tax bill and devestated

anais

Hi all. I am a paye employee married to a self employed auctioneer who has ventured out on his/our own in the last couple off years. His brother (a qualified accountant ) has been doing the accounts free gratis for the last 3 years. I honestly don't know the details but on Monday last my husband got an email to say the 'director's account ' has a deficit and we owe....25 thousand euro to be 'accounted for'?? by Friday (yesterday). My husband has said all along he wants to be up front and not get any surprises.
We have nothing (but our house)
We have 3 children.
Who can I go to for advise/help.
Thanks for reading this.

Aint Eazy Being Cheezy

Revenue emailing you out of the blue like that sounds extremely sus. Are you sure it's not a scam?

anais

Aint Eazy Being Cheezy wrote:

Revenue emailing you out of the blue like that sounds extremely sus. Are you sure it's not a scam?

Sorry, the email is from the accountant/brother

Rob Thomas

What part of the country are you in?

anais

Kildare

Kristopherus

Aint Eazy Being Cheezy wrote: »

Revenue emailing you out of the blue like that sounds extremely sus. Are you sure it's not a scam?

+1. Sounds like a scam. Revenue will never hit you with an assessmnent like that. And being a neat figure like €25,000 is very suspect. Did hubby check it out with the brother? What was his response?

Jimbob1977

Rather than replying to the email, you should phone the local district office of the Revenue Commissioners to ask if the email was valid.

Revenue don't tend to make first contact by email and how would they know the Director's Account was in deficit by €25k (if it was)?

Might be a scammer that wants you to deposit €25k to a certain bank account that the scammer controls.

Revenue would like to hear about scams. Is there any reason that your company has a potential issue? You don't have to answer that if you don't want to 😀

anais

It's not revenue hitting us with the deficit, rather the accountant saying end of year figures don't add up and we owe the money. I asked my husband to send me the email which he did and because I don't know what I'm seeing I haven't a clue. It just seems like an enormous tax bill. Can this happen in business? My husbands business certainly hasn't made that kind of money. Again, it mentions "directors account' . I have no idea what that means. And because it's his brother ; not charging for services, my husband doesn't want to rock the boat. He's talking about taking out a loan? Surely an accountant would have an idea this was coming down the tracks? If the business goes under we will lose our house

Lockedout2

anais wrote: »

Hi all. I am a paye employee married to a self employed auctioneer who has ventured out on his/our own in the last couple off years. His brother (a qualified accountant ) has been doing the accounts free gratis for the last 3 years. I honestly don't know the details but on Monday last my husband got an email to say the 'director's account ' has a deficit and we owe....25 thousand euro to be 'accounted for'?? by Friday (yesterday). My husband has said all along he wants to be up front and not get any surprises.
We have nothing (but our house)
We have 3 children.
Who can I go to for advise/help.
Thanks for reading this.

I assume that your husband has a company and he draws out a salary. Did he draw out further funds during the year?

An overdrawn directors current arises when you draw out more than you are owed.

Sheep Shagger

Think you should seek some independent advice if you don't want to 'rock the boat'

Perhaps someone like www.taxassist.ie (am not connected in any way and I've used them after getting an unexpected tax bill). At least you can get a free quote on how much it would cost to look into it for you.

barneystinson

I don't think anyone replying so far has got the correct gist of the OP... (Edit: apart fromLockedout!)

The accountant has told them that they need to "account for" ie explain, a "deficit" in the director's account, by a date. This could mean that Revenue have rais d a query in relation to the director's loan balance, which is very common.

So it would appear the OP's hubby is trading as a Ltd company, and he has drawn money from the company through directors loan account rather than as a taxed salary.

If that is the case, the issue is a company one, rather than the director's in the first instance. The company should have paid over tax at 20/80ths of the increasing loan balance at each year end, so it owes 6,250 to date if the loan is at 25k.

This tax is refunded to the company proportionately as the loan is repaid by the director to the company.

Separately there's a BIK issue on the provision of an interest free loan to the director, with a notional BIK @ 12.5% or 13.5% of the loan, but again that's a PAYE liability in the company in the first instance.

So between jigs & reels, there's probably about 7-8k plus a bit of interest to be dealt with, but the good news is it can be dealt with by the company rather than it of the director's after-tax income. OP you need to get advice from a competent professional if your hubby's brother isn't up to the job.

Rob Thomas

I don't know anyone to recommend that side of the country but I would suggest the following:
1. Speak to your husbands professional colleagues who might recommend someone more competent to sort out the issue.
2. You need to establish the extent of and the exact nature of the issue. You say a tax bill but your language suggests that your husband most likely has taken more out to the business than he intended do and it has to be balanced for year end. This can be converted to a loan in cases or minimised in other ways.
3. Don't worry. Stressing on a Saturday night about this won't help, even if it turns out to be a big problem, you can sort it over the coming days and weeks. This is understandably a shock, and of course you are thrown by it, but you will overcome it.
4. If this turns into a tax bill, employ someone specialist who will negotiate payment for you. Revenue are tough, but they are fair and will enter into reasonable agreements with genuine people.

Best of luck.
Rob

exaisle

Kristopherus wrote: »

+1. Sounds like a scam. Revenue will never hit you with an assessmnent like that. And being a neat figure like €25,000 is very suspect. Did hubby check it out with the brother? What was his response?

It doesn't sound like a scam at all..the email came from OP's brother-in-law who is the accountant.

There are too many aspects of this for anybody here to give you worthwhile advice other than to suggest that it might be worth your while speaking to an independent tax advisor/accountant.

anais

Panrich wrote:

We need a celtic alliance with NI and the Scots.

barneystinson wrote:

Separately there's a BIK issue on the provision of an interest free loan to the director, with a notional BIK @ 12.5% or 13.5% of the loan, but again that's a PAYE liability in the company in the first instance.

barneystinson wrote:

So between jigs & reels, there's probably about 7-8k plus a bit of interest to be dealt with, but the good news is it can be dealt with by the company rather than it of the director's after-tax income. OP you need to get advice from a competent professional if your hubby's brother isn't up to the job.

barneystinson wrote:

If that is the case, the issue is a company one, rather than the director's in the first instance. The company should have paid over tax at 20/80ths of the increasing loan balance at each year end, so it owes 6,250 to date if the loan is at 25k.

Yes. You are right it is a company issue in my opinion. My brother in law was trying to save us money. But instead were landed with this crippling tax bill . My husband thinks we have to pay it out of personal funds (ie my mother died unexpectedly and we will.have to tell my siblings to sell her house pronto). If there were funds paid out of a directors account instead of salary/ that was the accountant 's idea. My husband is the main employee with only one other person (on payroll) there 3 days a week . Many thanks for the replies

mickdw

anais wrote: »

Yes. You are right it is a company issue in my opinion. My brother in law was trying to save us money. But instead were landed with this crippling tax bill . My husband thinks we have to pay it out of personal funds (ie my mother died unexpectedly and we will.have to tell my siblings to sell her house pronto). If there were funds paid out of a directors account instead of salary/ that was the accountant 's idea. My husband is the main employee with only one other person (on payroll) there 3 days a week . Many thanks for the replies

Its not a 25k tax bill. The liability would be a percentage of that.

anais

Rob Thomas wrote:

I don't know anyone to recommend that side of the country but I would suggest the following: 1. Speak to your husbands professional colleagues who might recommend someone more competent to sort out the issue. 2. You need to establish the extent of and the exact nature of the issue. You say a tax bill but your language suggests that your husband most likely has taken more out to the business than he intended do and it has to be balanced for year end. This can be converted to a loan in cases or minimised in other ways. 3. Don't worry. Stressing on a Saturday night about this won't help, even if it turns out to be a big problem, you can sort it over the coming days and weeks. This is understandably a shock, and of course you are thrown by it, but you will overcome it. 4. If this turns into a tax bill, employ someone specialist who will negotiate payment for you. Revenue are tough, but they are fair and will enter into reasonable agreements with genuine people.

The company is my husband. That's it. We are so terribly upset and think we have to come up with this money. Like selling my mother's house. She died not so long ago. Your words and advise give me hope . Thank you.

Kristopherus

exaisle wrote: »

It doesn't sound like a scam at all..the email came from OP's brother-in-law who is the accountant.

There are too many aspects of this for anybody here to give you worthwhile advice other than to suggest that it might be worth your while speaking to an independent tax advisor/accountant.

Ah, while I was typing the post, several other posts came in (watching the boxing as well:D). I appreciate it may not now have come from Revenue. Thats not their modus operandi.If , as appears now, there is a shortage of funds in the "Directors Account", imo the easiest way to treat it is as a loan to the Director.Its up to the accountant to sort that issue out to the satisfaction of Revenue.

Dr Turk Turkelton

Op, you and your husband don't seem to have much of a grasp of basic business or tax matters and I'm sure his brother can see this while he is helping yous.
Are you sure he (the accountant) doesn't owe someone 25k?

I think your best bet is to pay someone unrelated to have a look at your affairs.

edit; just copped that yous will have an inheritance coming as well.
Definitely get someone independent to look at this. It seems yous are about to be rode sideways.

PARlance

1. It certainly doesn't sound like a scam or even a 25k liability. As mentioned previously, it reads like there's a 25k Directors Loan. The company will have a lesser liability and you shouldn't raid personal funds. I.e it should be paid out of company funds, talk to the Rev Comm and work out a payment schedule.
2. Get another accountant. He shouldn't have been informing you less than 5 days in advance. Working with family can be a bad idea.
3. Your husband should make it "his business" to educate himself on the responsibilities of his business.

PARlance

anais wrote: »

The company is my husband. That's it. We are so terribly upset and think we have to come up with this money. Like selling my mother's house. She died not so long ago. Your words and advise give me hope . Thank you.

Have you and your husband got the brother to talk through exactly what he means? It doesn't sound like you have. You should.

EagererBeaver

Something very fishy about this. An email from one sibling (allegedly a qualified accountant) informing another that they owe €25k and the former is now in a state of hysterics and talking about seeking the house rather than, you know, asking his brother wtf he's on about?

dresden8

Looks like you're getting something free which is worth how much you are paying.

road_high

If ever there was a thread and scenario for not mixing business with family then this is surely it!!!

mickdw

I wouldnt be so quick to beat up on the accountant.
It sounds to me that the business owner had to know he was taking out funds from the business. Accountant probably pushing him to put a proper arrangement in place with this email the result of much heal dragging by the business owner.

Lockedout2

Have to agree. Auctioneering is a regulated trade and the licence applications should be filed with the PSRA by the end of May. With a report from a practicing accountant.

It seems strange that the brother emailed so say you have an overdrawn directors current account rather than picking up the phone and explaining it.

Glenbhoy

The revenue have most likely looked at the filed accounts (not for 2015, but probably the 2014 accounts), noticed that there's a directors loan account balance of €25,000. They then send a letter to the company secretary and usually the company accountants and ask for an explanation behind this.

What you want/need to know now is:
1. Who is the company secretary?
2. A copy of the letter from the revenue.
3. What period the revenue are querying and, importantly, what is the current status of the directors loan account.

You particularly want to know the answer to 3, as that will determine how you respond (although, I would suggest that your brother in law draft the letter). It's likely that the revenue will have asked for a response within 4 weeks or similar timeframe.
It may be that there is no longer a deficit, in which case your reply will point that out and will require no payment. It's likely that there will still be a deficit, in which case, the reply can be accompanied by a cheque for the 20/80ths or whatever as laid out by a poster above.
Overall though, it's not something to be too worried about. If the account is still in deficit, then look on it as a loan, PAYE should have been paid on these drawings, posters here don't know the ins and outs of what advice has been proffered over the years by your accountant, it may have been that a decision was taken to do this for cashflow reasons, whatever the reason, it's been picked up by the revenue and it's best to deal with it now, before they get annoyed!!

Or, of course it may just be that your brother in law is finishing up preparing the accounts and has calculated that there is a directors loan deficit, due to drawings by your husband, and he saying that it should be paid back, if it's not, then either paye or withholding tax will have to be paid on it.

Mrs OBumble

anais wrote: »

...My husband thinks we have to pay it out of personal funds (ie my mother died unexpectedly and we will.have to tell my siblings to sell her house pronto). ...

anais wrote: »

The company is my husband. That's it. We are so terribly upset and think we have to come up with this money. Like selling my mother's house. She died not so long ago.

anais wrote: »

...My husbands business certainly hasn't made that kind of money. ... And because it's his brother ; not charging for services, my husband doesn't want to rock the boat. ... Surely an accountant would have an idea this was coming down the tracks? If the business goes under we will lose our house

OP, I hate to say it, but your post, especially the bolded points, rings warning bells for me. For there to be a tax liability, your husband would need to be have a profit of at least twice the amount you owe.

Maybe it is all a misunderstanding based on accounting jargon, and you owe little, if anything.

But it seems very odd that the first you hear of this is via email, not via an in-person discussion which included in-depth explanation of the situation.

A possibility that the others haven't considered is that the brothers are colluding to manipulate you and your siblings into certain actions. I know this sounds horrible, especially if you believe your relationship is solid - but it's happened to women before, and will doubtless happen again.

I suggest getting independent tax advice immediately. If your husband resists this, then I'd suggest contacting these folks: https://www.womensaid.ie Remember - family violence isn't always physical.

anais

Thanks so much again for all the replies. I feel completely out of my depth and asking about personal matters on a public forum might seem mad to some but it has given me some good insights and information.
Husband back today. He had a chat with accountant/brother in law on friday (news for me) . The year in question is indeed 2014/15. It is also a liability rather than a tax bill (thanks for the language on this, I appeared almost knowledgeable). It's either a) accountant 'accounted' for a salary which was too low and now tax is owed on money over this amount or
b) my husband took more out of company and now owes tax on same.
Either way it seems at best 12.5k is now owed to revenue but again I question how this was only made known on a Monday to be rectified by the Friday.
Husband made returns, as required last Oct. He says he made it very clear how much he was paid.
My final question is to where do I turn to for help/ independent information. Myself and my kids will bear the brunt of this and I feel ignorant. I need to educate myself so this never happens again.
Thanks K

mickdw

You seem to be held at some distance from all this. Working on snippets of info when in fact you and your family are directly effected.
Are you officially a director or secretary of this company?
It is very fishy that one single conversation with husband could not clear up what the story is. He has to know the story.

relax carry on

anais wrote: »

Thanks so much again for all the replies. I feel completely out of my depth and asking about personal matters on a public forum might seem mad to some but it has given me some good insights and information.
Husband back today. He had a chat with accountant/brother in law on friday (news for me) . The year in question is indeed 2014/15. It is also a liability rather than a tax bill (thanks for the language on this, I appeared almost knowledgeable). It's either a) accountant 'accounted' for a salary which was too low and now tax is owed on money over this amount or
b) my husband took more out of company and now owes tax on same.
Either way it seems at best 12.5k is now owed to revenue but again I question how this was only made known on a Monday to be rectified by the Friday.
Husband made returns, as required last Oct. He says he made it very clear how much he was paid.
My final question is to where do I turn to for help/ independent information. Myself and my kids will bear the brunt of this and I feel ignorant. I need to educate myself so this never happens again.
Thanks K

So it looks like it's an additional 12500 paye/PRSI/USC liability for drawings/benefits taken by your spouse from the company. I would ask to see the accounts showing those workings as it will show you how much income your spouse actually took out of the company during the period. Do you know how much of a salary your spouse pays himself?

anais

Think his salary was 20k plus 12k expenses. I feel they think I don't understand so am kept out of the loop. I'm a 1% shareholder? Need to grow up and get myself informed.

CIARAN_BOYLE

anais wrote: »

Think his salary was 20k plus 12k expenses. I feel they think I don't understand so am kept out of the loop. I'm a 1% shareholder? Need to grow up and get myself informed.

Sounds to me like its 20k salary but he took 45 k out. Or perhaps the expenses werent legit business expenses so the accountant just put that 12k in as directors loan for two years.

Did you know about his level of drawings?

the_syco

Dr Turk Turkelton wrote: »

Op, you and your husband don't seem to have much of a grasp of basic business or tax matters and I'm sure his brother can see this while he is helping yous.
Are you sure he (the accountant) doesn't owe someone 25k?

I think your best bet is to pay someone unrelated to have a look at your affairs.

edit; just copped that yous will have an inheritance coming as well.
Definitely get someone independent to look at this. It seems yous are about to be rode sideways.

Having read all of the OP's updates, I agree with the above, and think she should look into getting a 2nd opinion from an accountant not related to any of the family.

barneystinson

the_syco wrote: »

Having read all of the OP's updates, I agree with the above, and think she should look into getting a 2nd opinion from an accountant not related to any of the family.

Conspiracy theories forum is that way >>>>>> :rolleyes:

FAILSAFE 00

barneystinson wrote: »

Conspiracy theories forum is that way >>>>>> :rolleyes:

More like the Common Sense forum.

Dr Turk Turkelton

barneystinson wrote: »

Conspiracy theories forum is that way >>>>>> :rolleyes:

I have a barely used monorail for sale if your town is interested?