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My accountant has lost my books – what can I do?

My accountant has lost my books – what can I do?

Good record keeping is vital to run an efficient business, and helps you avoid penalties from HMRC. It aids compliance and helps your accountant prepare accurate financial statements but what happens if your accountant loses your books, and is there anything you can do to rectify the situation?

What happens if your accountant loses your books?

Potential non-compliance

If your books are lost there’s a high risk of non-compliance with HMRC rules and regulations. Your tax return and/or tax payment may be late, which could lead to HMRC imposing hefty financial penalties.

HMRC penalties

HMRC charge a penalty of £100 if you miss the filing deadline, even by a single day, followed by a series of penalties the amount of which depends on the length of time the tax return is overdue. If it’s 30 days late you’ll be charged 5% of the amount of tax due, and there’s a daily penalty of £10 (up to a maximum of £900 in total) if it’s three months late.

Accountant actions

If your accountant admits they’ve lost your books, they may agree to compensate you for their mistake and pay the penalties that are imposed by HMRC. Professional indemnity insurance exists for instances such as these, and they should be able to make a claim on their policy. The accountant should also take immediate action to reconstruct your books using any supporting paperwork and documentation available.

What should you do if your accountant loses your books?

Contact HMRC

It’s important to contact HMRC as soon as you know there’s a problem. It shows willingness to take responsibility, and can help you avoid unnecessary charges in some cases. HMRC may be willing to extend the filing deadline or offer advice on how to proceed, but you need to communicate openly with them as soon as possible.

Action against your accountant

Although you’re responsible for your business’ tax affairs, the mistake wasn’t your fault and you may decide to take legal action against your accountant. Maybe this isn’t the first mistake they’ve made, for example, or you feel they aren’t helping you sufficiently to rectify the situation.  

The chances of obtaining compensation through the courts is improved if the accountant holds professional indemnity insurance, but you’ll need to have paid a penalty or fine from HMRC to make a claim. Whether or not you take action against your accountant will depend on a number of factors. For example:

  • The state of your working relationship leading up to this point
  • Whether they’ve made other errors
  • If your accountant has been open and honest about their mistake

Reconstructing your records

If your books have been lost but you still have your original records - invoices, receipts, and bank statements - it may be possible to reconstruct your records accurately. Missing statements may be obtained from your bank for a fee, allowing you to piece together the information contained in the books that were lost.

HMRC will probably advise you to estimate some or all of your figures if supporting information isn’t complete, as this provides a basis on which to assess your tax position and liability for the year.

If your accountant has lost your books and you want to appoint an accountant you can trust, who is reliable and will deal with your business’ financial affairs professionally, give us a call at Handpicked Accountants.

We have longstanding professional relationships with qualified accountants around the country, and will provide recommendations in your area. Contact one of the team to find out more.

David Tattersall
Speak to a Handpicked Expert today

Hi there - I'm David from Handpicked Accountants. If you need help finding the right accountant, simply give me a call. My expertise is in connecting business owners with the very best professional services and I'm on hand to assist you today.

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