tax investigations - accountancy firms
Even accountancy firms can be investigated and usually their clients will never know, even if the firm has not been paying the right amount of tax. However where an accountancy firm has been guilty of helping clients submit incorrect returns, HMRC will sometimes go public and often prosecute. Largely to scare other accountancy firms into good behaviour.
Unlike most firms of accountants we are able to offer an opportunity to have a confidential discussion which is within the rules of professional privilege.This cannot be disclosed to HMRC, unlike most conversations with your accountant. So if you are worried that what you or your accountant has done is wrong then you can find out.
In the past, firms of accountants have been found to be guilty of a number of issues from bad practice to outright fraud. Some examples might be;
Using round sum estimates of expenses which cannot be justified.
Backdating documents to pretend that arrangements began before they did.
Making excessive provision for expenses e.g. accountancy and not reversing it in the following year
Accepting clients totals for expenses with no supporting documents and in some cases encouraging clients to include excessive amounts.
Deliberately reducing the amounts included for cost of purchases to make the gross profit rate look more in line with HMRC expectations.
It is very difficult for an individual to decide what to do if they realise after a period of time that the adviser has given bad advice by recommending "inappropriate strategies". You could well be guilty of an offence as well as your accountant.
The penalties for under declaring tax are much less if you confess to HMRC before they catch you. In some cases HMRC offer deals to the clients of an accounting firms to reduce penalties for co-operation. This is usually where there are so many potential investigations that HMRC have not got the resources to investigate. Any such offer should be taken very seriously.
christopher lunn
HMRC have taken the unusual step of publicly announcing an investigation into media accountants Christopher Lunn & Company. The accusation seems to be that they have deliberately helped clients submit incorrect returns.
We have no knowledge of this investigation & would not seek to comment on whether they have been guilty of wrong doing.
We expect that HMRC will almost certainly investigate the affairs of some of the clients of the firm. With our specialist knowledge of media and investigations we will be pleased to advise any worried clients of that firm.
The company have said that they expect to be exonerated in due course but any client of that firm who is worried that their affairs have not been dealt with correctly could contact us for an opinion.
business
If you have a business and you believe that your accountant may have led you to under declarethen it is wise to seize the initiative to try to avoid HMRC raising a challenge.
If you approach HMRC then any admission of wrong doing is likely to be treated more sympathetically. Penalties are also reduced or even avoided.
Also if your affairs are complex and their are some areas of genuine uncertainty then it may be possible to negotiate a deal with HMRC by putting your own "spin" on the disclosure having carefully planned in advance.
international
We would strongly recommend that if you are concerned about the advice given by your accountant and you have international tax affairs then you really need specialist help. It is very easy to make mistakes in such a complex area, so once you lose confidence that the accountant is reliable then you need an independent assessment of your position.
HMRC have given opportunities for disclosure of certain offshore income - so you need to be aware of those opportunities.
individual
An investigation into an accountant is less likely to trigger investigation into a private individual who has no business interest - although it could happen if there has been a "misunderstanding" of some significant tax issue - especially on capital gains on the disposal of property.
If your accountant was simply not competent to make a correct return then you may have some defense - although you may be asked to prove that you took reasonable steps to establish that he had expertise to deal with your more complex affairs.