Bad Tax Advice from Accountant

hoey1240

I run a small company and have a sub contractor working for me. Two years ago my accountant incorrectly advised me that my subcontractor needed to sort out his own tax. This accountant told me that the sub contractor just needed to give me an invoice then I pay him for the work he did. His tax affairs were his own business. I was not told about C45. My new accountant has told me now that the sub contractor should have been C45 registered. Because the sub contractor didn't, and because he is not in the country any more, my new accountant tells me that I liable for the sub contractor's tax. This seems really unfair to me - I'm paying for bad advice. Is there no way of giving the taxman the sub's PPS num so when he starts working here again he can sort out his own tax?
I only run a very small company and it feels like I'm being punished for someone else's mistake. Thanks if you can help.

ants09

What type of business do you work at ? and regarding your sub contractor what type of work was he doing for you ?

To get a reasonable answer to your query people will need to know those two .

hoey1240

I'm a plumber. My sub-contractor was a plumber also, being paid by me per job. As I said, I was advised that he had to sort his own tax out.

ants09

hoey1240 wrote: »

I'm a plumber. My sub-contractor was a plumber also, being paid by me per job. As I said, I was advised that he had to sort his own tax out.

Forgive me for ignorance was it repairs or installations/construction ?

Was it building sites or commerical etc ?

hoey1240

Repairs and some installation - domestic mainly. Anything commercial would have been something like a dripping tap in a restaurant, blocked sink in a hotel etc. - small jobs

bah1011

I knew someone in a very similar situation and they went to court and the accountant had to pay the tax liability and the interest.
I only heard this second hand so sorry I cant be of more help.

ants09

hoey1240 wrote: »

Two years ago my accountant incorrectly advised me that my subcontractor needed to sort out his own tax.

hoey1240 wrote: »

My new accountant has told me now that the sub contractor should have been C45 registered.

I can see your problem and to be honest getting two different opinions is quite worrying

One of them is correct and once off them is incorrect but you like to know which one

Why did you change accountants in the first place was it because of this advice !

To operate C45 you have to work in the construction industry,
The construction, alteration, repair, extension, demolition or dismantling of buildings or structures; which you dont operate in

The construction, alteration, repair, extension or demolition of any works forming, or to form, part of the land, including walls, road-works, power lines, telecommunication apparatus, aircraft runways, docks and harbours, railways, inland waterways, pipelines, reservoirs, water mains, wells, sewers, industrial plant and installations for purposes of land drainage; in which you dont operate in

The installation in any building or structure of systems of heating, lighting, air-conditioning, soundproofing, ventilation, power supply, drainage, sanitation, water supply, burglar or fire protection; which you dont operate in

The external cleaning of buildings (other than cleaning of any part of a building in the course of normal maintenance) or the internal cleaning of buildings and structures, in so far as carried out in the course of their construction, alteration, extension, repair or restoration; which dont apply to you

so in my opinion your first accountant is right as you did not operate in the construction industry for C45 purposes

Regards

Ants09

ants09

bah1011 wrote: »

I knew someone in a very similar situation and they went to court and the accountant had to pay the tax liability and the interest.
I only heard this second hand so sorry I cant be of more help.

Thats very true but you are putting the cart before the horse as your thinking his previous accountant was culpable of being in the wrong

kennyb3

I would be careful here, I do bookkeeping for a plumbing company in my out of practice personal time - For 99% of their customers there is no RCT involved.

Note: RCT = relevant contract tax (the relevant contract being the key).

However there is 1% with a large construction company for which they are a subcontractor (registered with revenue) and therefore account for vat on a reverse charge basis. (i.e the principal deals with it).

So really it all depends as ants09 says on what exactly your subcontractor is doing for you.

dbran

Hi

You need to go and find an accountant that you trust is giving you correct advise. See if you can get a friend or a collegue to recommend their accountant. Getting advise from an online forum may just serve to confuse you even more.

For what its worth, in my opinion I believe the second accountant is right. In all probability you should have been operating RCT. The contract was a "Relevant Contract" as the work you are doing is for the repair of a structure or a building.

Kind Regards


dbran

bah1011

ants09 wrote: »

Thats very true but you are putting the cart before the horse as your thinking his previous accountant was culpable of being in the wrong

True. Sorry, I presumed that was already established.