What if your accountant makes an error?

[Ericthelobster]

General hypothetical query for the sake of interest (prompted by my response to 'marplasto' just now).

If I give all my property income and expenditure information to my accountant, all completely and utterly open and above board, and ask him to prepare my lettings accounts, what is the situation if he were then to make a fundamental mistake; eg including deductions which should not be allowed; arithmetical mistake; acting on advice which proves to be wrong? Where would that leave me, the client? Am I equally culpable in the eyes of HMRC and liable for penalties, possibly going back years if it's an ongoing issue? Am I expected to check and verify everything the accountant does, or would it be fair enough to say to HMRC 'that's what I'm paying my accountant for'?

[JK0]

AFAIK, you aren't culpable. Though you should of course check his figures as far as possible for slip ups, if only to check that you aren't paying too much.

An accountant has a 'foot in both camps'. Therefore if he makes a mistake, I believe you would only have to pay the back tax and interest.

(Might be a different story if your accountant was arranging a tax avoidance scheme similar to the one all those pop stars recently fell foul of.)

[jpkeates]

You sign your tax return, and are liable for any errors in it.
HMRC don't care that you subcontract the work.
HMRC would normally be sympathetic if it wasn't your fault, but still take action to correct.

The real risk is getting someone to admit they cocked up (and HMRC to agree it wasn't a failed avoidance scheme).

The accountant would (hopefully) be insured against such an occurrence, and you would have to recover your loss/damages from them.
In practice, unless it was gazillions of pounds, the accountant would probably sort it out and deal with any fines etc.

[theartfullodger]

My accountant "forgot" to transfer losses forward a couple of years in a row - done me own since