Accountants held accountable?

Jeremy535897

Have you raised this issue with your accountants? It is not just the partnership tax return. Your personal tax returns should also have included the fact that the partnership had ceased to trade, and may have included figures for disposing of the partnership assets to the company. It would also have been good practice for your accountants to have raised the issue of furlough (even though it may not have been practical), and it would have been good practice to tell you, as your personal tax advisers, that SEISS was unavailable. That is why I asked what your letters of engagement with them say. They should set out in detail their responsibilities and yours with regard to you as individuals, the partnership (before it ceased) and the limited company.

Sandtree

Zil4315 said:

We understand we are responsible but there is a reason why we pay accountants to deal with everything on our behalf, because we are not accountants. We specialise in what we do and they specialise in what they do. Even if we looked over everything they do, I'm not sure an error would be picked up because we don't know what we would be looking for.

We know now that we claimed wrongly but at the time, we didn't know and we didn't check. We simply trusted the government letter we received and thought we were super lucky (we are never lucky!). That was our mistake yes, but we can't help thinking that if the accountants hadn't made the mistake of not entering the cessation date on the tax return, we wouldn't be in this mess.

When determining liability the courts look at the remoteness of the cause and effect so as an easy example, a person is injured in a car accident that wasnt their fault, they get a few weeks full sick pay and then it stops. They can claim their loss of earnings from the at fault driver/their insurance. You could attempt to argue that their employer should be able to claim the sick pay back from the driver too as its their fault they had to pay wages without getting any work done but the courts have deemed that this is too remote.

From what you say the accountants do appear to have made a mistake but it feels to me to be too remote to link the mistake to the loan.

I assume you guys filled in the grant forms and/or signed them in which case it was your duty to ensure that this was done correctly and accurately. I've not seen the form but I'd be surprised that there wouldnt have been a number of red flags... "Self Employed Income Support Scheme", you arent self employed if via a LTD... no questions about the company name, number, registered address etc.

The accountants may have a token liability but it'd presumably have been cleared up in the 20/21 returns had the grant not been received. 

Your focus should be on negotiating a repayment plan for the grant if the business remains viable with the debt.

Jeremy535897

Sandtree said:

Zil4315 said:

We understand we are responsible but there is a reason why we pay accountants to deal with everything on our behalf, because we are not accountants. We specialise in what we do and they specialise in what they do. Even if we looked over everything they do, I'm not sure an error would be picked up because we don't know what we would be looking for.

We know now that we claimed wrongly but at the time, we didn't know and we didn't check. We simply trusted the government letter we received and thought we were super lucky (we are never lucky!). That was our mistake yes, but we can't help thinking that if the accountants hadn't made the mistake of not entering the cessation date on the tax return, we wouldn't be in this mess.

When determining liability the courts look at the remoteness of the cause and effect so as an easy example, a person is injured in a car accident that wasnt their fault, they get a few weeks full sick pay and then it stops. They can claim their loss of earnings from the at fault driver/their insurance. You could attempt to argue that their employer should be able to claim the sick pay back from the driver too as its their fault they had to pay wages without getting any work done but the courts have deemed that this is too remote.

From what you say the accountants do appear to have made a mistake but it feels to me to be too remote to link the mistake to the loan.

I assume you guys filled in the grant forms and/or signed them in which case it was your duty to ensure that this was done correctly and accurately. I've not seen the form but I'd be surprised that there wouldnt have been a number of red flags... "Self Employed Income Support Scheme", you arent self employed if via a LTD... no questions about the company name, number, registered address etc.

The accountants may have a token liability but it'd presumably have been cleared up in the 20/21 returns had the grant not been received. 

Your focus should be on negotiating a repayment plan for the grant if the business remains viable with the debt.

Assuming that the accountants carry professional indemnity insurance, the immediate question is more what the insurers think than what a court thinks, and they will be influenced by the amount of the claim. It makes total sense to negotiate payment terms as soon as possible (apart from anything else, you have a duty to mitigate your loss), but don't immediately write off your chances. Most genuine insurance claims are settled out of court.

Thrugelmir

Bottom line is.

"At the time we were in financial dire straits and didn't check the details properly."

You've had the benefit of money that you weren't entitled to. Will be able to repay it over a period of time. Expecting to somebody else to pay is just the nature of the world we live currently in. 

Sandtree

Jeremy535897 said:

Sandtree said:

Zil4315 said:

We understand we are responsible but there is a reason why we pay accountants to deal with everything on our behalf, because we are not accountants. We specialise in what we do and they specialise in what they do. Even if we looked over everything they do, I'm not sure an error would be picked up because we don't know what we would be looking for.

We know now that we claimed wrongly but at the time, we didn't know and we didn't check. We simply trusted the government letter we received and thought we were super lucky (we are never lucky!). That was our mistake yes, but we can't help thinking that if the accountants hadn't made the mistake of not entering the cessation date on the tax return, we wouldn't be in this mess.

When determining liability the courts look at the remoteness of the cause and effect so as an easy example, a person is injured in a car accident that wasnt their fault, they get a few weeks full sick pay and then it stops. They can claim their loss of earnings from the at fault driver/their insurance. You could attempt to argue that their employer should be able to claim the sick pay back from the driver too as its their fault they had to pay wages without getting any work done but the courts have deemed that this is too remote.

From what you say the accountants do appear to have made a mistake but it feels to me to be too remote to link the mistake to the loan.

I assume you guys filled in the grant forms and/or signed them in which case it was your duty to ensure that this was done correctly and accurately. I've not seen the form but I'd be surprised that there wouldnt have been a number of red flags... "Self Employed Income Support Scheme", you arent self employed if via a LTD... no questions about the company name, number, registered address etc.

The accountants may have a token liability but it'd presumably have been cleared up in the 20/21 returns had the grant not been received. 

Your focus should be on negotiating a repayment plan for the grant if the business remains viable with the debt.

Assuming that the accountants carry professional indemnity insurance, the immediate question is more what the insurers think than what a court thinks, and they will be influenced by the amount of the claim. It makes total sense to negotiate payment terms as soon as possible (apart from anything else, you have a duty to mitigate your loss), but don't immediately write off your chances. Most genuine insurance claims are settled out of court.

There is no obligation for them to pass it to their insurers to deal with... unlike Motor or EL you cannot circumvent the party you are blaming. Even if they do pass it to their insurers what the insurer will be doing is ultimately trying to predict the outcome of litigation with an element of risk margin 

Jeremy535897

Sandtree said:

Jeremy535897 said:

Sandtree said:

Zil4315 said:

We understand we are responsible but there is a reason why we pay accountants to deal with everything on our behalf, because we are not accountants. We specialise in what we do and they specialise in what they do. Even if we looked over everything they do, I'm not sure an error would be picked up because we don't know what we would be looking for.

We know now that we claimed wrongly but at the time, we didn't know and we didn't check. We simply trusted the government letter we received and thought we were super lucky (we are never lucky!). That was our mistake yes, but we can't help thinking that if the accountants hadn't made the mistake of not entering the cessation date on the tax return, we wouldn't be in this mess.

When determining liability the courts look at the remoteness of the cause and effect so as an easy example, a person is injured in a car accident that wasnt their fault, they get a few weeks full sick pay and then it stops. They can claim their loss of earnings from the at fault driver/their insurance. You could attempt to argue that their employer should be able to claim the sick pay back from the driver too as its their fault they had to pay wages without getting any work done but the courts have deemed that this is too remote.

From what you say the accountants do appear to have made a mistake but it feels to me to be too remote to link the mistake to the loan.

I assume you guys filled in the grant forms and/or signed them in which case it was your duty to ensure that this was done correctly and accurately. I've not seen the form but I'd be surprised that there wouldnt have been a number of red flags... "Self Employed Income Support Scheme", you arent self employed if via a LTD... no questions about the company name, number, registered address etc.

The accountants may have a token liability but it'd presumably have been cleared up in the 20/21 returns had the grant not been received. 

Your focus should be on negotiating a repayment plan for the grant if the business remains viable with the debt.

Assuming that the accountants carry professional indemnity insurance, the immediate question is more what the insurers think than what a court thinks, and they will be influenced by the amount of the claim. It makes total sense to negotiate payment terms as soon as possible (apart from anything else, you have a duty to mitigate your loss), but don't immediately write off your chances. Most genuine insurance claims are settled out of court.

There is no obligation for them to pass it to their insurers to deal with... unlike Motor or EL you cannot circumvent the party you are blaming. Even if they do pass it to their insurers what the insurer will be doing is ultimately trying to predict the outcome of litigation with an element of risk margin 

It is a condition of all PII insurance that you must immediately inform the insurer that you face a claim, otherwise the claim may not be covered. Where the amount involved is modest, the bias is towards settling. That is why the NHS pays out so much each year.

Mistral001

Jeremy535897 said:

Sandtree said:

Jeremy535897 said:

Sandtree said:

Zil4315 said:

We understand we are responsible but there is a reason why we pay accountants to deal with everything on our behalf, because we are not accountants. We specialise in what we do and they specialise in what they do. Even if we looked over everything they do, I'm not sure an error would be picked up because we don't know what we would be looking for.

We know now that we claimed wrongly but at the time, we didn't know and we didn't check. We simply trusted the government letter we received and thought we were super lucky (we are never lucky!). That was our mistake yes, but we can't help thinking that if the accountants hadn't made the mistake of not entering the cessation date on the tax return, we wouldn't be in this mess.

When determining liability the courts look at the remoteness of the cause and effect so as an easy example, a person is injured in a car accident that wasnt their fault, they get a few weeks full sick pay and then it stops. They can claim their loss of earnings from the at fault driver/their insurance. You could attempt to argue that their employer should be able to claim the sick pay back from the driver too as its their fault they had to pay wages without getting any work done but the courts have deemed that this is too remote.

From what you say the accountants do appear to have made a mistake but it feels to me to be too remote to link the mistake to the loan.

I assume you guys filled in the grant forms and/or signed them in which case it was your duty to ensure that this was done correctly and accurately. I've not seen the form but I'd be surprised that there wouldnt have been a number of red flags... "Self Employed Income Support Scheme", you arent self employed if via a LTD... no questions about the company name, number, registered address etc.

The accountants may have a token liability but it'd presumably have been cleared up in the 20/21 returns had the grant not been received. 

Your focus should be on negotiating a repayment plan for the grant if the business remains viable with the debt.

Assuming that the accountants carry professional indemnity insurance, the immediate question is more what the insurers think than what a court thinks, and they will be influenced by the amount of the claim. It makes total sense to negotiate payment terms as soon as possible (apart from anything else, you have a duty to mitigate your loss), but don't immediately write off your chances. Most genuine insurance claims are settled out of court.

There is no obligation for them to pass it to their insurers to deal with... unlike Motor or EL you cannot circumvent the party you are blaming. Even if they do pass it to their insurers what the insurer will be doing is ultimately trying to predict the outcome of litigation with an element of risk margin 

It is a condition of all PII insurance that you must immediately inform the insurer that you face a claim, otherwise the claim may not be covered. Where the amount involved is modest, the bias is towards settling. That is why the NHS pays out so much each year.

Yes this a very strict condition of PII.  Also insurers may not cover all or any of the claim if the accountant admits liability. Hence an apology from the accountants is out of the question as it is in some way an admission of guilt. 

Sandtree

Jeremy535897 said:

Sandtree said:

Jeremy535897 said:

Sandtree said:

Zil4315 said:

We understand we are responsible but there is a reason why we pay accountants to deal with everything on our behalf, because we are not accountants. We specialise in what we do and they specialise in what they do. Even if we looked over everything they do, I'm not sure an error would be picked up because we don't know what we would be looking for.

We know now that we claimed wrongly but at the time, we didn't know and we didn't check. We simply trusted the government letter we received and thought we were super lucky (we are never lucky!). That was our mistake yes, but we can't help thinking that if the accountants hadn't made the mistake of not entering the cessation date on the tax return, we wouldn't be in this mess.

When determining liability the courts look at the remoteness of the cause and effect so as an easy example, a person is injured in a car accident that wasnt their fault, they get a few weeks full sick pay and then it stops. They can claim their loss of earnings from the at fault driver/their insurance. You could attempt to argue that their employer should be able to claim the sick pay back from the driver too as its their fault they had to pay wages without getting any work done but the courts have deemed that this is too remote.

From what you say the accountants do appear to have made a mistake but it feels to me to be too remote to link the mistake to the loan.

I assume you guys filled in the grant forms and/or signed them in which case it was your duty to ensure that this was done correctly and accurately. I've not seen the form but I'd be surprised that there wouldnt have been a number of red flags... "Self Employed Income Support Scheme", you arent self employed if via a LTD... no questions about the company name, number, registered address etc.

The accountants may have a token liability but it'd presumably have been cleared up in the 20/21 returns had the grant not been received. 

Your focus should be on negotiating a repayment plan for the grant if the business remains viable with the debt.

Assuming that the accountants carry professional indemnity insurance, the immediate question is more what the insurers think than what a court thinks, and they will be influenced by the amount of the claim. It makes total sense to negotiate payment terms as soon as possible (apart from anything else, you have a duty to mitigate your loss), but don't immediately write off your chances. Most genuine insurance claims are settled out of court.

There is no obligation for them to pass it to their insurers to deal with... unlike Motor or EL you cannot circumvent the party you are blaming. Even if they do pass it to their insurers what the insurer will be doing is ultimately trying to predict the outcome of litigation with an element of risk margin 

It is a condition of all PII insurance that you must immediately inform the insurer that you face a claim, otherwise the claim may not be covered. Where the amount involved is modest, the bias is towards settling. That is why the NHS pays out so much each year.

Whilst not disputing that is the case how is that relevant to the point? Just because if the accountant wants to benefit from their cover they must inform their insurers doesnt make it possible for the OP to force their accountants to claim from their insurance.

Mistral001

My PI insurance broker once told me that I should not give out any details of my insurance cover unless I had to.  It is something that should be there but the less potential clients, and hence potential claimants, know about it the better.   

I see window cleaners' vans which have "fully insured" written on their sides in fairly large letters.  I often wonder if their insurers know about this.  Even if the insurers do know and do not mind, the window cleaner might end up with unintended consequences of advertising insurance so publically.  

Jeremy535897

Sandtree said:

Jeremy535897 said:

Sandtree said:

Jeremy535897 said:

Sandtree said:

Zil4315 said:

We understand we are responsible but there is a reason why we pay accountants to deal with everything on our behalf, because we are not accountants. We specialise in what we do and they specialise in what they do. Even if we looked over everything they do, I'm not sure an error would be picked up because we don't know what we would be looking for.

We know now that we claimed wrongly but at the time, we didn't know and we didn't check. We simply trusted the government letter we received and thought we were super lucky (we are never lucky!). That was our mistake yes, but we can't help thinking that if the accountants hadn't made the mistake of not entering the cessation date on the tax return, we wouldn't be in this mess.

When determining liability the courts look at the remoteness of the cause and effect so as an easy example, a person is injured in a car accident that wasnt their fault, they get a few weeks full sick pay and then it stops. They can claim their loss of earnings from the at fault driver/their insurance. You could attempt to argue that their employer should be able to claim the sick pay back from the driver too as its their fault they had to pay wages without getting any work done but the courts have deemed that this is too remote.

From what you say the accountants do appear to have made a mistake but it feels to me to be too remote to link the mistake to the loan.

I assume you guys filled in the grant forms and/or signed them in which case it was your duty to ensure that this was done correctly and accurately. I've not seen the form but I'd be surprised that there wouldnt have been a number of red flags... "Self Employed Income Support Scheme", you arent self employed if via a LTD... no questions about the company name, number, registered address etc.

The accountants may have a token liability but it'd presumably have been cleared up in the 20/21 returns had the grant not been received. 

Your focus should be on negotiating a repayment plan for the grant if the business remains viable with the debt.

Assuming that the accountants carry professional indemnity insurance, the immediate question is more what the insurers think than what a court thinks, and they will be influenced by the amount of the claim. It makes total sense to negotiate payment terms as soon as possible (apart from anything else, you have a duty to mitigate your loss), but don't immediately write off your chances. Most genuine insurance claims are settled out of court.

There is no obligation for them to pass it to their insurers to deal with... unlike Motor or EL you cannot circumvent the party you are blaming. Even if they do pass it to their insurers what the insurer will be doing is ultimately trying to predict the outcome of litigation with an element of risk margin 

It is a condition of all PII insurance that you must immediately inform the insurer that you face a claim, otherwise the claim may not be covered. Where the amount involved is modest, the bias is towards settling. That is why the NHS pays out so much each year.

Whilst not disputing that is the case how is that relevant to the point? Just because if the accountant wants to benefit from their cover they must inform their insurers doesnt make it possible for the OP to force their accountants to claim from their insurance.

It was to correct your statement responding to my earlier post that "there is no obligation for them to pass it on to their insurers". The process has to start with advising the insurer. A discussion then takes place between the insurer and the accountant, exploring things like the quantum of a claim, and whether the accountant thinks that it is possibly a valid claim, or whether it is spurious. They reach an agreement as to how the matter will be pursued, and if the claim is not spurious, that normally leads to an offer of settlement without admission of liability.