2021 Worst Accountants Ever – Case 1

On another recommendation a lady came to see us because her IRD debt for income tax was $190000.00. She was a cleaner in her own business but it was very small, basically 1.5 clients a week.

She had engaged a Botany Chartered accountant to attend to her “books”. She and her husband wanted to relocate and buy in to the Botany area from South Auckland. They could afford the house payments but needed supporting data. The Chartered Accountant “cooked the books” per se, raising income over 3 years to almost $180k in income.

My clients own words:

“I went to the accountant and told him need Financials for my cleaning. We saw a house of this amount and my husband’s income is this much. He said don’t worry will make your financial and you can buy the house. Told I don’t get enough but for the house payment we will be able to afford it. He made the financial and I signed it said don’t worry the bank will give you the loan.  I told him I am very scared he said don’t worry once the bank approves we can get  the amount down.  And the tax won’t be so much so don’t worry. Didn’t know he filed all the years. And the tax amount was so much. He de linked me  and I didn’t know what was happening I kept getting the letter of over due accounts and I kept texting and calling him to sort it out as I was getting stressed  and anxiety attacks told him. I can’t pay it’s too much as I don’t have money and also I had an injury in hand and clients had difficulties too due to covid. I was so depressed  I feel I went mad running to check if he was in the office as he wasn’t answering my calls or replying  to my texts. When called at office lady said his gone overseas. I told the lady I am so stressed that I feel like going  straight  to Ird and tell them the truth. And then she said don’t she will try to solve it. I sent her everything and she said I don’t know why he didn’t tell you he  can’t change it as its already filed and that he should have ask for apply for payment arrangements.”

This is another case where formal complaints were laid to IRD. We have to dio this to support our clients agreement.

The client was severely stressed when she first came to see us.

Cases like this are unusual, that is over declaring income.

There is also the issue of correcting. When errors are this serious, Inland Revenue can charge “shortfall penalties going back to the start.

This was all addressed to Inland Revneu and the accounts for 3 years were prepared correctly and approved and filed. The result was $4000.00 in tax as opposed to nearly $190000.00.

Procedurally this needed a different approach though and we prepared and filed a Voluntary Pre-Audit disclosure, with all supporting data. The file was so large we had to courier it to Inland Revenue Takapuna. If we were not careful with this case, IRD could justifiably claim the error was 100% contrived and charge a penalty of at least the debt owing.

Our work around with submissions worked perfectly. The client was ecstatic.