Having hired an accountant to deal with your business finances it must be disconcerting to discover they’ve forgotten to file your tax return – a task of fundamental importance to your compliance with HMRC regulations.
HMRC acknowledge that tax returns may be late under certain circumstances, and accept ‘reasonable excuses’ such as severe ill health or bereavement, but if your accountant has simply forgotten to file your tax return you’ll receive an immediate £100 penalty, even though it wasn’t your fault.
So what are the implications of this type of accountant error, and is there anything you can do to help the situation?
What happens if your accountant forgets to submit your tax return?
Penalties and surcharges
HMRC apply a £100 penalty immediately after the tax filing deadline has passed, even if you don’t owe any tax. They also add further penalties and interest as time goes on, for example:
- If the return is 30 days late, you’ll be liable for 5% of the tax due
- After three months, a daily charge of £10 is applied for up to 90 days
- After six months, the greater of 5% of the outstanding tax or £300 is charged
Your tax return is unlikely to remain unsubmitted for this length of time if your accountant has genuinely forgotten to file it, but as you can see, the potential for further severe penalties exists.
It’s in your best interests, therefore, to ensure the return is submitted as a matter of urgency – you’ll avoid further penalties, and also limit the damage to your business’ reputation with the tax office.
HMRC tend to view persistent late filing or late payment as a cause for concern rather than a single incident such as this, but protecting your reputation is important, particularly when the error wasn’t your fault.
Responsibility lies with you
As the business owner or director, the ultimate responsibility for accurate and timely filing of your tax return lies with you/your company. Many people believe their accountant should be held responsible when a tax obligation hasn’t been met, but accountants are simply agents of a business.
Taking action against your accountant
Depending on the quality of the relationship between yourself and your accountant, they may offer to repay any penalties imposed on the business as a result of their mistake. If they hold professional indemnity insurance, they simply make a claim on the policy.
If you decide to take legal action against your accountant, however, there are a few factors to consider, including whether:
- They’ve admitted their mistake
- You’ve already paid penalties to HMRC for late filing – you can then make a claim for compensation through the courts
- Your accountant holds professional indemnity insurance
Are you happy with your accountant?
If your accountant has forgotten to file your tax return, your trust in them may be lost as a result and you might be considering a change. Finding a reliable accountant who is qualified to help you can be difficult, however.
That’s where Handpicked Accountants can help. We’re able to offer a shortlist of trustworthy accountants and accountancy practices in your area, matching their service offering and experience with your needs.
Our referrals are based on long-term experience and knowledge of their working practices and levels of customer care, and are made from our extensive database of finance professionals. If you would like more information on how we can help you find an accountant you can trust, please contact one of our expert team.