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Hello my name is Alex and I will help you with this.
I can answer legal questions for you but not accounting questions - is that ok?
Not sure! Are you experienced with PI/negligence claims?
Better leave this for now. The site seemed to freeze up earlier after taking some money and I need to go out shortly, sorry.
Back in Jan-2009 we did a rescue package on a company, shedding employees and leaving just a sole director, (who also has a sole trade business). Since then we've prepared annual accounts, checked and signed off every year. But now we've realised that the invoiced charges from the director (in his sole trader capacity) have always been posted to Directors Loan Account NOT to work done. Hence the DLA is virtually gone, expenses were understated and the director can only take money from the biz as dividend or salary. We can backtrack three years with HMRC to claw back overpaid tax but not the initial year - which carries therefore about £1500 overpaid tax as a result of our misunderstanding. He signed off the accounts each year.
My main concern is what I say, or don't say, at this moment. He seems to have acquired a 'back room lawyer' friend to write on their behalf demanding info in writing and I'm just nervous about committing us to anything at this stage. We haven't finished backtracking on the analysis of the four years and quantifying the tax/DLA figures. Obviously I DON'T say anything about having PI insurance! The daft thing is, his simple sole trade accounts were analysed by one girl in the office, the Company accounts by me, and the two were never joined up. I'm worried if we have a face to face that he'll pin me down on that; and what could I say?!
For safety, do I move to everything in writing, and be totally noncommittal in phone or face to face situations? (PS, the office girl's prime records paperwork from the sole trade DOESN'T mention the income source - just 'work done', so I'm not blaming her in any way.
In summary, the company has overpaid tax for 4 years, the misunderstanding was in our office, although the bookkeeping wasn't perfect. We can claw back three years and reinstate his directors account to a large degree. But we are vulnerable if he chooses to be vindictive. Do we retreat to 'all in writing' for safety? Or is that provocative in itself?
And, if £30 isn't enough, say so.
Yes I understand the position. As an accountant you have rules to follow etc. Do the rules say you need to notify a client upon discovery of an error?