Accountant gave incorrect advice about leaving flat rate VAT scheme

[Rob Johnson]

2 years ago we told our account that we wanted to leave the scheme as exports were an increasing percentage of our turnover so didn't want to pay the flare rate vat on zero rated sales.
They changed the software to account for standard vat and said that was all that needed doing, no need to inform HMRC.
HMRC are now saying they've not been informed and despite all our returns for 2 years being based on the standard vat scheme it all must be recalculated to flat rate.
HMRC won't move on their position and our account still think that they are correct. The accountant has also stated that they do no have insurance to cover incorrect advice. Short of suing the accountant is there anything in else that can be done?

 

[MyAccountantOnline]

2 years ago we told our account that we wanted to leave the scheme as exports were an increasing percentage of our turnover so didn't want to pay the flare rate vat on zero rated sales.
They changed the software to account for standard vat and said that was all that needed doing, no need to inform HMRC.
HMRC are now saying they've not been informed and despite all our returns for 2 years being based on the standard vat scheme it all must be recalculated to flat rate.
HMRC won't move on their position and our account still think that they are correct. The accountant has also stated that they do no have insurance to cover incorrect advice. Short of suing the accountant is there anything in else that can be done?

HMRC do accept applications to join or leave the Flat Rate Scheme retrospectively but generally only in exceptional cases. You could seek advice from a VAT specialist on this but I suspect your only option is a professional negligence claim.

 

[Rob Johnson]

HMRC do accept applications to join or leave the Flat Rate Scheme retrospectively but generally only in exceptional cases. You could seek advice from a VAT specialist on this but I suspect your only option is a professional negligence claim.

Thanks for your reply. The HMRC VAT auditor said the same so I have emailed the flat rate team to ask for it to be retrospectively changed.

 

[WaveJumper]

And if your accountant feels they are in the right why are they not sorting this out for you

 

[tony84]

The accountant has also stated that they do no have insurance to cover incorrect advice.

Is it not a requirement? www.policybee.co.uk/accountants-insurance (probably not the most reliable source but it seems to be a requirement).

If they are not insured, that seems a problem for them to deal with if they are unable to sort the issue out.

 

[John Hemming]

Insurance is not a requirement more generally although certain institutions/associations require it for membership and the government are looking at making it compulsory for tax advice more generally.

 

[KAC]

The accountant has also stated that they do no have insurance to cover incorrect advice. Short of suing the accountant is there anything in else that can be done?

Can we assume that the accountants were not qualified, as it is a regulatory requirement that all members of ACCA and ICAEW with practising certificates should hold appropriate level of PI insurance.

Failure to do so my well be treated as a disciplinary matter

 

[lesvatadvice]

Once you have a reply from HMRC, we will be pleased to advise on the likelihood of success were you to appeal.