I had this written out and realised it got quite long so decided to bullet point it below to make it as clear as possible – apologies for the length and I really appreciate any advice, even if it’s “you have no options”.
Given two years of tax has already been paid my question is about whether I can do anything about their decision which is now costing me €1500 more in tax? I know the obvious answer is to ask the accountant but frankly I don’t trust the information their giving me anymore.
Ironically, they also recently told me that I could have de-registered for VAT in my second and third year of the business as I went under the threshold in these years – but having told me this AFTER the contract ended is useless information and cost me an increase in pay as I was told by the people paying the contract that the cost of the additional VAT payments meant they couldn’t afford the raise. If they’d have told me this in the second year their decision to start my tax year in February might have ‘worked’ but again there was zero communication from them.
Apologies for the length of this and thank you for any piece of advice you could give me.
- I started a sole trader to take on a single 3 year contract.
- Work began in first week of January 2012.
- Each year I knew I’d earn less due to reduction in days being worked each year.
- Accountant made decision to have my financial year running from start of February to end of January the following year – originally when I asked why they were doing this they said “because your first invoice was paid in February” and that was all they said.
- They have already filed first two years of tax and my final year is now due.
- For my final tax year they sent me the details which were over €4500 more than I had calculated - my initial calculations were very basic so I spent a weekend going through everything myself to check and subsequently went into them with my own spreadsheets to show how much I thought I should be paying and they then acknowledged they had miscalculated and would recalculate.
- They’ve come back again and as a result of my own calculations I have worked out that as a result of their decision to start my financial year in February that I will now pay over €1500 more in tax than if they had put my tax year on an actual basis from January to December from the beginning.
- Realising the extra tax I’d pay I queried their decision and they told me that they did this as they thought I’d be earning more each year and from a tax perspective it would have “worked out” if I’d continued to earn more each year and continued with the sole trader for years to come – both presumptions that if they had asked I would have clarified would not happen.
- Further, when they submitted my first two years tax they had the figures in front on them showing clearly that I earned LESS in my second year than in my first year – so they had the information to clearly show that their reasoning was wrong for my situation, but they went with it anyway without calling me to say what they were doing and to give me a rationale for it.
- In a subsequent call another accountant in the firm told me it was a Revenue requirement to have my financial year beginning in February.
- I then read up about it myself and queried their decision again saying that my understanding was that this was not a Revenue requirement and they then said it was optional to do this and it was because they would have been too busy to have done it from January to December from the beginning.
Given two years of tax has already been paid my question is about whether I can do anything about their decision which is now costing me €1500 more in tax? I know the obvious answer is to ask the accountant but frankly I don’t trust the information their giving me anymore.
Ironically, they also recently told me that I could have de-registered for VAT in my second and third year of the business as I went under the threshold in these years – but having told me this AFTER the contract ended is useless information and cost me an increase in pay as I was told by the people paying the contract that the cost of the additional VAT payments meant they couldn’t afford the raise. If they’d have told me this in the second year their decision to start my tax year in February might have ‘worked’ but again there was zero communication from them.
Apologies for the length of this and thank you for any piece of advice you could give me.