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Good evening. Thank you for contacting Justanswer. I am a solicitor in England and Wales and happy to guide you. Accountability to HMRC is the tax payer's. So if you are self employed you would be held accountable by HMRC and if you are a Director of a limited company you would be liable too. The accounted is contracted on a commercial contract basis to assist the tax payer with fulfilling their duties to HMRC. If they get the taxes wrong and the tax payer gets a penalty they are in breach of contract and tax payer can look to the accountant for indemnity. The tax payer however will have to pay their taxes and any penalties and then look to the accountant to recover the penalties and not the taxes since the tax is a liability that would have been paid if the accountant had got it right in the first place. You sue them on grounds of breach of contract and professional negligence. If I can clarify further do not hesitate to send your follow up question. I am happy to assist you. All the best.
Going to jail is very extreme. If the HMRC accuses you of fraud and you fail to defend the prosecution then yes you could end up in jail. But unless there is clear evidence of fraud then that accusation is not lightly made. If they just missed some detail and upon declaring it or hmrc finding it the true tax bill is created you would be order to settle this and you may also have a penalty to pay.
Hi, yes they could treat that as fraud because a person would know when they are self-employed and therefore failing to declare that for a whole year would reasonably be considered as dishonest or deceptive and they would think it was done for tax evasion. Now accountants can file information 9 months late so really as soon as they realised they had not registered you as self employed they should have rectified it and if it was just a year they would have been late by 3 months. Issues get messy with hmrc if they seek you out and not when you approach them to correct you records and regularise your tax affairs. Your accountant should plead with them and take the blame they are likely to let it pass if this is the only issue and no other tax issues in the past.
That is great to hear. You are welcome and I am glad I could clarify the legal position for your hypothetical situation. All the best.