I was reminded recently of an article written a few years ago by Mike Thexton and published by Taxation magazine.

In the article Mike explained how he helped a friend who needed his help to ‘come clean’ re undisclosed earnings.

Mike said it all started with “the dreaded question”. This happens when someone asks for help in resolving a tax problem that requires knowledge and experience way outside your comfort zone. As Mike says, it’s because people tend to assume that accountants know about all things tax, just like they assume that doctors know about all things medical.

When I read this my mind immediately went back to a key paragraph in the’Guide to Professional Conduct in Relation to Taxation’:

“A member must not undertake professional work which he is not competent to perform unless he obtains help from an appropriate specialist.”

Mike complied with this advice and sought the input of a friend who chaired the tax investigation service at Baker Tilly, a top ten firm of accountants.

I’ve summarised below some of the key lessons drawn from Mike’s article:

  • “Do not do this by yourself if you have no experience” – This accords with the Guidance above and a key lesson from the recent professional negligence case of Mehjoo v Barker;
  • “Find someone who knows what to do. The client may baulk at the level of fees, but it is likely to be worth it in reduced trouble and penalties”
  • “What was unfamiliar to [Mike] was routine to someone who works in investigations.”
  • You need to address the underpayment of Class 2 NICs totally separately to the underpaid income tax and Class 4 NICs which were to be covered by the main settlement.
  • The relative speed of securing a full settlement with maximum mitigation of penalties when you know what you’re doing.

For others faced with similar situations I would suggest that the independent tax investigation specialist members of the Tax Advice Network should be your first port of call. ;-)

I have also written a 10,000 word ebook drawn from my talk on How to avoid professional negligence claims, containing tips and risk management advice for accountants in practice. You can buy the book or download a summary for free here>>>