Huge mistake from my accountant

akesha

Hi all,

my husband and I are IT contractors, having our own limited company.

After some recommendation from a colleague of my husband, we decided to hire an accountant. We are with him for a year and a half. Our taxation can't be more simple: 1/2 invoices and 2/3 expenditures per month.

A while ago, they made a wrong calculation with the VAT. They always double check with me if the calculation is fine... (I don't like this, because if I have to review things... why should I pay them for??), and once I realised that they weren't counting all the expenditures and I saved myself like 200/300 e.

We weren't happy, but it was only one mistake.

What happens now... again, they contacted me to check P30 values, and I see a small amount of money for 3 months, so I checked with them... Surprise! Since July, when we decided to change our net salary, they "misunderstood" their own excel, and instead of paying 3 months of taxes, we were paying only one!!

Again, thanks to review things myself, we realise that we need to pay 24K to revenue, when then accountant thought it was only 8K!!! So now, we "just" need to pay the balance, which is 17K.........

Not sure what to do with this accountant. He admitted his error, and he apologised, but we think their job is not acceptable by any means, and we don't want to pay for their job anymore (we pay annually in July). We are thinking of changing of accountant. What do you think? What's the best thing to do here? He wants to pay the balance on February, but we would like him to fix it and telling him that we are not happy, and we are not paying him anymore, and that we are changing to a more reliable accountant...

uck51js9zml2yt

Sort out your tax affairs and change accountants.

I dont see your dilemma!

bucketybuck

I also don't see much debate here, you do not trust your accountants work, you absolutely need to change to somebody else.

vmb

I'm Akesha's OH. Should we pay for these last 6 months? He generates one invoice per year, so in July we should pay him 1 year of service from the past 12 months

The point is that all the work he has done since this July is wrong. I don't think he has worked more than 5 minutes per month in our bookkeeping (as Akesha said, our company provides consultant services, no expenditures, it's trivial in terms of accountancy).

He has admitted his error, but I don't see the point of paying for an accountant if we have to review and correct his work all the time.

The whole point of having an accountant is to not to make mistakes as we are not experts in this area. We have some accountancy knowledge from college (just one subject), but we don't know the Irish system in depth.

Our dilemma is how to tell him to fix it but we won't pay for this 6 months. We consider that given the bad work this 6 months, we shouldn't pay him, and at the same time, is his responsibility to fix it.

exaisle

Your total PAYE bill is what it is. It hasn't changed. It's all just a question of timing and when you have to pay it. Looking at it from a different perspective, you've had the benefit of the €17k for the past few months. Better that they find their mistake now, rather than in six months time when you might owe another €17k.

Presumably, if you're drawing a salary, the amount of money you receive from the company isn't affected by the mistake. Neither is the net worth of your company. You have €17k more in the bank and owe €17k more to Revenue than you would have if the error hadn't occured.

Everybody makes mistakes. What you've described isn't a "huge mistake" in the overall scheme of things. Jumping up and down on the spot with indignation isn't going to rectify things and changing accountants isn't either.

Nobody's dead.

There's a way of softening the blow of the 17k, or at least of delaying when you need to pay it. Ask your accountant. If he doesn't know what I mean, then maybe there's a case for changing.

exaisle

akesha wrote: »

He wants to pay the balance on February, but we would like him to fix it and telling him that we are not happy, and we are not paying him anymore, and that we are changing to a more reliable accountant...

What do you want him to do...wave his magic wand?

As I've mentioned above, your tax bill is what it is.

CIARAN_BOYLE

akesha wrote: »

A while ago, they made a wrong calculation with the VAT. They always double check with me if the calculation is fine... (I don't like this, because if I have to review things... why should I pay them for??), and once I realised that they weren't counting all the expenditures and I saved myself like 200/300 e.

No matter what you are responsible for your tax affairs. He has to check with you and get approval before paying. This should be a pro forma exercise but if there are mistakes the question of why you are paying them arises.

You are paying for one of two things. One for them to provide their expertise and calculate the liability. Two for someone to press the final button and do the necessary to file. However at the end of the day you are the responsible party.

If you can't trust them to file the right amounts you need to consider changing. However in the grand scheme of things as exiles says remember no one is dead. You have a choice move on and get a new accountant who you can trust or stay with this guy.

akesha

What I meant by fixing it, it is not to reduce the amount, obviously it is what it is. I mean to pay that amount already and have all the debt paid.

@exaisle I realised the mistake, not them. It could have been a big problem in the future. It is a huge mistake for me, when their main job is doing my taxes, and they do that wrong.

Is it normal to double check their calculations? Do other accountants do that?

johnnyskeleton

vmb wrote: »

Our dilemma is how to tell him to fix it but we won't pay for this 6 months. We consider that given the bad work this 6 months, we shouldn't pay him, and at the same time, is his responsibility to fix it.

If it was the accountants mistake then it would be reasonable for him/her to EITHER fix the error free of charge and resolve any penalty issues with revenue OR not raise a bill for the work done. But you can hardly expect him/her to BOTH fix it and to not charge you for it.

Also, Id maybe double check that it was in fact his mistake. An accountant will only do up the returns based on the figures you give him, and the reason they ask you to confirm is because ultimately you have to stand over the return. While you say that they misunderstood, it did arise out of a change in your systems. Also, we arent talking about a small amount of money either. If you collect say 60,000 per month and pay 24,000 in tax, surely you noticed that after you changed your systems instead of having 36,000 in the bank account you had 52,000? And the money should still be there unless you spent it, so its really only a question as to whether revenue will charge a penalty.

wally1990

I work in an accountants and it's common for the company to have clients run over the figures and confirm they are happy to sign off.

Sure if accountants didn't then people will give out too so there is no winning.

He does the accounts and payroll.

Confirms with his clients and everyone is knowledgable and happy.

If it annoys you that he was doing that then you may be surprised because it can be quite common because accountants generally will
Always be keeping their clients up to speed on their financial affairs and having them confirm/sign off.

Regarding the fee to him, maybe he will lower it or waive a fee but that's up to him

Your tax bill is your tax bill and you had the benefit of the money

Best of luck with it.

jimmycrackcorm

vmb wrote:

I'm Akesha's OH. Should we pay for these last 6 months? He generates one invoice per year, so in July we should pay him 1 year of service from the past 12 months

Dear Op. Seeing as you work in IT, Im going to suggest that you balance it out by paying your employers the cost of every software bug you or your OH are responsible for.

That just might give you some perspective.

hometruths

OP and OH, surprised at the reactions here tbh.

If you owe revenue 24k and accountant thought you only owe 8k bottom line is you need a new accountant. And I think you are perfectly entitled at the very least to negotiate his bill.

His job is ultimately to calculate your tax liabilities and he got it wrong. Yes I realise nobody died but at the same time it is a slightly bigger issue than say a waiter getting the order wrong in a restaurant.

exaisle

schmittel wrote: »

OP and OH, surprised at the reactions here tbh.

<snip>

His job is ultimately to calculate your tax liabilities and he got it wrong. Yes I realise nobody died but at the same time it is a slightly bigger issue than say a waiter getting the order wrong in a restaurant.

Yes, but in the overall scheme of things OP/OH aren't paying any more than they otherwise would have. It's a smaller issue than a consultant physician mis-reading a scan where somebody's life is put in danger.

The reactions here are probably from accountants for the most part and they can see it from the other side. Mistakes happen and all anybody can do is to apologize, rectify and move on. Life is too short to dwell on f**k ups.

That's not to say that the accountant involved may not have given the issue the full attention it deserved but we really need to get things into perspective. OP and OH would owe the tax anyhow so nothing has changed except the timing. There shouldn't be any issue here with interest and penalties if the outstanding amount is included in the P35.

CIARAN_BOYLE

schmittel wrote: »

Yes I realise nobody died but at the same time it is a slightly bigger issue than say a waiter getting the order wrong in a restaurant.

To me there are two types of mistakes. One that leads to interest and penalties are serious one that doesn't is less so.

OK you need be happy with your accountant so feel free to change accountant but it's not the end of the world.

vmb

We know and understand that people make mistakes, it's that our accounts are so simple, that it seems that they haven't put any attention to them. We do create bugs working, but at least we try to test our code properly.

Fortunately our company account has more than enough money to pay the pending taxes (we save money in the company as rainy days funds, my health is not good and I can't work all the time) but it's a shock that they didn't calculate how many taxes should we pay. Our agreement was, we want to be able to withdraw (create payslips) x euro per month, please calculate and pay the required taxes to the revenue.

Then Akesha realised that our company account was too healthy... and making numbers we realised that they reported to the revenue less PAYE to collect. As far as we know, the companies consolidates its accounts in February, so we though that we were so close to penalties.

Regarding validation, they send us raw numbers. i.e, do you agree to pay x euro for the VAT? so we have to calculate everything manually if we want to check it. We should ask for their complete calculation if they want us to validate everything properly, but we don't know what's the standard. It's anyway a simple calculation, but if we start having a more complicate structure it'll be a time consuming thing.

At least this thread has shown us some misconceptions we had about how accountants operate. What I can't see, in case of small companies with lots of small incomes/expenditures, having and accountant won't save them too much time, because they will need to recalculate everything anyway.

Morte

With the best will in the world, every business will make mistakes every now and again, even on the simple things. The question is whether having two mistakes just after starting with him was just unlucky or whether the accountant is careless. If you know other people who use him and are happy with him maybe you should give him another chance. If you don't there's no harm in moving if you don't feel confident in him any more. It may be harsh if it was just bad luck but you'll probably feel better off if you don't feel you can trust him.

Every accountant will send the figures through to you to check before sending them off to Revenue. The more eyes that check it the better. Most clients would just give a high level review rather than checking everything. This probably wouldn't catch a small error like the VAT but should be able to catch larger ones like the second error. If you want to check everything properly yourself then you won't be saving much time. Though you would still have the benefit of having someone to ask if anything strange popped up that you didn't know how to deal with.

Accountants will also send the figures to clients to drum it into their head that this is the legal position. The taxpayer is the one responsible in law and if something goes wrong the Revenue will come after them rather than the accountant. It also emphasises to some clients that the accountant can't be held responsible for stuff the client never told him about :P. Not talking about you obviously but some clients think accountants should be psychic about these things.

JMNolan

No such thing as Professional Indemnity Insurance for tax accountants then? The client has to sign off on the figure even though they are not an accountant themselves?

barneystinson

JMNolan wrote: »

No such thing as Professional Indemnity Insurance for tax accountants then? The client has to sign off on the figure even though they are not an accountant themselves?

If you think PI insurance, or any form of indemnity, will cover someone's tax liability you're sadly mistaken.

If you decide you want X amount of net salary from your company and the accountant miscalculated the applicable tax, how/why do you think they could be held liable for your tax liability?

Penalties might be a different matter, where they arise as a result of the accountant's miscalculation.

Franz Von Peppercorn

CIARAN_BOYLE wrote: »

To me there are two types of mistakes. One that leads to interest and penalties are serious one that doesn't is less so.

OK you need be happy with your accountant so feel free to change accountant but it's not the end of the world.

Can’t he demand money back from the accountant? With interest?

JMNolan

barneystinson wrote: »

If you think PI insurance, or any form of indemnity, will cover someone's tax liability you're sadly mistaken.

If you decide you want X amount of net salary from your company and the accountant miscalculated the applicable tax, how/why do you think they could be held liable for your tax liability?

Penalties might be a different matter, where they arise as a result of the accountant's miscalculation.

Of course I don't expect someone else to cover a persons tax liability but if you are given advice and as a result of that advice you end up paying interest and penalties then ,sure, why wouldn't PI insurance cover it?