Using an accountant is a popular option for business owners who struggle to do their own taxes or do not have the time. Despite our best efforts, sometimes an accountant or tax advisor can give us bad tax advice which can cause issues with HRMC and leave your business out of pocket. This can lead to other detrimental effects on your business and can make it harder in the future if this stains your record.
An accountant, like any other professional, has a duty of care for their clients when offering tax advice. If they are responsible for giving bad advice, they should help you to deal with the situation. For anyone that has received bad tax advice, this article delves deeper into how to deal with the situation to get the best outcome for you and your business.
Understanding Tax Avoidance
One of the main reasons that businesses end up in trouble when it comes to taxes is because they have taken part in some kind of tax avoidance scheme. This is not necessarily an illegal act; it depends on how your accountant or tax adviser has gone about the claims and whether they have given you sound legal advice.
Tax avoidance becomes an issue when there is too much effort to avoid tax, or this is done in a way that does not consider the law. There are plenty of unsuitable and flawed schemes that business owners need to be made aware of when completing taxes, so they do not fall for the same mistake. This news article discusses big names such as David Beckham and Ant and Dec taking part in schemes that have caused them to owe millions back to HMRC. A small business would not be able to deal with the repercussions of this, so it is always best to avoid anything that you do not understand properly.
As a business owner, you are also responsible for your tax. If you make the decision to go through with a tax avoidance scheme and you are aware of the consequences, the fallback could come back on you no matter what. Your accountant should give you information and advice on how to reduce taxes, but this should be in a way that is legal and safe. If you are worried or something doesn’t feel right, get a second opinion.
Hire Another Accountant
After getting bad tax advice, the rational next step is to hire another accountant. A competent and professional accountant will be able to help you get your finances back on track and deal with the ramifications of bad tax advice. It can be difficult to trust another professional after being given poor advice, which is why you should always do your research before hiring an accountant, to minimise the risk of issues.
To find another accountant, check online and read reviews. An informative website should include testimonials from clients, so you can have a better idea of whether the accountant is trustworthy and is likely to cause any more harm to your business. A good accountant will make you feel at ease and will answer any questions you have before you choose to use them. You can also ask friends or other people you know that own a business and seek referrals from them.
This can make the process easier if someone you know has used the accountant and praises what they do. If you do not want to hire another accountant, you will have to learn about the laws regarding taxes and how to do them yourself in the future. This can be time-consuming and demanding work, but there are ways to make it easier. Luckily, there are guides and videos online which can guide you through the process, or you can use an accounting app to help you. Click here to find out more about the best small business accounting software in 2022.
Call HMRC Straight Away
Usually, you do not find out about poor tax advice until you receive a letter from HMRC stating that you have underpaid on your tax or that you have fines to pay for tax avoidance. The first thing to do is not panic, as this will only make the situation worse. There will be a number to contact the relevant department when you receive such a letter, or you can find out the contact number with a quick Google search.
Depending on the situation, you could be liable to make a payment within a certain period or impose further penalties, so you should never ignore these letters even if you believe it was not your fault. Call HMRC, stating any reference number that you may have been given, and explain the situation.
If your business has been given bad tax advice, they might be able to hold off on the fines whilst they or you gather more information. This will depend on the situation and how much you knew about it. HMRC may still ask for the money or suggest a payment scheme that will leave you out of pocket, so the next logical step is to speak to a lawyer, which you can find more information on below.
Speak To A Lawyer
Any professional dealing with your taxes has a legal obligation to give you legitimate and professional tax advice. If you have been given bad advice that has led to hefty fines or court action, you should speak to a professional negligence lawyer. They will be able to see if you have a case and help you with the next steps. You have to make any claims within 6 years of the incident or within 3 years of finding out about the negligence.
For professional negligence claims, speak to an expert such as the solicitors at Hugh James. They can help you to recover the losses to your business that have occurred due to poor advice, including money paid for fines and damage to reputation. Professional negligence is a tricky subject, especially when it comes to tax issues.
You will need relevant information and proof that you have been subject to bad advice, which is where a lawyer can help. Gathering the right information and making a case is stressful enough, without having to deal with the repercussions of bad tax advice. To find out if you could make a claim, speak to a professional negligence lawyer as soon as possible.
Bad tax advice can cause many issues for a business and could even lead to the closure of a business, depending on fines that need to be paid. When this was not your fault, the results can be very frustrating. As a business owner, make sure you understand tax avoidance and the mistakes others have made, so you do not fall into the same trap.
Receiving bad tax advice can be difficult to traverse, but start by hiring another accountant to help. You should be aware of tax avoidance, to make sure that you do not do anything that could put your business in trouble. Follow the help in this article and speak to a lawyer if you believe you have a professional negligence case. You may also be eligible for free professional advice.
