- Original Poster
- #1
Sorry to bring up such a big issue in my first post. But I believe my accountant has been negligent, in not informing me of tax changes that, based on previous year's accounting trends, would have affect me, as well as not offering ways of mitigating tax through employer pension contributions.
I have operated a limited company since 2012, 90% of which is IT contracting, where I am the sole employee/director. I have been with the same accountant for 8 years. I'm 53 years old, so anyone knowing my position would be mindful of pension contributions.
Last year I made a pre-tax profit of £99k, and also took £18k as a *personal* contribution to my SIPP (after taking a dividend from the company.
This year my pre-tax profit was £130k. My accountant just did the numbers, and told me the corporation tax bill was £31k. I discovered that 6k of this tax was due to Jeremy Hunt's changes in corporation tax rates over £50k introduced on 1 April 2023 (which coincides exactly with my company financial year). I was not aware of this tax change, and complained to my accountant that he had not informed me, prior to the end of this tax year, that had I known this, I would have taken action to mitigate it by paying a lot more into my pension instead of the money sitting in a business savings account. He said "you never contacted me to tell me your change in position". Well he just did my accounts and saw that I DID in fact make £100k last year, so there wasn't a change in position - it would definitely have been a matter to highlight, as, if continued would have led to me paying the higher corporation tax rate this year.
He also only just told me that it was usually more tax efficient to pay into a SIPP directly from the company as an Employer Contribution. Why didn't he tell me this last year, when he saw I was doing it the "wrong" way (through personal contribution after taking dividends then claiming back the higher rate in my Self Assessment)? It is estimated that the £20k SIPP payment I made this year would have saved me £1,700 had I done it the Employer contribution route.
Apart from responding to my emails during the time of doing my accounts and filings, he didn't contact me at any other time of the year, and especially did not in Feb/Mar as a "check up" before the end of the financial year.
So, on these two points, the lack of warning about higher corporation tax rates, and the lack of advice on method of SIPP payments, I am now down approximately £7.700 in additional tax that could have been avoided had I been forewarned.
Was my accountant professionally negligent or did he fail in his duty of care to alert me of the impending tax changes, and advice on how to better make SIPP payments? Or am I expected to contact him on a regular basis with intangible questions about things I can't be expected to know, since I'm not an accounting professional?
Is this a common scenario that others have had? Is there recourse to receive compensation if it can be somehow "proved" that he failed in his duty of care?
I have operated a limited company since 2012, 90% of which is IT contracting, where I am the sole employee/director. I have been with the same accountant for 8 years. I'm 53 years old, so anyone knowing my position would be mindful of pension contributions.
Last year I made a pre-tax profit of £99k, and also took £18k as a *personal* contribution to my SIPP (after taking a dividend from the company.
This year my pre-tax profit was £130k. My accountant just did the numbers, and told me the corporation tax bill was £31k. I discovered that 6k of this tax was due to Jeremy Hunt's changes in corporation tax rates over £50k introduced on 1 April 2023 (which coincides exactly with my company financial year). I was not aware of this tax change, and complained to my accountant that he had not informed me, prior to the end of this tax year, that had I known this, I would have taken action to mitigate it by paying a lot more into my pension instead of the money sitting in a business savings account. He said "you never contacted me to tell me your change in position". Well he just did my accounts and saw that I DID in fact make £100k last year, so there wasn't a change in position - it would definitely have been a matter to highlight, as, if continued would have led to me paying the higher corporation tax rate this year.
He also only just told me that it was usually more tax efficient to pay into a SIPP directly from the company as an Employer Contribution. Why didn't he tell me this last year, when he saw I was doing it the "wrong" way (through personal contribution after taking dividends then claiming back the higher rate in my Self Assessment)? It is estimated that the £20k SIPP payment I made this year would have saved me £1,700 had I done it the Employer contribution route.
Apart from responding to my emails during the time of doing my accounts and filings, he didn't contact me at any other time of the year, and especially did not in Feb/Mar as a "check up" before the end of the financial year.
So, on these two points, the lack of warning about higher corporation tax rates, and the lack of advice on method of SIPP payments, I am now down approximately £7.700 in additional tax that could have been avoided had I been forewarned.
Was my accountant professionally negligent or did he fail in his duty of care to alert me of the impending tax changes, and advice on how to better make SIPP payments? Or am I expected to contact him on a regular basis with intangible questions about things I can't be expected to know, since I'm not an accounting professional?
Is this a common scenario that others have had? Is there recourse to receive compensation if it can be somehow "proved" that he failed in his duty of care?
