reasonable to expect the accountant to know it would include the 19/20 return? 

It's a very interesting question. Some letters of engagement include limitation of liability, usually around failure to provide information when requested, or providing incorrect information, and it may be some will exclude consequential liability. Professional negligence cases are often complex, but I think that there is a reasonable argument that a competent tax adviser would have foreseen the possibility that the date of filing the 2019/20 tax return would have to be on time for clients to qualify for SEISS 4 and 5. Whether I'd want to fight it for the modest sums involved is another matter.

mattyprice4004

Ultimately HMRC won't do anything - you need to take this up with your accountant. 

unholyangel

Jeremy535897 said:

unholyangel said:

macman said:

Surely the lesson here is that if you are using a one man/woman band then you have to consider that illness or domestic emergency could render the whole operation non-functional, and plan your supply of return info accordingly. My own accountant requests that all tax return data is supplied by end October, and reserves the right to charge extra if it's not.
A larger company will have the resources to deal with a large influx of late returns: a one-man band clearly cannot. 

It's up to the provider to have a contingency in place - their staff cover (whether one man band or not) is entirely within their control and therefore their risk to bear. 

Will be interesting to see if any cases like thi succeed. It may be due to a mistake of the accountant's but legally (professional bodies aside, who may have their own additional rules) I can't see a solid claim. 

To explain, normally losses are only recoverable under two limbs. 
Direct losses - these are losses which arise in the natural course of events, it would be obvious to the world at large that such a breach would cause such a loss. 
Indirect (aka consequential) losses - these are losses that don't arise in natural course but from special circumstances. These are only recoverable if they were in the parties contemplation at the time they entered the contract. 

Anything beyond these two are deemed too remote and are not recoverable. 

Can you see where I'm going with this? Seiss wouldn't be a direct loss and it's a bit of a stretch as an indirect loss - unless your accountant can also predict the future. 

There's an argument to be made with previous grants being based on timely returns that this one would be too, but would it be reasonable to expect the accountant to know it would include the 19/20 return? 

It's a very interesting question. Some letters of engagement include limitation of liability, usually around failure to provide information when requested, or providing incorrect information, and it may be some will exclude consequential liability. Professional negligence cases are often complex, but I think that there is a reasonable argument that a competent tax adviser would have foreseen the possibility that the date of filing the 2019/20 tax return would have to be on time for clients to qualify for SEISS 4 and 5. Whether I'd want to fight it for the modest sums involved is another matter.

I gave it a bit of thought, but I could see arguments for/against. 

You can expect that a service be provided with reasonable care & skill. Reasonable isn't perfect though and it can also depend on particulars. ie you don't hold a trainee GP to the same standard as a senior specialist consultant or a amatuer footballer to the standards of a professional. Nor does someone fail to meet the standard just because there is another portion/body who hold an opposing view. You basically need to prove that what they did/failed to do was so wrong, that no professional of their level would have done the same thing. 

Given the extraordinary year we've all had and how we keep being told that the level of support is extraordinary/they wouldn't be amending the rules (admittedly this was back under the 1st grant), I can also see an argument that it might be rose tinted to expect accountants to predict it. 

However, I also stressed professional bodies aside because most of them have an expectation their members will conduct themselves & their business in a certain manner and IMO, the professional bodies probably would side with the client (unless LoE covered it/client was at fault themselves of course). IMO (again), professional bodies in the accounting world are a bit like ombudsman - they can consider things a court can't. Like fairness.

Jeremy535897

unholyangel said:

Jeremy535897 said:

unholyangel said:

macman said:

Surely the lesson here is that if you are using a one man/woman band then you have to consider that illness or domestic emergency could render the whole operation non-functional, and plan your supply of return info accordingly. My own accountant requests that all tax return data is supplied by end October, and reserves the right to charge extra if it's not.
A larger company will have the resources to deal with a large influx of late returns: a one-man band clearly cannot. 

It's up to the provider to have a contingency in place - their staff cover (whether one man band or not) is entirely within their control and therefore their risk to bear. 

Will be interesting to see if any cases like thi succeed. It may be due to a mistake of the accountant's but legally (professional bodies aside, who may have their own additional rules) I can't see a solid claim. 

To explain, normally losses are only recoverable under two limbs. 
Direct losses - these are losses which arise in the natural course of events, it would be obvious to the world at large that such a breach would cause such a loss. 
Indirect (aka consequential) losses - these are losses that don't arise in natural course but from special circumstances. These are only recoverable if they were in the parties contemplation at the time they entered the contract. 

Anything beyond these two are deemed too remote and are not recoverable. 

Can you see where I'm going with this? Seiss wouldn't be a direct loss and it's a bit of a stretch as an indirect loss - unless your accountant can also predict the future. 

There's an argument to be made with previous grants being based on timely returns that this one would be too, but would it be reasonable to expect the accountant to know it would include the 19/20 return? 

It's a very interesting question. Some letters of engagement include limitation of liability, usually around failure to provide information when requested, or providing incorrect information, and it may be some will exclude consequential liability. Professional negligence cases are often complex, but I think that there is a reasonable argument that a competent tax adviser would have foreseen the possibility that the date of filing the 2019/20 tax return would have to be on time for clients to qualify for SEISS 4 and 5. Whether I'd want to fight it for the modest sums involved is another matter.

I gave it a bit of thought, but I could see arguments for/against. 

You can expect that a service be provided with reasonable care & skill. Reasonable isn't perfect though and it can also depend on particulars. ie you don't hold a trainee GP to the same standard as a senior specialist consultant or a amatuer footballer to the standards of a professional. Nor does someone fail to meet the standard just because there is another portion/body who hold an opposing view. You basically need to prove that what they did/failed to do was so wrong, that no professional of their level would have done the same thing. 

Given the extraordinary year we've all had and how we keep being told that the level of support is extraordinary/they wouldn't be amending the rules (admittedly this was back under the 1st grant), I can also see an argument that it might be rose tinted to expect accountants to predict it. 

However, I also stressed professional bodies aside because most of them have an expectation their members will conduct themselves & their business in a certain manner and IMO, the professional bodies probably would side with the client (unless LoE covered it/client was at fault themselves of course). IMO (again), professional bodies in the accounting world are a bit like ombudsman - they can consider things a court can't. Like fairness.

You might be right, but the professional bodies rarely get involved (possibly as expert witnesses). Unless the amount at stake is within the excess, he issue is whether, having reported the claim (once made) to the insurer, as will be required by the terms of the PII, the insurance company have the stomach for fighting such a modest claim. They would seek advice from a lawyer, who would tell them they might lose. (If there is no PII, the adviser is not a member of a professional body.)

Pennywise

macman said:

Surely the lesson here is that if you are using a one man/woman band then you have to consider that illness or domestic emergency could render the whole operation non-functional, and plan your supply of return info accordingly. My own accountant requests that all tax return data is supplied by end October, and reserves the right to charge extra if it's not.
A larger company will have the resources to deal with a large influx of late returns: a one-man band clearly cannot. 

Exactly, this is exactly why I, as a "one man band", have very clear deadlines for when clients must send me all their information.  I have 31 October as the cut off which gives me 3 months and allows for "contingency" time.  Clients know all this, they know I'm a one man band.  There are 10 months to file, so giving the client 7 months to sort out their paperwork and me 3 to do the return is more than enough time for them!  Obviously, if clients leave it later, I'll still do the work and the deadlines are met, as I've not yet been "caught out" by an unexpected illness or whatever.  The only "near miss" was going into hospital for a c-section when DS decided to be 5 weeks premature.  I was admitted on 28th January, but luckily all my clients' tax returns had been submitted before then because of my 31 October cut off and the few stragglers (there's always the usual last minuters) had also been done (as I plan for that).

It's not that easy for a one man band to make "other arrangements".  Yes, we have a continuity agreement with another practice, but that's for death and long term illness.  Continuity agreements don't cover the odd few days here and there as another firm can't just walk in and take over for just a few days, nor do the professional bodies require any short term provision.  That's on the basis that clients send all their records soon enough that the odd few days here and there shouldn't be a risk of late filing.