Revenue Audit shock -help

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charlie66

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During a Revenue.ie audit for wife (IT trainer) last month they advised us of suspicious activity and inflated expenses claims by our bookkeeper. The Bookkeeper had full authority to act as our agent with Revenue for the last 5 years and we assumed that all was well. So it came to us as quite a shock to find out during the audit that our bookkeeper had been embezzling us and the Revenue auditor claims we now owe over e50K! We challenged our Bookkeeper and he promises to sort out in his emails to us but this is clearly just to fob us off. Revenue continue to demand what was embezzled we return the missing funds.

We just dont know what steps to take and would appreciate any advice as to how to fix the situation?
 
Report to the gardai and make a complaint to whatever professional accountancy body he belongs to.
They will have details on their website of how to make a complaint about their members.

won’t help you get your money back but will hopefully stop them.

And maybe hire someone to help sort out exactly what has happened and work out a payment schedule with revenue
 
Solid advice, a Garda station visit it is on my list to do tomorrow, tks

Do you think I should also be engaging a Forensic accountant to find out what happened. Also just wondering if the forensic account would be authorised on appointment to get access to review our Revenue account and then presumably be able to talk/negotiate with Revenue? ?
 
I don’t know how complicated it might be, a forensic accountant is helpful for unravelling fraud etc but this might not need a great forensic skill.

All qualified accountants should have a certain level of expertise but maybe ask around for someone experienced in revenue negotiations.

You’ll need to authorise them to deal with revenue and youll also need to get copies of your returns and any records your current book keeper has.

Can one ask here for recommendations?
 
@Annieindublin, tks. However as there was definitely fraud going on with us and despite the high cost I am considering a forensic person. Do you perhaps know if they can (when authorised by us) act as our agent with Revenue to investigate all of our bookkeepers dealings?

What we really need we need someone on our side to talk/negotiate with Revenue and find out what really took place.
 
I'm struggling to understand what you mean by "our bookkeepers dealings" - to what extent did they have control over, or access to, your money?

I've seen / heard of instances previously, where the registered tax agent for a taxpayer provided one set of figures to the client, and submitted a completely different set to Revenue, and they trousered the difference. Is that the type of situation you're dealing with, or is it somehow more involved..?
 
There are two separate issues here and this is the biggest one:

charlie66 said:
our bookkeeper had been embezzling us
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charlie66 said:
wife (IT trainer)
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It is odd that in a one person company that a bookkeeper can embezzle you. I presume that is an external bookkeeper who just does the books for you?

But are you saying that your wife gave them access to her bank account? That would be most unusual.

It's also a little unusual that your wife did not notice so much missing.

You do need an accountant but not a forensic accountant. An ordinary accountant should be able to find out what went on and how much is missing. And they can deal with Revenue as well.
 
ClubMan said:
I would report it to the Gardaí to be honest. This is a criminal matter as far as I can see.
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Yes, but not a priority for you. Your priority is to get any lost money back. The threat of going to the Gardai may well motivate the bookkeeper to refund you some of the money or at least to come clean. If you go to the Gardai, she will have little incentive to try to fix things in a hurry.

And the Fraud Squad is overloaded with stuff. You are probably not going to be a priority.

Again, an ordinary accountant will look at this for you and advise you what is the right way to handle it.

They will send Revenue a holding letter and Revenue will await the outcome.
 
I thought that not reporting a suspected crime promptly might undermine any possibility of prosecution/conviction and maybe also potential compensation down the line?
 
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It's news to me that a bookkeeper can file returns for a Ltd. company. OP not specifc on whether it's sole-trader or Ltd company but I'm assuming its Ltd. May not be an isolated incident. Revenue may be looking at all submissions by the 'agent'.
 
ClubMan said:
I thought that not reporting a suspected crime promptly might undermine any possibility of prosecution/conviction and maybe also potential compensation down the line?
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I think that first getting an accountant in to see what the issue is would not be held against them.

And who does the potential compensation you refer to come from?
 
Solicitor, people, solicitor. OP has been the victim of embezzlement. They need to talk to a solicitor to establish (a) the options open to them for recovering the money that has been stolen, and (b) the possibility of having the thief prosecuted, and (c) how these two things interact, and how they should be prioritised.

Also, as others have said, talk to an accountant who will help to identify exactly how much has been embezzled, and how it was embezzled. This may not require a forensic accountant — most frauds are pretty crude,and, given the original financial records (invoices, receipts, etc) its a basic bookkeeping exercise to the accounts that should have been prepared and compare them with the fraudulent accounts that were prepared.

The accountant can also advise on the tax implications, but this seems to me to be a second-order issue. If the embezzled money looks irrecoverable then it may be a matter of submitting a revised return claiming a deduction for the amount embezzled, and this may take care of the tax liability. If some of the money is later recovered then that can be treated as income in the year in which it is recovered. But that can't really be progressed until it is known whether recovery is possible or likely.
 
I've no great expertise in this, but assume that Revenue are charging a penal rate of interest on what they claim is owed.

Wouldn't it be worth the OP's while making a payment on account to Revenue to stop the interest clock running (assuming that he/his spouse have funds available to make such a payment)?
 
It really is a question of the order of doing things.

And the highest priority is to establish what has actually happened and that requires an accountant. Not another bookkeeper but a qualified accountant.

At the moment, what has happened is very vague.

Accountant first.
Find out what happened.
Talk to the bookkeeper to see is it recoverable - probably not.
Talk to Revenue to explain what happened.

Plenty of time to talk to solicitors and Gardai.
 
Very strange one. It seems like Revenue want €50k in unpaid back taxes due to under-declared income/over-declared expenses. Is it clear how much the bookkeeper is alleged to have embezzled from OP? Any idea what prompted the audit? I know from a family member's experience that Revenue could tell from his returns for a licensed premises just about how many bottles of 7-Up he had on the shelves. How come this dragged on for 5 years undetected?
 
mathepac said:
How come this dragged on for 5 years undetected?
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At a guess:

- For some or all of the five years the bookkeeper was embezzling funds and concealing this by (a) failing to record income, or (b) recording bogus expenses, or (c) a bit of both.

- Fraudulent accounts prepared in this way were supplied to the OP by the bookkeeper, and also used as the basis for tax returns.

- A revenue audit identified that the tax returns (and the underlying accounts) did not correctly reflect the true income receive, expenses incurred, or both, and this is how the fraud came to light.

- Revenue have now assessed based on the true (or, at least, truer) income and expenses, but not treating the theft as an expense, and issued a tax demand including interest and penalties.

Not my area of expertise by any means, but I would have thought that losses due to theft are a deductible expense, and if the theft can be documented revised returns, treating the amounts stolen as deductible, should be acceptable. Others who are better qualified than I can confirm or correct my belief about this.

If I'm right, as far as tax goes the priority is to document the amounts stolen and the dates they were stolen, which is where an accountant comes in. With that information, the tax issues can be addressed.
 
@torblednam ....what a great expression "trousered the difference". In this case it is a perfect description in that our registered tax agent(our bookkeeper) for a taxpayer provided one set of figures for us, and submitted a completely different set to Revenue. My wife & I are in our 60s and naive in 100% trusting our bookkeeper hence the situation we find ourselves in.

I reported the situation to the Garda station this morning and a case of fraud is now open. Not sure what to do next , reckoning we should get a forensics accountant and solicitor on board?
 
charlie66 said:
In this case it is a perfect description in that our registered tax agent(our bookkeeper) for a taxpayer provided one set of figures for us, and submitted a completely different set to Revenue. My wife & I are in our 60s and naive in 100% trusting our bookkeeper hence the situation we find ourselves in.
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you keep using the term book keeper, is this person your authorised tax agent and your accountant (and thus filing your tax returns and accounts?)

you need a competent accountant to review everything, i would start at that before engaging a solicitor as you need to ascertain the facts, as things stand at the minute all you have is the findings of a revenue audit and i assume no level of detail.
 
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