Author Topic: My tax accountant made a mistake and now it’s costing me. What are my rights?  (Read 303 times)

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Offline londonbos

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I’ve been filing my expat taxes with the same company for the last 5 years. They helped me with the streamlined procedure and I stayed with them for the following years.

They have a high turn over of staff and I’m now with a new accountant who has informed me that the previous accountant I worked with at the same firm had wrongly filed my accounts - 5 YEARS WORTH. She reported my UK Limited company accounts using my UK company year end (Jun-Jul), but apparently, we were supposed to report based on the **US calendar year**  (Jan-Dec)…

This now means I now have to go back to my UK accountant and request year end accounts for all of these years in one chunk, which is going to cost me.

She has also said that they will not charge me to file the amendment but they will have to charge me for any forms that the previous accountant may have missed!

I find this shocking!! They are also a well-known name in expat accounting (I'm tempted to call them out on here now!)

Is there anything I can do - can I claim compensation? Or is there anyone I can report them to?

UPDATE: I should clarify this is a **US (not UK) BASED ACCOUNTANCY FIRM**

Kelly
« Last Edit: May 01, 2018, 04:27:40 PM by londonbos »

Offline sjb2016

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I am not a lawyer (although I did take a course on contract law ;) ).

Anyway, your rights depend on whether you were using the accountant to provide a service to you as a consumer, in which case the Consumer Rights Act 2015 applies. If you employed the accountant in a B2B transaction, you'd apply the rules in the Supply and Good of Services Act 1982. It sounds like it would likely be the latter as it was in regards to your taxes for your business.

Either way, your rights are the same, the service must be of satisfactory quality and fit for purpose. It sounds like this is neither of those. In your next chat with them, mention the legislation and see if they agree to file any new forms free of charge.

If they are unmoved, you could mention court, but it might prove difficult. You might be able to claim for any extra fees and interest you pay have pay the IRS for late filings or such. However, if you would have had to pay for different forms at the time of the original (if the accountants had done the filing properly) then it would be reasonable to pay for them now. Also, if you would have had to pay your UK accountant extra to run the numbers for a U.S. tax year as opposed to the U.K tax year, then you probably wouldn't be able to get compensation for that either.  But that's just my very basic understanding, so could be wrong.

Offline Anchor

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Do you know that the second accountant is right? I would ask the principal of the firm to tell you which of his/her staff are correct. If it is the second one then I would insist on all corrective action being taken without further charge to you.

I would also want to independently verify that what is being stated is correct.

Offline theOAP

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Re: My tax accountant made a mistake. What are my rights?
« Reply #3 on: May 01, 2018, 02:26:28 PM »
I agree with Anchor.

It is not uncommon for two accountants to disagree where US tax reporting is involved. Check with your 1st accountant, explaining you are unsure of their methods and ask for verification as to why they prepared your return as they did.

Most reputable accountants have insurance to cover the costs of correction and re-filing if the cost is excessive. They also should have issued a terms of engagement letter when you asked for preparation which would cover what happens if errors are made.

Reputable accountants will also be members of UK (and possibly US) professional organisations. Look on correspondence for their affiliations. If you are dissatisfied, start with a complaint there.

Offline jimbocz

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I'm in a similar position to you in that I took advice from a UK accountant and a financial planner about setting up my company, pensions and life insurance.  Now I am beginning to find out that while these were set up correctly from a UK point of view, they may be very wrong from a US point of view.  Of course, at the time I asked them if these arrangements were good for the US as well, and I remember being told "I'm no US accountant/financial advisor but the IRS should not care at all about your limited company". 

I've often thought about possibly seeking compensation once I pull my head out of the sand and actually try to address this problem with a professional who DOES know what they are talking about and find out exactly how much damage has been done. 

To be fair, they did tell me their limitations and it was my fault that I did not pay attention so I always thought my chances of blaming them were small.   

Offline londonbos

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Thanks for the responses everyone!

I should have clarified that this is a US-based Accountancy firm. Not a UK one.

The previous accountant is no longer reachable as they have moved on and they do not have her contact and I have had no success finding her information online myself.

I will check my letter of engagement with them to see what it stipulates but surely there must be some entity I can report them to for providing bad advice and ideally would be good to know what legislation or consumer protection I might have with regard to *US* based business.

I am so out of touch with who to call for this type of stuff in the US. Is it the Better Business Bureau? 
« Last Edit: May 01, 2018, 04:58:45 PM by londonbos »

Offline Anchor

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You say both accountants worked for the same firm. Is there no owner/principal that you can connect with?

How do you know that the second accountant is right?

If they are CPAs I believe any complaint goes via the state:
https://cpaverify.org/file-a-complaint/

If they are tax preparers you can complain to the IRS:
https://www.irs.gov/tax-professionals/make-a-complaint-about-a-tax-return-preparer

However, I doubt whether this amounts to "misconduct". As theOAP says, it is not uncommon for two accountant to disagree where US tax reporting is involved.

Offline Art

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I had a limited company in UK and file US taxes. I had my UK accountant prepare an extra set of accounts for the US tax year, which was different from the UK company tax year. So it sounds like your second accountant is correct. My US accountant used these figures for income etc. in preparing US taxes and the 5471. You have been filing a 5471, right?

Art