You may not always agree with your accountant. It certainly seems to be the experience of an entrepreneur who, as a limited liability company, wanted to take advantage of the £150 exemption for staff entertainment, against the advice of his accountant.
But as a general rule, you can expect to believe that what your accountant tells you is correct, writes David Whiscombe, tax adviser at accountancy firm BKL. He or she is, after all, a trained professional.
Tears and trust
However, if you’re constantly wondering what your accountant is saying, it’s probably time to find a new accountant (and, frankly, your accountant is unlikely to cry many tears over your decision!). If you find yourself constantly not trusting what your accountant says, the relationship is broken. Move on, for both of you.
Prior to this crucial point, there may be times that for whatever reason you do not wish to file with HMRC in the manner suggested by your accountant.
What are your options if you disagree with your accountant?
Usually your options if you disagree with your accountant depend on the situation or type of dispute.
However, ultimately you and you alone (as the taxpayer) are responsible for providing accurate information to HMRC. Or, more specifically, to exercise “due diligence” in trying to do so.
If your accountant tells you something that obviously sounds “too good to be true”, your responsibility is to question them and verify as much as possible that you have provided all the facts and that your accountant has not. misunderstood. .
When you will not suffer an HMRC penalty
Once you’ve done that, however, you’ve done your best. Then, if the advice turns out to be wrong and HMRC successfully challenges it, you will have to pay the correct tax and interest. But you will not suffer any penalty. Nevertheless, it is always better to seek advice in writing, in these circumstances.
Please note that the advice I have just described does not apply in cases of “tax evasion”. To be clear, to avoid an avoidance penalty, a much higher level of skepticism on your part is expected.
But what if it’s the other way around – where you want to have a more favorable opinion than your accountant? It will be difficult. No trustworthy adviser will ever be willing to be associated with a position that is flat out wrong. The advisor will think: “better to lose a client than a reputation, or worse”.
Gray areas, loggerheads and counter-expertise
Sometimes there may be gray areas. These are areas where an accountant can accept, on reflection, that there is a reasonable ranking position. Again though, if you want to avoid a penalty if you are successfully challenged by HMRC, get clearance from the accountant in writing.
Still stuck or at odds with your accountant? Well, remember you can always get a second opinion. Small accounting firms are, after all, usually general practitioners and cannot be expected to know everything. In the same way that a GP might refer you to a consultant, a small accounting firm might find it necessary or desirable to bring in specialist expertise – that’s no shame. Or, if there’s enough in-depth knowledge within the company you’re dealing with, it may be faster and cheaper to get a second opinion in-house.
At the end of the day, if you don’t like what your accountant is telling you and you can’t persuade him that you’re right, you can of course fire your accountant and file your own returns in the way you you wish.
Finally, it is reserved for the brave (and the very sure)…
But – be prepared for the next huge caveat – if it turns out you’re wrong, you’ll find it. very difficult to show that you have exercised “due diligence” to file accurate returns. In fact, filing a statement on the basis that a competent professional has explicitly told you it is false is about as far from “reasonable care” as it gets. So unless you want to risk a major HMRC penalty, you better be very very sure that you are right and the professional is wrong!