VAT office

[Hayles]

If you employ a book-keeper in good faith and after a while realise they haven't adhered to some VAT rules (eg mixing standard and cash accounting systems....), what could happen in the future if you were investigated? Bearing in mind the book-keeper was recommended by an accountant and as soon as the errors were discovered action was taken to correct the books?

I understand that the bottom line is that the owners of the business are legally liable, but just wondered if anyone has experience of how, in practice, the VAT office act when mistakes have been made without the owners knowledge.

 

[Jayne]

As long as the books were put right and any monies owing to the VAT office was paid, there should be no problem.

Please correct me if i'm wrong brainy accountants :lol:

Jayne

 

[Optegris]

I'm not a brainy accountant, hell I'm not even brainy, but you have to be soooo careful with HMCE.

They do not treat ignorance as an excuse and could still fine you. Does the bookkeeper have any kind of liability insurance to cover for such mistakes?

 

[Hayles]

I very much doubt it.

 

[Optegris]

In that case, if the worst scenario happened and the HMCE do fine you, still go ahead and sue them as as far as I can see you employed them for a service in good faith, they screwed up, therefore they should pay to correct the problem...

Assuming of course they haven't got a contract with you to say they are not liable, blah de blah...

 

[KM-Tiger]

Do HMC&E still have the rule that if the correction is less tha £2K you don't even have to tell them?

How much do you owe them or they owe you?

 

[Alpha]

To be honest most vat inspectors are very reasonable in cases where mistakes have been made.

if you look at their standard guidance where the mistake is below £2000 then you simply correct it in the next return. If above that you must notify them immediately and pay over the difference.

If you notify them you do not get charged misdeclaration penalties.

Yes you are liable even if it is your book keeper that made the mistake ( Although how on earth they can mix standard and cash accounting is beyond me unless you changed over at some point and they were not immediately informed)

The inspector will probably just get you to put the correct returns thorugh and if substantial will give you a penalty as well. They may even give you time to pay if it causes difficulties.

Of course if the inspector suspects fraud then he will take a rather different attitude.

 

[Joyous]

Hi Hayles

Have you worked out yet how big the error is? As others have said regardless of who does the books it's down to you to ensure that your VAT returns are correct. So now that you're aware of the error you need to take steps to correct it.

If the net VAT value of the errors is £2,000 or less either way then you can simply correct it on your next VAT return. If the net error is more than £2000 you'll have to make a voluntary declaration detailing the facts. If it turns out that you've VAT owing to you as result of the error you've got 3 years from the date of the return that the transactions appeared in to make your claim.

Regards

Joy

 

[Hayles]

Many thanks for the advice. It seems that, alledgedly(!), the invoices received have been recorded on the standard system, but invoices raised by us have been recorded on the cash accounting system..... seems like she picked the best of both? The accounts have been restarted (six months worth) for this year and I don't know the outcome at the moment.

Not being an accountant, I'm thinking that within one or two quarters the figures will have evened out anyway?

Another little worry is that our accountant has no record of us buying two business cars last year.....! The money came out of our business account so how on earth it has been recorded is a mystery. Amazingly the bank accounts reconciled as far as she's concerned at the end of each month?!

As you can imagine, there are lots of other things that have come to light but I'm determined not to dwell on the past. GRRRRRR.

 

[Joyous]

Hmm, didn't you have an issue with your accountant/bookkeeper not too long ago. Time to get yourself new ones methinks. This is my totally unbiased opinion of course.

Regards

Joy

 

[Hayles]

Hi Joy

Yes, have done that and that's how we're finding more and more problems....

Can of worms comes to mind....

I do feel better knowing that it is being sorted though and anyone in a similar position should bite the bullet and get help. Much easier to sort things after 6 months than after 2 years.

Hayles