Unpaid Corporation Tax

feartheclaw

Hello all,
I have a small limited company and am the sole employee
I received a letter from Revenue stating my Corporation tax (CT1) wasn't filed for 2014 even though I thought my accountant had done it in October. There is a liability which I was not aware of and now a penalty of 10%. In the financial statements corporation tax is entered as €1 and there is no entry in tax on profits in notes to financial statements. Each year till now I've avoided CT as I pay myself any profits. I changed accountant in the new year (not related to this issue just found a more suitable one) and my new accountant has raised questions about the quality of the job done. I feel the fee I paid for the completion of accounts should be refunded.
My new accountant has advised to pay Revenue and then look at my options.

Before I challenge my old accountant what are people's views?

Thanks
ftc

barneystinson

feartheclaw wrote: »

Hello all,
I have a small limited company and am the sole employee
I received a letter from Revenue stating my Corporation tax (CT1) wasn't filed for 2014 even though I thought my accountant had done it in October. There is a liability which I was not aware of and now a penalty of 10%. In the financial statements corporation tax is entered as €1 and there is no entry in tax on profits in notes to financial statements. Each year till now I've avoided CT as I pay myself any profits. I changed accountant in the new year (not related to this issue just found a more suitable one) and my new accountant has raised questions about the quality of the job done. I feel the fee I paid for the completion of accounts should be refunded.
My new accountant has advised to pay Revenue and then look at my options.

Before I challenge my old accountant what are people's views?

Thanks
ftc

A penalty of 10% of €1?! What's your problem?

Assuming you have left something out in your OP and we aren't talking about a 10cent penalty....

If the company owes tax it owes tax. The old accountant, poor job or not, is not going to pay this for you.

They also are not going to refund you any part of their fee, short of you suing them for non-performance of whatever was in the contract between you - again, a non runner.

If you hadn't left and gone elsewhere you might have been able to negotiate a reduction in the fee for the current / next year, to reflect the penalty / interest that their action/inaction caused. But as you're no longer a client that's also off the table.

You could look into whether you could take a claim against them to small claims court, that'd be about the only potentially cost effective way for you to extract money from them.

Or it might just have to be a lesson learned - as a company owner / director you have to be aware of what is going on, even with the things that you're paying a professional to sort out for you.

feartheclaw

barneystinson wrote: »

A penalty of 10% of €1?! What's your problem?

Assuming you have left something out in your OP and we aren't talking about a 10cent penalty....

If the company owes tax it owes tax. The old accountant, poor job or not, is not going to pay this for you.

They also are not going to refund you any part of their fee, short of you suing them for non-performance of whatever was in the contract between you - again, a non runner.

If you hadn't left and gone elsewhere you might have been able to negotiate a reduction in the fee for the current / next year, to reflect the penalty / interest that their action/inaction caused. But as you're no longer a client that's also off the table.

You could look into whether you could take a claim against them to small claims court, that'd be about the only potentially cost effective way for you to extract money from them.

Or it might just have to be a lesson learned - as a company owner / director you have to be aware of what is going on, even with the things that you're paying a professional to sort out for you.

Thanks for your reply but we're talking about a little more than 10c!!!
They entered the liability as €1 in the financial statements incorrectly and led me to believe there was no liability - in reality it was much higher

As a small business I try to avoid CT as I'm already paying tax on salary and I would assume its also their job to help me do that as my accountants knowing my position...so they've let me down on a number of levels

glued

feartheclaw wrote: »

Thanks for your reply but we're talking about a little more than 10c!!!
They entered the liability as €1 in the financial statements incorrectly and led me to believe there was no liability - in reality it was much higher

As a small business I try to avoid CT as I'm already paying tax on salary and I would assume its also their job to help me do that as my accountants knowing my position...so they've let me down on a number of levels

Ultimately you're responsible for the filing requirements of your company. Is it that hard to log into ROS and check is the return submitted? You can argue with your accountant all day long and if you've paid them for tax compliance services then you should seek a refund for them failing to file your CT1 but at the end of the day it's your responsibility to ensure that the CT1 is filed and paid.

Did you sign a CT1 form at the time?

feartheclaw

glued wrote: »

Ultimately you're responsible for the filing requirements of your company. Is it that hard to log into ROS and check is the return submitted? You can argue with your accountant all day long and if you've paid them for tax compliance services then you should seek a refund for them failing to file your CT1 but at the end of the day it's your responsibility to ensure that the CT1 is filed and paid.

Did you sign a CT1 form at the time?

They were looking after all my Revenue filings so left it up to them. This is what they're paid for, is it not? I didn't sign a CT1 form and never have as they have always looked after this and have never had a CT liability before.

barneystinson

feartheclaw wrote: »

Thanks for your reply but we're talking about a little more than 10c!!!
They entered the liability as €1 in the financial statements incorrectly and led me to believe there was no liability - in reality it was much higher

As a small business I try to avoid CT as I'm already paying tax on salary and I would assume its also their job to help me do that as my accountants knowing my position...so they've let me down on a number of levels

See my earlier comments regarding your options. What else do you want to hear?

They may have prepared the financial statements but legally as director it's your responsibility to know the figures are correct (I'm assuming he hasn't performed an audit).

If you believe they've performed incompetently and they are a member of one of the professional accountancy bodies then you can file a complaint with their Institute. That won't get you any money back though, which appeared to be your main concern in your OP.

Arbiter of Good Taste

feartheclaw wrote: »

They were looking after all my Revenue filings so left it up to them. This is what they're paid for, is it not? I didn't sign a CT1 form and never have as they have always looked after this and have never had a CT liability before.

I assume you are a director of this company. I'd strongly advise you to brush up on directors' responsibilities.

dogsears

I'm curious what makes you think the €1 tax is incorrect? You say there is now a higher liability - is this advice from the new accountants, is it from Revenue, have you received an assessment?

You also said that in other years you took out all the company profits as salary - was this not also the case in 2014?

NB If there is a liability, the company should pay it asap as there will be interest accruing as time goes by.

feartheclaw

dogsears wrote: »

I'm curious what makes you think the €1 tax is incorrect? You say there is now a higher liability - is this advice from the new accountants, is it from Revenue, have you received an assessment?

You also said that in other years you took out all the company profits as salary - was this not also the case in 2014?

NB If there is a liability, the company should pay it asap as there will be interest accruing as time goes by.

Thanks, I've paid the liabilty.
I received a letter from Revenue to let me know that CT1 had not been filed. Then when new accountant went to file it was discovered (6 months later) there was a liability so €1 was not correct

I've always just kept an eye an what was coming in and paid myself a figure equal to this after calculating PAYE/USC/PRSI. I've got it pretty much bang on each year so far except 2014. It looked fine but there were a few things that I had not included that cropped up at the last minute when they were doing the accounts. So my workings were amended and a profit was declared in the financial statements but Corporation Tax was entered as €1 so I assumed no liability. When asked re CT the accountant did not advise of a CT liability and to make it worse neglected to file the CT1. I know I should have paid more attention but was extremely busy and took it on good faith...

dogsears

feartheclaw wrote: »

Thanks, I've paid the liabilty.
I received a letter from Revenue to let me know that CT1 had not been filed. Then when new accountant went to file it was discovered (6 months later) there was a liability so €1 was not correct

I've always just kept an eye an what was coming in and paid myself a figure equal to this after calculating PAYE/USC/PRSI. I've got it pretty much bang on each year so far except 2014. It looked fine but there were a few things that I had not included that cropped up at the last minute when they were doing the accounts. So my workings were amended and a profit was declared in the financial statements but Corporation Tax was entered as €1 so I assumed no liability. When asked re CT the accountant did not advise of a CT liability and to make it worse neglected to file the CT1. I know I should have paid more attention but was extremely busy and took it on good faith...

OK - thanks for that. I just thought it seemed a bit rum that the only year you had a liability happened to be the year the previous agents failed to file the return so I thought there might have been more of a story to it.

As it stands then, I think you should put it down to experience. The comments above about directors responsibilities are very true as well. I would say you should make it your practice to request from the accountants copies of all documents filed with Revenue in relation to the company's Corporation Tax etc, and diary forward annually when to get on to them to check that all is in order etc.