|
Post by jennyb on Jun 13, 2014 21:24:10 GMT 1
That's a very valid point, and one which infuriates me. Having spent five years studying to get my professional qualification, it drives me insane that anyone can call themselves an accountant. I know people running decent sized practices who don't have proper professional qualifications to be doing so, the average man on the street has no chance in being able to pick out a good small accountancy firm!
|
|
|
Post by kt with Hanni on Jun 14, 2014 0:37:19 GMT 1
Thanks you taklishim for your knowledge also!
I think we will draft a letter to the solicitors combining the questions you and jenny have come up with! Not that I understand accounts of figures very easily as I'm not a numbers person at all! I guess these questions you've suggested a solicitor acting on our behalf would probably ask? At least maybe if we do some of the leg work and then go legal route it may be cheaper?
So should I not just accept that the solicitor letter clearly states it's the accountants fault??
The trustees are people my gran requested and they are sort of family friends! I'm not sure about qualifications of the first accountant ( at the moment in trying to get his details) but when he retired he sold his client portfolio to the one we have now who I believe is a qualified accountant and tax adviser!
Should we write to HMRC and state that any penalties they decide on ( if they do) should be sent to the trustees?
The only thing we've done so far is write a letter to trustees and their solicitors stating we are proposing to write directly to accountant and claim off their indemnity insurance but I guess we can hold off writing to accountant until we have asked the trustees some more questions?
Thanks again for you advice. Much appreciated!
|
|
|
Post by kt with Hanni on Jun 14, 2014 0:48:35 GMT 1
And from what I can gather from the letter the present accountant discovered the fault and disclosed it to HMRC. They have paid HMRC including interest. We are now awaiting a response from HMRC as to whether penalties will apply. Fingers crossed HMRC will see that it was a genuine mistake and not our fault
|
|
|
Post by taklishim on Jun 14, 2014 17:56:23 GMT 1
And from what I can gather from the letter the present accountant discovered the fault and disclosed it to HMRC. They have paid HMRC including interest. We are now awaiting a response from HMRC as to whether penalties will apply. Fingers crossed HMRC will see that it was a genuine mistake and not our fault # I am starting to see the scenario that the family friends perhaps didn't know much about tax and simply relied upon the advice of their accountant. The accountant may not have been qualified, elderly or simply out of his depth in dealing with trust returns. Perhaps the family friends didn't hand over all info as they didn't realise it's importance and the first accountant didn't question them sufficiently. Perhaps they handed everything over and the accountant simply didn't use it correctly. From the size of the settlement I would suspect that there has been an omission of a source of taxable income from the trust returns possibly from the beginining. The amount suggests that it may have gone back over several earlier years. The trustees were the ones responsible for signing the returns. It was up to them to make sure they were correct. So the penalty lies with them. In practice no doubt they had little idea and relied upon their accountant but ultimately it rests with them. What happened next I suspect is new accountant came along, starting filling in the TR and had one of those OMG moments of "where exactly did the old accountant put that on his TR's"!! Followed by the realisation he didn't! Quite correctly he made a full disclosure to HMRC so hopefully any penalties will take that disclosre into account. (this is just my educated guess as to the course of events from what you have said) In your position I would want to know what was omitted and how it came to be omitted. It would make it easier for me to accept that there was a genuine error and I was going to have to repay a lot of money. If the above is a reasonable guess at what heppened (and you are the one who knows the trustees) then I would contact the second accountant and ask for a copy of the letter of disclosure he made to HMRC. I would suspect in it he will have set out the source of income omitted, the years involved, extra tax due and possibly his interest computation. He will have explained why it was omitted. He will also have on record the name and address of the first accountant which should lead you to their qualifications. The second accountant will also have the background papers from which he discovered another (or an understated) source of income. Nothing to stop you asking to meet him so that he can show you these and explain what has happened. You don't have to have a grasp of figures just understand the basic reason for the problem. The second accountant has already done the figure work for you. In your position I would do this. Firstly for the reason that you will have a good idea if a genuine error was made. You will also have an idea as to whether you wish to pursue that further. Secondly, this sounds like quite a large (moneywise) trust. A relatively large error has been made. I would want to be sure that there had been no further errors, not taxwise as the second accountant sounds to be on the ball but overall. HMRC will not have looked at this. Their only interest is in establishing the correct tax liability. Perhaps I am being mercanary but if I was going to be asked to make a large repayment (which you may ultimately have to make) I would want to be sure there were no further errors. Or perhaps putting it very bluntly, for which I apologise, that nothing had gone adrift. I am afraid you are still at the fact finding stage.
|
|
|
Post by jennyb on Jun 14, 2014 19:49:56 GMT 1
I wonder if the ten yearly charge was addressed... Could easily be missed if someone was not familiar with dealing with trusts...
|
|
|
Post by taklishim on Jun 14, 2014 21:10:35 GMT 1
I wonder if the ten yearly charge was addressed... Could easily be missed if someone was not familiar with dealing with trusts... don't know. I suspect the 2nd agents disclosure letter could be the key. Could be a technical issue, could be something else, so many possibilities. It would be interesting to know what work the 2nd agent carried out to be satisfied everything was in order. (presuming any work was needed) Speaking to him may well put everyone's mind's at rest. Always interesting to see the pieces coming together.
|
|
|
Post by kt with Hanni on Jun 15, 2014 0:11:18 GMT 1
Hello, Thanks again. Yes the error has occurred since the fund was set up in 2005 so a long time hence I guess the high figures. If you referring to the 10 year inheritance tax they have taken that into account ( well the present accountant has) It's a difficult situation as the trustees have not been paid to do this and my gran chose them and I truly believe no monies have been tampered with. They have nothing to gain really. I feel like I couldn't take things further or claim against the trustees as they've bent over backwards with the complications of this trust fund. Doing it voluntarily. They've also stated they are not in a position to pursue this on our behalf as no monies have been lost as such ( well I guess they would be if HMRC decides to penalize). So basically we have to battle this one alone. Not quite sure where to take this
|
|
|
Post by taklishim on Jun 15, 2014 12:05:06 GMT 1
Hello, Thanks again. Yes the error has occurred since the fund was set up in 2005 so a long time hence I guess the high figures. If you referring to the 10 year inheritance tax they have taken that into account ( well the present accountant has) It's a difficult situation as the trustees have not been paid to do this and my gran chose them and I truly believe no monies have been tampered with. They have nothing to gain really. I feel like I couldn't take things further or claim against the trustees as they've bent over backwards with the complications of this trust fund. Doing it voluntarily. They've also stated they are not in a position to pursue this on our behalf as no monies have been lost as such ( well I guess they would be if HMRC decides to penalize). So basically we have to battle this one alone. Not quite sure where to take this that is great that you are happy with the trustees. The next place is the letter from the second accountant to HMRC. If the second accountant is difficult about dealing with you then you can either get authority from the trustees for him to deal with you or you can ask them to sign your letter requesting the info. It is a case of finding out what errors the first accountant made and why. Only then can you decide on further action. From a cost point of view it may be worth pursing to that stage and getting the second accountant's opinion. It may be that when discovering the problems the second accountant sent detailed letters to the trustees explaining in detail what had happened. You could ask them if they still have those letters? If you are able to speak to the trustees you could ask them about how the first accountant was appointed. Was he just a family friend almost retired and just doing his best, was he specifically appointed by the solicitor. ps I was not suggesting in any way that the trustees had tampered with the trust monies. I was more considering the first accountant and the solicitor. That may seem harsh. The first accountant may be an old family fried who is mortified by what has happened. OTOH these things have happened. There have been several cases in solicitor's offices where monies have disappeared in their trust departments. You will have probably seen some in your local paper over the years. I am sadly familiar with this as it happened in a firm where a friend worked. It came as a total shock to the staff (I hasten to add they were not the thief) If you can do this basic leg work it will keep your costs down until you can decide whether to pay up and live with it or not.
|
|
|
Post by lawyerbunny on Jun 19, 2014 14:01:56 GMT 1
Hello all
Really sorry to hear about this, kt, not a nice situation at all.
A large part of my practice area is in the field of claims against professionals, bringing claims but mainly defending them. You are indeed at the stage of needing fully to investigate what has happened, both with the accountant to establish the nature of the error and with HMRC to establish the reason for the additional charges. Only when you have all of the facts will it be possible to judge whether there may be a professional negligence claim against the accountant.
The first accountant should indeed have notified the trustees of the error as soon as it was discovered and should be asked to provide a detailed explanation now, if they haven't provided this already. They are professionally obliged to do this.
To bring a successful claim in negligence, a claimant must demonstrate that a duty owed towards them has been breached, causing them loss. There can be no question that a duty was owed, in a case like this. The more difficult questions always concern loss and whether there is a link between the act/omission and the loss - i.e. did the accountant make an error that directly caused you to be in a worse position than would otherwise have been the case?
Let's assume that this is a case in which something has been omitted, but ought always to have been disclosed. From what you say, that sounds the most likely scenario. In that case, the tax that has to be paid to HMRC is not a loss that can be recovered from the accountant. It is not a 'loss' at all: if the accountant had been acting properly, they would have disclosed whatever it was that was omitted and the tax would always have been payable, albeit sooner. Your claim would be limited to any additional charges/penalties charged as a result of the delay in payment.
Until you know the full position, this is all speculation. While this will have come as a shock, however, I wouldn't rush to contemplate a claim against the accountant, as the claim may not be worth a great deal. Equally, it is relatively uncommon for the trustees to be liable for appointing a professional who makes a mistake, provided the professional is suitably qualified. The trustees might find themselves liable, if they have not disclosed everything to the accountant, but suject to the same point about establishing loss.
Hope that helps a bit on the legal side. Do let me know how you get on and feel free to shout if I can help explain anything
|
|
|
Post by kt with Hanni on Jun 20, 2014 23:12:38 GMT 1
Thank you Lawyerbunny that's very helpful. We are drafting a letter with various questions based on people's advice to the trustees and we will go from there. Do you think there is a strong chance we can claim penalties if HMRC decide to fine us? Also my youngest cousin hasn't inherited yet ( has another 1.5 years to wait) so in theory she is currently in a lists situation as the money due to hmrc was paid using her money until we pay our tax back into the trust ( although my cousin can't pay all his back in one go as it's 46k! So how does that placed us and her? If we don't pay it back ASAP she could claim on us? Or could she make a loss claim on all our behalfs?
|
|