The benefits of relying on a tax accountant

 

Your relationship with your tax accountant or advisor should be a close one. You should use their skills to find legal ways of reducing your tax bill.

They can also keep you up-to-date with all the latest tax law and how this could impact on the amounts and types of tax you may have to pay. You should never conceal any facts from your accountant, as they will base their advice on the information you give them.

Why do I need a tax accountant?

A tax accountant can be invaluable for assisting you with, and advising on your personal and company tax situation. An advantage of using a tax accountant can be the protection offered against legal penalties where that advice is incorrect.

When an individual relies on the advice of a specialist tax accountant, that individual is somewhat protected from certain potential penalties levied by the HMRC.

This, however, is only true in some limited circumstances, as confirmed by the recent case of Rowland v Revenue and Customs Commissioners.

  • The case involved a woman who had made a considerable taxable profit by selling a certain asset. She then received advice from a tax accountant which informed her that by investing in a film partnership she will be able to avoid paying tax on some of those profits
  • She then followed the advice of her tax accountant and subsequently paid the amount of tax which the tax accountant indicated she should
  • The accountant then realised that a mistake was made in calculating the tax payable. As a result the claimant paid an additional sum 10 weeks late. She was then fined for the delay and argued that her reliance on the advice of a specialist tax accountant should be considered a reasonable excuse
  • The court agreed with her claim but specifically explained that the reason this was an acceptable excuse was that the woman was wholly unfamiliar with the complexities of film tax law and was thus fully reliant on the advice of specialists, the advice of which she had no reason to doubt

Check their qualifications

It is important to note that anyone in the UK can call themselves a ‘tax specialist’ or ‘tax expert’. To rely on a defence like this, you must hire the services of an accredited tax accountant. Usually this will mean they are a member of the:

  • Institute of Chartered Accountants in England and Wales (ICAEW)
  • Association of Chartered Certified Accountants (ACCA)

If you have relied on the professional advice of a tax accountant and believe you have been wrongly advised, you may be able to bring a claim against the tax accountant directly, instead of defending yourself against the HMRC.

This is because tax professionals owe a duty of care to their clients and by providing incorrect advice they could be found professionally negligent and therefore liable for any losses stemming from their mistakes. If you find yourself in this situation, it is recommended to seek legal advice as soon as possible.

Are you looking for help filing your tax return, and want to hire the services of a tax accountant? Contact Law works with specialists around UK and can advise whether an accountant or solicitor is best suited to deal with your particular issue. Please call us on 0800 1777 162 or complete the web-form above and we will call you back.

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