What Happens If My Accountant Makes a Mistake to HMRC?

What Happens If My Accountant Makes a Mistake to HMRC?

Yes, that’s right – sometimes, accountants do make mistakes. It’s rare but it does happen and hey, that’s okay because just like you and me, they’re only human.

However, when they’re representing you to HM Revenue & Customs (HMRC), it can present a few challenges when an accountant makes an error.

It might be a missed deadline that results in a penalty, or incorrect information that means your accounts don’t add up. Whatever the issue may be, you – the company – are the party liable for any mistakes.

There is the possibility of suing an accountant for making a mistake (whether they have insurance or not), providing they have admitted fault and that all debts owed to HMRC have been settled.

What should I do if my accountant makes a mistake?

Before you head down the bumpy road of the biggest telling-off ever, let’s first look at what you might need to do more immediately:

  • First things first, contact HMRC to make them aware of the problem. You never know, they may be willing to offer a deadline extension or payment plan to help you navigate your way out of the situation.
  • Rectify any inaccuracies or errors within your accounts so that you can move forward efficiently.
  • Set up a meeting with your accountant to establish why the error occurred and where the fault lies so that you can avoid a repeat performance.
  • Carefully consider whether you’re willing to give your accountant a second chance (presuming this is their first offence). If so, draw a line in the sand and move on. If not, it’s time to consider switching your accountant.

Hopefully, you can work things out. To help smooth things over, consider what measures you might put in place to avoid any mistakes in the first place.

How to help your accountant avoid making mistakes to HMRC

Okay, so you’re most probably thinking to yourself: surely the onus is on the accountant to avoid making errors to HMRC. That’s what they’re paid for, right?

Yes, this is correct for the most part and you should absolutely be able to rely on the accountant you choose to entrust your business finances with.

Whilst you shouldn’t be doing the accountants’ job for them, have a chat to see what processes you may be able to put in place in order to work together more effectively.

Only work with reputable, qualified professionals

Whilst anyone can make a mistake, the best way to reduce risk is by working with experienced professionals who have the necessary qualifications and knowledge.

When it comes to finding an accountant to help you save money, keep your business healthy, and your cash flow safe, it really does pay to invest in the best.

Communicate regularly, clearly, and transparently

Your relationship with your accountant should be built on open lines of communication. For them to do their best work – including limiting the number of mistakes they make – they need to be kept in the loop and aware of any changes or updates within your accounts, and the business in general.

Don’t slack on those regular catchup meetings, and don’t hesitate to pick up the phone or send an email if you think there’s something your accountant should know about. Without being privy to all the information they need, mistakes are bound to happen.

Reduce the risk of human error on your end

One of the simplest ways to stop mistakes being made by your accountant is by ensuring you’re keeping up your end of the bargain too.

Wherever your responsibilities lie when it comes to your accounts, be thorough and meticulous. It will help ensure that your financial records are as clear as they can be when an accountant comes to deal with them.

How can I reduce errors in my accounts?

  • Use good cloud-based bookkeeping software which includes automated reminders.
  • Don’t rush! Leave plenty of time before deadline day to complete your accounts and returns.
  • Stay on top of your bookkeeping to avoid missed transactions (‘errors of omission’) or late payments being overlooked.
  • Maintain a clear divide between business and personal accounts to limit complications.
  • Keep digital records of receipts and invoices for at least three years (just in case you’re audited, for example).
  • Get another pair of eyes on it – don’t leave it all down to one person. Get at least one other person to go through the accounts with a fine-tooth comb to weed out any mistakes.
  • Looking for more support with your business finances? Ask a tax question for free with our handy online tool!

Ronan Ferguson
Junior Marketing Executive and Part-Time Copywriter. When I'm not working, you'll likely find me in a boxing gym, or knocking balls around with a wooden stick on a green baize.

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