Accountant Issue

P

PDCAT

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Hi Folks

I'm really not sure if this thread is in the right location. If not, maybe somebody could move to correct location.

It's a little longwinded so i'll try and make it as concise as i'm able to.

My Father in law has been dealing with an Accountant now for many years. He is a man in his 80's and didn't know a whole lot about dealing with accountant's or money situations. He is a small farmer ( approx 30 acres ) and had two pensions (council pension & state pension). For many years he has been paying his accountant approx 100 euro a year payment for her services and approx 200 - 300 euro for tax returns.

Now here, is the problem. He always paid his accountant in cash and recieved no receipts. He's way of doing things i suppose is like many old time people and he never thought any wrong in this.
He also never recieved any confirmation from the revenue of any monies paid. Over the past year or so, when my wife heard about how he was paying his tax, she became concerned and spoke to his accountant. This year he wrote his accountant a cheque to be paid to the revenue.

The accountant he was dealing with has recently died. Another accoutant (not sure if it's another company or how this works) is looking after cleaning up the mess that this accountant has left behind. When the father in law contacted them in order to pay his tax for the year, he was told that they could find very little files relating to him for this year or any year.

The accountant rang the revenue and it turns out that they have no payment for any tax paid by him for years....... except for this years cheque. We have since been made aware that the previous accountant had lots of personal issues (don't really what to go into these). It looks like to us that all the cash he has been paying through the years was not paid to the revenue but pocketed by the accountant.

He obviously owes the revenue a bundle of money now as his tax due for each year should probably be way more than the 200 - 300 euro he was paying to this accountant.
This seems to be a very messy and serious situation he is in.

My wife is worried the stress of this will affect his health so we are trying to keep things calm and find out as much as we can to help.
The previous accountant never used to computers (go figure) only paper.

The new accountant is trying to trawl through this mess. By the sounds of it, we're not the only one's this has happened to. She will contact us in a couple of weeks when she has a better handle onit.

I suppose my question is really - Where do we go from here?

Should we wait to see what the accountant says in a couple of weeks?
Will he be charged interest/penalties on non payment of tax for all these years even though he believed he was paying it?
Is there any point in going to solicitor as he never recieved any receipts for monies paid?

Any advice greatly appreciated.
 
I would probably sit tight until the new accountant has had a look through his accounts. There may be no need to worry at all- many small farmers have an income low enough that they are under the taxable limits. If he should have been paying tax and didn't, a case can be made to revenue. The new accountant will advise. Whether there is a case for negligence against the old accountants estate/insurance company will depend on this anyway so not much point in talking to a solicitor yet.
 
Agree with Vanilla above.

Perhaps this man, or more likely a family member, should take it upon themselves to contact Revenue and find out his current tax liability and returns positions. If Form 11 returns are outstanding, perhaps Revenue will agree to retrospectively treat him as exempt for filing returns for recent years, as they often do for pensioners with limited income well below the tax exemption thresholds for over-65s.
 
Agree with all above. 30 acre part time farmer is unlikely to have made sufficient taxable income to warrant additional liabilites. Find out first how many years you need (if any ) to make a return for. I doubt if it's any at all as if it was, you would have been receiving demands directly from the revenue for failure to submit a return. It sounds to me that your father was probably exempted from making a return and that the old accountant was charging €100 plus €300 for his services. (€100 is ridiculous for a tax return fee).
Anyway to ease your own mind, heres a very simple and effective way of working out your father inlaw's profit/loss over any period.

Pick two points in time say e.g. 31st Dec 1998 and 31st dec 2011.

List all his assets and liabilities at those two points

Subtract one from the other and this will show his increase/decrease in net wealth over the period. Ie a rough idea of his profit or loss for the period.
Note that this figure would need to be adjsuted for non trading taxable items i.e. assets sold/bought or gifts received/given, savings policies matured, pensions,vhi, and living expenses.
If the figure is negative and the items in the note above are neutral then your father in law could well be entitled to a refund. If it's positive, dont panic,you need an accountant who knows farm taxation and can utilise the other reliefs specifically available to farmers.
PS Don't let the new accountant make this job bigger than it is,cause it's really quite a simple matter to sort out,
 
rocksider said:
Anyway to ease your own mind, heres a very simple and effective way of working out your father inlaw's profit/loss over any period.

Pick two points in time say e.g. 31st Dec 1998 and 31st dec 2011.

List all his assets and liabilities at those two points

Subtract one from the other and this will show his increase/decrease in net wealth over the period. Ie a rough idea of his profit or loss for the period.
Click to expand...

While this is all well-and-good for a short period of time it's not very practical for a long period like the 13 years in your example. Someone could make profits of say €100K over a 6-year period and losses of €90K over the next 7. Total profits for the 13 years amount to €10K or an average of < €1K per year. Unfortunately taxes are due on the €100K while the losses can only be carried forward against future profits.
 
Agreedand apologies DB74 (I meant 2008) but the general principal will still be okay even over 13 years. However, i've no doubt that we are only talking about a short period of time due to the fact that there appears to be no Revenue enforcement action. (and i wanted to ease their fears)
Thats why I said if it's profitable then seek a specialist farm accountant.
Wtihout trying to get too technical, I will give you just one example which is not generally know amongst non-farm accountants but which has been invaluable to farmers. In the late 1990s all farmers were allowed to revalue their stock at full market value tax free. Prior to this they claimed stock relief at an inflated rate and subsequently at a reduced rate. The fall in values of stock since the 1990s up until very recently allowed farmers to write down these values each year against profits. Add in the drop out year, inital year of assessment basis, farm averageing, spliting profits, and 100% capital allowances and I can tell you this man will not have a tax problem.
 
Thanks guys for the replies.

I think initially i'll wait and see what this new accountant comes back with.

His income for this year and most years has been something like this.

Council Pension 12,500 (he drove a jcb for council for 45 years)
State Pension 11,500
Farm Grants (approx 5,750)
Sale of cattle and sheep - not sure about this - don't think it would exceed 10,000

My understanding is that all this is counted as income

Example above income = 40,000 approx

Obviously he has expenses for the farm to subtrack from this.

Also i believe this tax credits are approx 18,000.

Does his pensions also count as income and could this be taxable?

Thanks for your advice again folks.
 
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