HMRC investigation

shelleym Registered Posts: 31 Regular contributor ⭐ 😼 ⭐
Hi All

I have a new client who has used an accountant for 6 years that did not ask him to keep receipts and put through estimates for expenses each year HMRC have investigated and the result was all expenses/ capital allowances disallowed and they have allowed expenses of 10% of income this has resulted in 18000 due to be paid back to hmrc has anyone came across anything like this as I think it is fairly reasonable but I want to make sure I am right to advise him to accept this. I would appreciate any advise from anyone else who has had a similar situation and where able to get HMRC to reduce the debt.

Thanks in advance for any help


  • MarieNoelle
    MarieNoelle Moderator, MAAT, AAT Licensed Accountant Posts: 1,369
    Hi @shelleym
    The advice given by @tinkerbell0406 on your previous thread would be my first answer.
    Surely there are some banking entries that could show the expenses? For capital allowances are the assets still held in the business? If the amount was for a few thousand pounds I may accept HMRC's figures but even if you include fees to investigate further it still could be worth it. Also if there a chance your client could sue the previous adviser for negligence? Is he a member of an accounting body and could he be reported?
  • shelleym
    shelleym Registered Posts: 31 Regular contributor ⭐ 😼 ⭐
    Hi Marie

    HMRC did request his bank statements but this did not produce any evidence of the expenses he had claimed. The previous accountant is not a member of any organisation and HMRC has advised my client that he should not be providing services but they cannot stop him 🤔 he is not responding to my client or HMRC. The vehicle I think the capital allowances relate to is still in use however as there is no paperwork and the capital allowance figures are inconsistent I cannot establish if they are for the vehicle.

    I was just wondering if anyone had been in this situation and managed to get HMRC to accept a smaller figure.

  • Neillaw
    Neillaw MAAT, AAT Licensed Accountant Posts: 301 Dedicated contributor 🌟 🐵 🌟
    I had a case last year similar but it was only for one year, the client notified HMRC about the change of accountant and we asked if we could re-do and resubmit the accounts for the year with notes to all the expenses claimed.
    We claimed mileage for motor expenses so no capital allowance were required and argued other expenses which were suitable to his job.
    I appreciate this will be a big job to scrap everything and rebuild the accounts but at least you'll know what expenses you've claimed for and if you keep the inspector informed they will actually be helpful.
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