2021 Worst Accountants Ever – Case 1

A small but Auckland wide Indian takeaway business came to FALC form a recommendation. They had been served by Inland Revenue with a statutory demand for nearly $300000.00. When the business advised the “accountant” they were “dropped like a stone” and told to get someone else.

The “accountant”: advertises:

“We are professional accountants and business advisors

“he” is an extraordinary accountant and financial advisor who has spent 18 years working with numbers. Having held various corporate roles as a Financial Accountant and Finance Manager and in Chartered Accountancy practices in roles such as Business Advisory Services Senior he has dealt with every size of business across a wide range of industries.”

That does not say “he”  is an accountant though.

A formal complaint was lodged with Inland Revenue over this practice because:

“All accounts are in error, and the tax returns do not match the accounts results. More or less the whole structure of the accounts , down to minutiae are incorrect. Reliance has been placed on a professional to assist. The amount of advice given, correct or otherwise has been nebulous. The disclosures to me on ethical clearances are also nebulous.”

The business was hit hard by the lockdowns. But what the business failed to recognise that it was, from day one going backwards and quickly so. The owners had no tangible business skills and ignored all advice given. The food and beverage industry comes with very strict rules.

In so many cases like this penalties and charges on unpaid taxes is massive. FALC successfully brokered a stay in proceedings based on Legal submissions and a payment proposal.

The other fatal issue was the business had a staff member attend to GST returns. That staff member under reported income (on occasion $50000.00 for a GST period) and over reported expenses (on occasion up to $40000.00). The owners never bothered to check. Every GST return was wrong.

I recommended to the business earlier this year ( April 2022) that they should voluntarily liquidate. IRD had a liquidation date already set, so it was a matter of the best result for the worst occasion. After we structured the stay and halt of proceedings in 2021, the business failed to make payments for PAYE and GST for about a year after the agreement was made.