Housing association takes legal action after £100,000 corporation tax blunder

Thursday 22nd September 2011

Porthove Housing Association paid more than £100,000 in corporation tax unnecessarily because it didn't realise that charities were exempt, it was revealed today.

Porthove Housing Association has now started legal action against its former accountants, the Accountancy Age reports.

The housing association, which provides 44 units in East Sussex for older people to rent, paid a minimum of £103,918.90 to the taxman before realising the mistake.

According to a High Court claim, Porthove says it paid an unknown amount of corporation tax between 1965 and 1992, but that between 1993 and 2005 it paid £103,918.90 as a result of advice given. The tax it paid between 2006 and 2008 has been refunded by HM Revenue and Customs, which cannot repay any more because of a three-year retrospective limit.

It wasn't until 2008, when Porthove changed to chartered accountants Wilson Sanford, that the association was informed it enjoyed tax exempt status as a charity, and did not need to pay corporation tax.

Porthove then realised it had received negligent advice over the need to pay tax 'for many years', according to the claim.

The association is suing its former accountants Keymer Haslam and Co, of Burgess Hill, and Lewes based Maxwell-Gumbleton and Co, branding the firms negligent.

The claim alleges that if Keymer Haslam and its predecessor had acted with reasonable care and skill, it would have advised it not to pay corporation tax, and would have advised it to claim refunds from HM Revenue and Customs.

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