Possible Insolvency - HMRC VAT Return

Discussion in 'Insolvency' started by bwoodlt, Jan 26, 2018.

  1. KAC

    KAC UKBF Enthusiast Free Member

    898 199
    Was he a qualified accountant? Did you receive a letter of engagement?
     
    Posted: Jan 27, 2018 By: KAC Member since: May 7, 2017
    #21
  2. bwoodlt

    bwoodlt UKBF Contributor Free Member

    31 1
    He's a qualified accountant. ACCA. We have email correspondence e.t.c but no formal letter of engagement before commencing work.
     
    Posted: Jan 27, 2018 By: bwoodlt Member since: Jan 10, 2018
    #22
  3. KAC

    KAC UKBF Enthusiast Free Member

    898 199
    It is mandatory for ACCA members to agree terms of engagement with new clients before commencing work and can be subject to disciplinary action if they fail to do so. From the ACCA Rulebook:

    Engagement letters 5. A professional accountant shall record in writing and send to their client a letter of engagement which sets out the terms under which they are agreeing to be engaged by their client before any work is undertaken or, if this is not possible, as soon as practicable after the engagement commences. The professional accountant shall ensure that at the time he/she agrees to perform certain work for the client a letter of engagement is prepared which clearly defines the scope of his/her responsibilities and the terms of his/her contract with his/her client. The letter of engagement shall set out in detail the actual services to be performed, the fees to be charged, or the basis upon which fees are calculated, and the terms of the engagement should be accepted by the client so as to minimise the risk of disputes regarding the duties assumed. Accordingly, the professional accountant shall ensure they retain a copy of the engagement letter which has been signed by the client. Where new work is to be undertaken or any terms have changed, the professional accountant shall send a new letter of engagement. It may also be helpful for the avoidance of misunderstandings to indicate any significant matters which are not included in the scope of responsibilities undertaken, although it will rarely be possible to provide a comprehensive list of matters excluded. Again, the professional accountant shall retain a copy of the new engagement letter which has been signed by the client.


    So no letter of engagement means you don't know whether you were engaging him for VAT advice :( Makes it more difficult to hold him responsible for what you say was bad advice.
     
    Posted: Jan 27, 2018 By: KAC Member since: May 7, 2017
    #23
  4. Newchodge

    Newchodge UKBF Big Shot Free Member

    9,318 2,371
    Isn't that a bit of a nonsene. The accountant fails to comply with his professional obligation, so cannot easily be pursued for giving bad advice?
     
    Posted: Jan 27, 2018 By: Newchodge Member since: Nov 8, 2012
    #24
  5. KAC

    KAC UKBF Enthusiast Free Member

    898 199
    I hear what you say Cyndy. But are there not 2 separate issues?
    He/she has failed to issue an engagement letter which means he/she is in breach of professional regulations and therefore could be liable to disciplinary action.
    The second issue is that with no engagement letter and no written advice, it would be difficult for the OP to prove that the services provided included advice on VAT. Just one of the reasons that clients should ensure they have an engagement letter.
     
    Posted: Jan 27, 2018 By: KAC Member since: May 7, 2017
    #25
  6. Newchodge

    Newchodge UKBF Big Shot Free Member

    9,318 2,371
    Or the professional body should extend their powers to assume, absent an engagement letter, that the advice claimed by the client to have been given, was given. More incentive to do the engagement letter.
     
    Posted: Jan 27, 2018 By: Newchodge Member since: Nov 8, 2012
    #26
  7. Mr D

    Mr D UKBF Legend Free Member

    8,286 846

    Unless the client lies / is mistaken about the advice.
    Which would happen at times - client not remembering right from a meeting, client confused, accountant using the wrong word, client seeking to turn blame onto someone else.
     
    Posted: Jan 27, 2018 By: Mr D Member since: Feb 12, 2017
    #27
  8. KAC

    KAC UKBF Enthusiast Free Member

    898 199
    Which is sadly why we always confirmed advice in writing. For our protection - not for the client's :(
     
    Posted: Jan 27, 2018 By: KAC Member since: May 7, 2017
    #28
  9. bwoodlt

    bwoodlt UKBF Contributor Free Member

    31 1
    Totally.

    Again, from our history, we never thought of claiming back VAT until he highlighted this. He was going to do it for us and take a big cut.

    So going forward, learnt this lesson amongst others.

    Any advise how to move on from this? What are the options available to us? We need to get back to HMRC next week :confused:
     
    Posted: Jan 28, 2018 By: bwoodlt Member since: Jan 10, 2018
    #29
  10. Newchodge

    Newchodge UKBF Big Shot Free Member

    9,318 2,371
    That should have immediately told you not to use him as your accountant - a reputable accountant would have told you what their fee was for doing this!
     
    Posted: Jan 28, 2018 By: Newchodge Member since: Nov 8, 2012
    #30
  11. bwoodlt

    bwoodlt UKBF Contributor Free Member

    31 1
    Well, he worked on our management account which was quite comprehensive.. I couldnt think otherwise when he mentioned VAT, just thought he's isnt a small scale accountant
     
    Posted: Jan 28, 2018 By: bwoodlt Member since: Jan 10, 2018
    #31
  12. KAC

    KAC UKBF Enthusiast Free Member

    898 199
    Have you complained to him and asked for him to compensate you for any losses you have incurred as a result of using his advice?

    If he did give you incorrect advice and doesn't deal with your complaint, you could consider bringing the matter to the attention of ACCA. His complaints procedure should have been in his engagement letter.
     
    Posted: Jan 28, 2018 By: KAC Member since: May 7, 2017
    #32
  13. bwoodlt

    bwoodlt UKBF Contributor Free Member

    31 1
    We've not been able to get through to him.

    Might have to close the company and sell the software. Again, considering competition is fierce right now in this market.
     
    Posted: Jan 28, 2018 By: bwoodlt Member since: Jan 10, 2018
    #33
  14. KAC

    KAC UKBF Enthusiast Free Member

    898 199
    Don't you have his address to write to him?
     
    Posted: Jan 28, 2018 By: KAC Member since: May 7, 2017
    #34
  15. Mr D

    Mr D UKBF Legend Free Member

    8,286 846
    Is the software an asset of the company?
     
    Posted: Jan 28, 2018 By: Mr D Member since: Feb 12, 2017
    #35
  16. bwoodlt

    bwoodlt UKBF Contributor Free Member

    31 1
    Yes it is.
     
    Posted: Jan 28, 2018 By: bwoodlt Member since: Jan 10, 2018
    #36
  17. Adam93

    Adam93 UKBF Regular Free Member

    153 24
    It's one thing closing the company down when it genuinely isn't profitable and can't pay it's debts, it is a totally different thing if you have reclaimed VAT incorrectly to the tune of £20k - HMRC will look at this as fraud and could lift the veil of incorporation on you or at best make you repay any illegal dividends to the company.

    The fact that there is an open investigation, HMRC have you on their radar and they will obviously object to any winding-up of the company so my advice would be to seek legal advice and do things the right way.

    When it comes to VAT, HMRC are less understanding than other taxes - not only have you not paid VAT over to HMRC, some of your customers have potentially reclaimed it from HMRC!
     
    Posted: Jan 28, 2018 By: Adam93 Member since: Jan 18, 2018
    #37
  18. bwoodlt

    bwoodlt UKBF Contributor Free Member

    31 1
    Thanks Adam!

    No dividend was paid... company hasnt been profitable, profitability in this space means scale. And yes, we are trying to do things the right way hence the post. We are also actively looking for a buyer so basically considering all cost effective options.
    By the way, we don't charge customers VAT neither do we add VAT to all sales. We only claim VAT from the receipt received from outlets.
     
    Last edited: Jan 28, 2018
    Posted: Jan 28, 2018 By: bwoodlt Member since: Jan 10, 2018
    #38
  19. Mr D

    Mr D UKBF Legend Free Member

    8,286 846
    A buyer to take on a business with a debt of unknown size?
    Clear the debt and may find a buyer. There are no guarantees that a business for sale will be sold.
     
    Posted: Jan 28, 2018 By: Mr D Member since: Feb 12, 2017
    #39
  20. bwoodlt

    bwoodlt UKBF Contributor Free Member

    31 1
    Thanks for your help!
     
    Posted: Jan 28, 2018 By: bwoodlt Member since: Jan 10, 2018
    #40