UK'S LARGEST INDEPENDENT TAX WEBSITE
Are you a member ?
|
Incomplete and Incorrect Accounts Print E-mail
User Rating: / 0
PoorBest 
Share on Facebook
Putting things right with incomplete and incorrect accounts - Where do I start?

Introduction

The Government seems intent on clamping down on non-compliance of tax obligations, particularly those who deliberately fail to pay their 'fair share' of taxes. For example, a new penalty regime is being introduced, with the prospect of potentially higher penalties for deliberate or persistent offenders. However, some taxpayers fail to comply through no fault of their own, and quickly find their tax affairs in something of a mess. Many of those taxpayers are desperate to put their house in order, but do not know where to start. Some become paralysed by anxiety over the possible outcome if they try to 'come clean', and instead bury their heads in the sand and pretend that the problem will simply go away. Fortunately, that approach does not seem to apply in the following query, from 'asheldon'.

Query from TaxationWeb visitor ('asheldon')

My ex-wife had completed my accounts and tax return as a sole trader over the past four years. The tax office has made an enquiry and it is clear the accounts are both incomplete and wrong(!), not only for the year they require information on but the previous years also. What will happen if I have no accounts for them to view and how will they calculate the mistakes, i.e. wrong numbers in the wrong boxes? Will they also allow me to pay back in instalments?

Editor’s Comments

There is a temptation for taxpayers to engage in 'DIY' when it comes to dealing with their tax affairs, particular to save professional costs. However, this course of action can often be counter-productive and a false economy, because it may lead to enquiries from HM Revenue and Customs (HMRC) particularly if the return (including any accounts) are clearly incorrect, and because professional help may be needed eventually if the taxpayer gets into difficulties, as in this case.

Unfortunately, HMRC are unlikely to accept reliance by 'asheldon' on his ex-wife to prepare complete and correct information as a reasonable excuse for an incorrect return. This is because the onus is normally on the taxpayer to ensure that their tax return has been prepared correctly. However, 'asheldon' seems intent on putting the situation right, which is a good start. As indicated below, professional help from an enquiry specialist (or suitably qualified and experienced accountant) could prove to be money well spent. Taxpayer co-operation and disclosure are important elements in ensuring a discount (or 'abatement') on the level of penalties charged by HMRC on any additional tax liabilities resulting from the mistakes made.

HMRC may also be amenable to the payment of additional tax by instalments (albeit probably over a limited period) following taxpayer co-operation, although interest is normally calculated to the date of payment.           

Forum responses included those reproduced below.

'wamstax' commented:

Let us be quite frank even though your wife completed your tax return it will depend a lot on what errors there are to say how HMRC will view matters, after all you would have signed the return as being correct and complete. If you signed the return without looking at it then that was a bit foolish given that it couldn't be that long ago since the return was submitted.
 
You should I think be considering getting the help of somebody experienced in these matters to see exactly what problems have been manifested on you. You may well have a difficulty placing the problems at your ex-wife's door. However everything would need to be considered with an open mind to determine the risks or opportunities open to you.

Instalments are always a possibility but HMRC might prefer you to realise assets before recourse to "lending you the money" for a period.

Simon Sweetman commented:

I agree wholeheartedly with the first answer. Go and seek professional help before you do anything else!

--------------------------------------------------------------------------------

To view this discussion online (including any possible updates), click here.

To view other discussions in TaxationWeb's Tax Tips Forum, click here.

--------------------------------------------------------------------------------

IMPORTANT:
Any advice given on the Tax Tips Forum is given as guidance only. Neither TaxationWeb Ltd. nor any of the contributors to the site can be held responsible for any loss or damage resulting from the action taken as a result of advice given on the site.

Comments
Only registered users can write comments!

About The Author

Mark McLaughlin

Mark McLaughlin is TaxationWeb's Co-Founder, Director and Technical Editor. He is a Fellow of the Chartered Institute of Taxation and a member of the Association of Taxation Technicians and the Society of Trust and Estate Practitioners. He lectures on tax subjects, is co-author of Tottel's IHT Annual and Ray & McLaughlin's IHT Planning, and Editor of Tottel's Tax Planning and Annual series. Mark's work has also been published in Taxation, Tax Adviser, Tolley's Practical Tax, Tax Journal and Simon's Weekly Tax Intelligence.

Since January 1998, Mark has been a consultant in his own tax practice, Mark McLaughlin Associates, which provides tax consultancy and support services to professional firms. He publishes a regular 'Tax Update' e-Newsletter for clients and other professional firms. To receive future copies, contact Mark via his website.

Article Added Friday, 06 April 2007 | 1989 Hits

 

Your attention is drawn to the disclaimer on this site, which applies to the content in this section.

Hitwise Award Winner Apr-Jun 2008 Hitwise Award Winner Jul-Sep 2008 Hitwise Award Winner Oct-Dec 2008 Hitwise Award Winner Jan-Jun 2009 Hitwise Award Winner Jul-Dec 2009 Hitwise Award Winner Jan-Jun 2011 Alexa - Most popular news and media website

TaxationWeb Limited (Registered in England No. 4571386), 6 Coleby Avenue, Peel Hall, Manchester, M22 5HH, United Kingdom

Information which you supply whilst using this website may be held in our computer records and may be used to send you information which we think might be of interest to you. If you do not want your information to be used for such purposes please write to us at: 6 Coleby Avenue, Peel Hall, Manchester M22 5HH, UK, or email us

Website by Dorifor Internet Marketing