HMRC Penalty - fault of my previous accountant. What can I do?

[superted]

Hi Guys,

I contract as a limited company. I've been trading for under a year.

After 4 months with my first accountant and speaking to other contractors, I realised that I receiving poor tax advice and was generally getting a poor service (ignored emails, etc).

So about 2 months ago I changed accountants - my new accountants appear to be much better and more professional.

However, whilst I was in the process of changing accountants (about a month long period), I realised that my original accountants were not passing on communications from HMRC - for example my CT41G, which I was able to get from them by basically demanding it. My company's registered address is now my home address to ensure that I receive all communications from HMRC directly.

It turns out that HMRC also sent a letter to my old accountants asking for my limited company to file it's Employer Annual Return (P35 and P14), which was never acted on or even passed onto me.

Fast forward to now and I've received a penalty notice for not filing my Employer Annual Return. It looks like it'll be £100.

Is it realistic that I demand my old accountants to cover the cost of this penalty as they never passed on or acted on the original notice from HMRC?

Thanks

Ted

[JoJoGabor]

Yes. If they resist threaten to report them to their accountancy governing body.

[VectraMan]

You can demand. I think I'd just pay the £100 and put it down to experience. At the end of the day it's your responsibly to make sure this stuff gets done.

[d000hg]

You can demand. I think I'd just pay the £100 and put it down to experience. At the end of the day it's your responsibly to make sure this stuff gets done.

The only way to do that fully is to understand and check every single form and figure - in which case you might as well not use an accountant! You're responsible legally, but it's realistic to claim someone you engaged to provide this service should be liable for costs due to stuffing up, just as contractors often take out liability protection.
In a 1-man business you can check every number and every receipt and every bank statement yourself which is a luxury in a sense - in even quite a small company this becomes impossible and you have no choice but to delegate responsibility/trust to someone else. Since a 1-man business is in principle the same as a 1000-man business, where there is no way you could personally check all the numbers yourself, I don't think it's as black and white as you suggest.

Personally I'd say demand they pay but don't expect much if you're no longer with them... you might threaten to badmouth them on Twitter and so on but I find that route a little distasteful personally.

[VectraMan]

The only way to do that fully is to understand and check every single form and figure - in which case you might as well not use an accountant!

True. I don't use an accountant. When I did they'd always get me to check things.

Not checking every figure isn't quite the same as not knowing that you have to file a tax return because your accountant didn't tell you. And you also have a responsibility to ensure the company can be contacted via its registered office; expecting it to be forwarded by a company you've stopped paying isn't doing that.

[d000hg]

Fair points. Although I do sympathise with knowing the forms you have to complete in your first year - nobody tells you a simple list and (to my knowledge) HMRC don't put a 1-page checklist on their site so this is one of the things you want an accountant to help you with. You are right but I still think it's reasonable to expect a registered, respectable accountant to take responsibility for mucking this up as it's what you pay them for.

[VectraMan]

You are right but I still think it's reasonable to expect a registered, respectable accountant to take responsibility for mucking this up as it's what you pay them for.

Did they muck it up? It's not clear when he stopped paying for the old accountant and started paying the new. If the P35 request had come after he'd stopped paying, it's not unreasonable for them not to provide a service they're not being paid for. Ideally the new accountant should have liased with the old to make sure nothing was missed, but they probably don't do that. Again, it's your responsibility as a director to ensure that anyone acting as your agent in any capacity does do what they're meant to do.

[d000hg]

Yes, in the same way it's your legal responsibility to ensure your car is safe... but if your mechanic does bad work they are still culpable.

Good point about cross-over dates though. If that's the case it would seem a genuine "slipped through the cracks" issue which you should have chased the accountants about. That said other than my personal/CT/VAT returns, I have no idea when the other things are due and I'm sure that's fairly common, remiss or not!

[superted]

Oddly, they passed on some communications from HMRC that must have come AFTER the Employer Annual return.

The old accounts sent me a bill for their services once the transfer was complete. It sounds like the date of this final bill may be crucial, although they definitely passed on another letter after this final bill, so I'm not sure if it means anything.