What’s the right thing to do?

I was approached by a friend last week who was looking for someone to help them with their tax affairs.

Now, I don’t do tax: not because I don’t understand it, more because I have chosen to focus what I do on helping small businesses managing their finances and you need to do a lot of tax work to stay up to date on the different rules and allowances.

However this case was more interesting than it first seemed. My friend’s tax adviser was a family friend (of his) who had been handling his taxes for a number of years. It has come to light that the tax adviser had made mistakes in previous years which had cost his client a reasonable sum of money. When the errors came to light the adviser didn’t admit to the mistakes, they did their best to brush them under the carpet! My friend wanted to know what to do about it.

Dawn breaking

In purely business terms the answer is simple – move to a new accountant.

The adviser in question wasn’t qualified in any way. They had been on a course run by HMRC to find out how to complete tax returns and then set up as an adviser – legally that’s all it takes! (Well that’s not quite true: you don’t need to go on a course…)

Chartered Accountants (all qualified accountants are Chartered in some way) have to undertake rigourous training and lots of exams to prove they know their stuff. They also need to take out insurance against the possibility that they may make mistakes in order to protect their clients. I don’t think I can stress the advantages of using a Chartered Accountant highly enough.

So, it’s a simple decision… yes? But actually, no…

My friend feels that he can’t move his business to a new accountant because it would be awkward when he met the current adviser socially.

I offered to recommend an accountant in North Devon who could handle the tax affairs remotely (the business is in Scotland), and probably more cheaply. But my friend feels this wouldn’t remove the embarrassment.

I pointed out that the current adviser has other clients (goodness knows what’s going on in their taxes) and so wouldn’t want to make a fuss that exposed the mistakes that he had made, but again this didn’t counter the client’s fear of embarrassment.

At present it looks like the status quo will continue – albeit with my friend’s raised awareness to ask more questions about their tax bill. This is a totally unsatisfactory outcome from my perspective – effectively the tax adviser is being rewarded for mistakes that they have refused to own up to.

Grey Hair I can only hope they learn a lesson from this incident and improve their processes in future.

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