|
Post by kt with Hanni on Jun 12, 2014 20:27:32 GMT 1
Hi,
This is a complicated situation but I'll just try and keep it short. My grandma left a trust fund for the 4 grandchildren when she died. the trust was looked after by the trustees and the accountant she used at the time. The money was invested and we all inherited a quarter of the pot upon our 30th birthday. So there is now only one left to inherit. Some of us received the money within the last 3 years but the trust was originally set up in 2005. We all received a letter yesterday from solicitors stating the original accountant had made mistakes with his figures over the years and therefore we all owed more tax ( when we inherited the newer accountant was supposed to ensure we all paid the right tax etc). Now the figure between the 4 of us is not small ( around £124k). This sum has been paid to HMRC from some of the funds remaining in the trust. however the trustees are now asking for us to pay back the additional tax we owe ( some of us don't have it available straight away). I asked an independent accountant his advice and he suggests we write to both accountants and claim for the additional tax and penalties via their professional indemnity insurance.
Anyone have any advice? We feel annoyed that he was employed to do a job he didn't do properly. We also know human error occurs and that's why we have insurance so we feel in our right to claim on his insurance. Why should our money be affected when they should have got it correct in the first instance?
Any advice? Thanks
|
|
wills
Grand Prix Poster
Posts: 4,657
|
Post by wills on Jun 12, 2014 20:53:42 GMT 1
No advice but hope somebody can help you. I wouldn't be happy to pay the price for someone elses mistake. Stand firm!
|
|
|
Post by julz on Jun 12, 2014 21:00:18 GMT 1
I think you'd be right to claim from their personal indemnity..
|
|
|
Post by jennyb on Jun 12, 2014 22:51:56 GMT 1
Difficult to say without knowing exact circumstances... However the Trust tax return (and indeed any tax return) is signed and declared as correct by the taxpayer themselves. HMRC don't accept ignorance or reliance on an accountant as an excuse for paying incorrect tax. Did you query the figures, or did the accountant ask if you understood everything? Did he make you aware that it is YOUR responsibility to file a correct tax return? I do feel for you as Trust tax can be a complex area, and isn't one that I choose to advise on myself! You probably do have a claim for the interest, but as for the tax, it does depend on circumstances I'm afraid.
|
|
|
Post by kt with Hanni on Jun 12, 2014 23:06:36 GMT 1
Thanks for replies. It was in trust so none of the beneficiaries have been involved with tax returns etc. I presume it would have been a trustee that signed off the paperwork??? May be me worth investigating?!
|
|
|
Post by jennyb on Jun 13, 2014 6:42:24 GMT 1
Yes, definitely. Also please fully investigate HOW the mistake occurred before you take action. Accountants can only work with the info they are given, I've come across plenty of clients who, deliberately or otherwise, withhold crucial pieces of information from us. Needless to say, discovery of the info often should result in a recalculation of liabilities - which isn't really my fault! Mind reading and psychic abilities aren't listed in the average accountants desired qualities... Of course it may be that he has just made a cock up - all I am saying is that in my experience there are more than likely extenuating circumstances, so like anything in life (like your saddle slipping!) you should be crystal clear on the facts before deciding what to do :-)
|
|
|
Post by kt with Hanni on Jun 13, 2014 11:42:47 GMT 1
Thanks Jenny. who in this situation do you think would be providing the figures to the accountant? I presume a trustee?
|
|
|
Post by jennyb on Jun 13, 2014 12:41:08 GMT 1
Yes, probably - they should be able to tell you. It's worth establishing: - who liaised with the accountant - what the error is, I.e. Which bit of the tax return has been misstated - what information was provided to the accountant - what, if any, concerns were raised by the accountant at the time of preparing the return? I would normally highlight quite clearly if I felt the records provided to me were in any way inadequate at the time of completing the work - what checks were made by the person who signed off the return, and what information was given to them by the accountant.
When I have dealt with trusts in the past I would normally prepare a set of trust accounts as well as the tax return. It should be possible to talk a lay person through these, so that they understand how the accounts have been devised from the records provided - thus enabling the taxpayer to make a judgement as to whether the information to be submitted to HMRC is correct or not.
Once you've established the above it should start to become clear what has happened. It could be lack of information, miscommunication, or a genuine cock up by the accountant. You can then decide how to proceed.
In my experience genuine cock ups are rare, most accountants take pride in their work and the very nature of the job attracts a methodical, careful character. Much, much more common are miscommunications and lack of info, for which it isn't right nor fair to lay the blame at the accountants door! It's very common for people to think that because an accountant has prepared their tax return, the accountant is accepting full and final responsibility for its' accuracy. That's not the case, the responsibility still rests with the taxpayer to ensure everything is correct. I do make a point of highlighting this to my clients when I send out returns, with a sentence along the lines of "HMRC hold you as the taxpayer responsible for the accuracy of the entries within the return, so it is important that you understand them and are satisfied that they are correct." I am always more than happy to explain and clarify any entries.
Hope this helps!
|
|
|
Post by kt with Hanni on Jun 13, 2014 12:48:12 GMT 1
Thanks Jenny. You are being very helpful!!
Perhaps I need to put these questions to the trustee or their solicitor?
The discovered the mistake in October so why would it take until now to inform us? Is that the norm!?
|
|
|
Post by portiabuzz on Jun 13, 2014 15:04:44 GMT 1
no idea but i hope you get it all sorted xx
|
|
|
Post by jennyb on Jun 13, 2014 15:55:03 GMT 1
No, not really! That's another question I would ask, they should let you know as soon as the error came to light and they had done their own interval investigation in to what had happened. I would certainly be doing some more digging if I were you, you have a right to understand what's happened to your financial affairs.
|
|
|
Post by taklishim on Jun 13, 2014 16:17:33 GMT 1
Thanks Jenny. You are being very helpful!! Perhaps I need to put these questions to the trustee or their solicitor? The discovered the mistake in October so why would it take until now to inform us? Is that the norm!? I sat on the opposite side of the fence ie as an ex HMRC investigator. It is not clear what has happened, if a disclosure was made to HMRC resulting in further tax, if this has been the subject of an investigation by HMRC or how this error has been discovered or by whom. I would write to each of the trustees (along with a copy to their solicitor and any accountants who have been involved) and ask for a breakdown of the figure. Is this simply tax or does it include interest and penalties. Ask also for the computation of the additional liabilities, a complete breakdown. You will no doubt get limited info but the more you can get the better. Make sure they understand that before anyone pays they want to know the precise circumstances of the additional liability. Ask why it has come to light now. Point out that an error appears to have been made and before considering paying you want precise details of excactly what returns were filed, the corrections necessary and why these were required. Ask for copies of correspondence sent by HMRC to the trustees detailing their findings. You may or may not be lucky and get these, I suppose it depends on how you get on with the trustees. You say you asked an independent accountant for advice. What did he base his comments on as it doesn't seem he had enough info to establish what has happened. It should be relatively easy to go back to the begining and to establish exactly what has heppened. If HMRC has been able to calculate the further tax due they will, most likely, have based it on actual figures and the actual errors that have occured. Once you get some info, if necessary, ask for a meeting with the trustees/accountant for a more detailed explanation. When you have got all the information you can see exactly where the blame lies and consider how to proceed. You may end up paying but definitely investigate. There should be no problem in establishing exactly what has happened and why. Good luck
|
|
|
Post by taklishim on Jun 13, 2014 16:26:49 GMT 1
sorry KT, I can't work out how to edit. I meant to say ask the trustees to explain precisely what checks they carried out each year before signing the return. Put the ball in their court. They made the return, they are responsible for it's accuracy and now you are being asked to pay.
|
|
|
Post by jennyb on Jun 13, 2014 18:25:57 GMT 1
Good to know the accountant and HMRC agree with approach to this one... ;-) Lots more digging needed I think so you understand fully what has happened and why.
|
|
|
Post by taklishim on Jun 13, 2014 20:34:48 GMT 1
Good to know the accountant and HMRC agree with approach to this one... ;-) Lots more digging needed I think so you understand fully what has happened and why. absolutely. seriously KT, who are the trustees? Are they just elderly family members who basically know little or were they appointed by the solicitors who drew up the trust and are "professional" people? I would try and find that out as it will give you some idea of who you are dealing with. Also with the accountants. I dealt with a lot of people who called themselves "accountants". Some had at one time done a bit of basic booking in their firm's wages department. ie they were totally unqualified. Was the first accountant qualified and similarly the second one? I would hasten to add there are many good "unqualified" accountants but if you can get an overview of the expertise of the people who have been dealing with this it may be easier to make sense of.
|
|