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Accountant messed up!

  • 26-03-2015 11:23pm
    #1
    cruiser202006
    Registered Users, Registered Users 2 Posts: 366 ✭✭


    Father Got a letter from taxman looking for a 5 figure sum of money as accountant was claiming tax relief on mortgage that apparently werent entitled to. Don't wanna go into too much detail. Any comeback on accountant with this?? Surely there insured for somet like this.


Comments

  • #2
    holyhead
    Closed Accounts Posts: 1,249 ✭✭✭holyhead


    It sounds like an open and shut case based on your post OP. The problem is that doesn't guarantee recompense. Professionals across all sectors ie accountants/lawyers/engineers etc screw up and its generally very difficult to pursue them either because of expense or putting together a solid case against them.
    I would imagine most profs have insurance against claims. Crucial to get all documents relating to this scenario from your a/c before he/she destroys them or accidently mislays them. Important to keep any correspondences from your accountant which proves they are your accountant and which proves they advised your Dad in the manner you tell us. Your Dad would have to had agreed to claiming the relief in order for your accountant to do so.
    In hindsight did it seem fanciful to claim the relief?


  • #3
    cruiser202006
    Registered Users, Registered Users 2 Posts: 366 ✭✭cruiser202006


    So basically very little comeback on him! It was tax relief on mortgage on home house to buy an investment property 8 year ago which he knew all de details surrounding. Meeting with accountant in morning to sort it out anyway! Only over a serious illness so last thing he needs at de monent!!


  • #4
    cruiser202006
    Registered Users, Registered Users 2 Posts: 366 ✭✭cruiser202006


    So basically very little comeback on him! It was tax relief on mortgage on home house to buy an investment property 8 year ago which he knew all de details surrounding. Meeting with accountant in morning to sort it out anyway! Only over a serious illness so last thing he needs at de monent!!


  • #5
    holyhead
    Closed Accounts Posts: 1,249 ✭✭✭holyhead


    Sorry to hear your Dad was unwell OP. This kind of hassle/stress is never easy to cope with, esp having just come out the good side of a serious illness. The lapse in time won't help either. Hard to source records going back 8 years. The revenue will get their pound of flesh no matter how your Dad fares with the accountant. You are generally better going with an accounting firm. Good advice is always cheap ie bad advice costs you more in the long run.
    Unless the money owed is in the mid to late 5 figure then it may not be worth the hassle pursuing the accountant. Either way hope things get sorted.


  • #6
    cruiser202006
    Registered Users, Registered Users 2 Posts: 366 ✭✭cruiser202006


    Have all the accounts since he started out. And he's been with this accountancy firm since he started!! Hopefully somet will come out of the meeting in the morning! Thanks for the advice!


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  • #7
    Alan Shore
    Registered Users, Registered Users 2 Posts: 735 ✭✭✭Alan Shore


    cruiser202006 wrote: »
    Father Got a letter from taxman looking for a 5 figure sum of money as accountant was claiming tax relief on mortgage that apparently werent entitled to. Don't wanna go into too much detail. Any comeback on accountant with this?? Surely there insured for somet like this.

    The Revenue don't normally write to people saying they are withdrawing relief like that. They write to the tax payer and say they are reviewing the return and seek information first.

    75% of the Interest on a loan to acquire an investment property is allowed where the property is registered with the PRTB.


  • #8
    cruiser202006
    Registered Users, Registered Users 2 Posts: 366 ✭✭cruiser202006


    Alan Shore wrote: »
    The Revenue don't normally write to people saying they are withdrawing relief like that. They write to the tax payer and say they are reviewing the return and seek information first.

    75% of the Interest on a loan to acquire an investment property is allowed where the property is registered with the PRTB.
    First he heard of it was the letter yesterday looking for x amount of money by a certain date. Property is registered with prtb


  • #9
    secman
    Registered Users, Registered Users 2 Posts: 6,414 ✭✭✭secman


    From what the OP said, the mortgage was drawn down against their home to purchase an investment property.So the interest paid is not deemed a business expense against the rental income from the investment property. They were then caught by the restriction to claim mortgage interest relief on their PPR, which only allows first time buyers to claim mortgage interest relief for 7 years . The accountants should have been aware of this to be honest.


  • #10
    Alan Shore
    Registered Users, Registered Users 2 Posts: 735 ✭✭✭Alan Shore


    secman wrote: »
    From what the OP said, the mortgage was drawn down against their home to purchase an investment property. So the interest paid is not deemed a business expense against the rental income from the investment property. They were then caught by the restriction to claim mortgage interest relief on their PPR, which only allows first time buyers to claim mortgage interest relief for 7 years . The accountants should have been aware of this to be honest.

    Perhaps the OP will revert to the actual reason. Other posters may disagree with your view on the allowability of loan interest as you have outlined.


  • #11
    dbran
    Registered Users, Registered Users 2 Posts: 2,094 ✭✭✭dbran


    Hi

    I think Alan is correct here. The loan interest should be allowable (subject to the 75% restriction and also it being registered with the PRTB) as the purpose of the additional loan was to purchase the investment property. If this was the other way around ie the mortgage on the investment property to purchase a new PPR then I would see your issue arising.

    It sounds like the OP possibly continued to claim TRS on the entire mortgage interest on the home. This would not be part of the tax return normally and unless the OP asked the accountant and the accountant gave incorrect advice I do not think it should be the accountants responsibility.

    A client can get up to all sorts of things, sometime they tell you, sometimes they do not and sometimes they only half tell you. There has to be a limit to an accountants responsibility and just because you ask them to do your tax return does not mean they are responsible for all of your tax compliance issues seen and unseen.

    That would be my take in it.

    Regards

    dbran


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  • #12
    Geniass
    Closed Accounts Posts: 643 ✭✭✭Geniass


    The max the accountant would be liable to is the interest and charges the Revenue applied (If any).


  • #13
    Synode
    Closed Accounts Posts: 7,967 ✭✭✭Synode


    I'd agree dbran. The mortgage interest should be allowable. OP can you let us know what has given rise to the liability.


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