Accountant Missed HST, T2 or T4 Filings or Stopped Responding

What do I do first when my accountant missed filings and stopped answering?

Find out what the CRA holds before anything else, then deal with what is late. The CRA treats the business as responsible for its records even when someone else holds them (records responsibilities). Relief for an accountant's failure is the exception, as the relief section below explains. How fast you act is the part you control.

1. Look. Sign in to My Business Account and note the status, balance and mail for each tax account under the business number: corporation tax (T2), GST/HST and payroll. Check that the banking details and mailing address are yours and that money you gave the accountant for tax shows as a payment.
2. List what is late using the due-date table below. Write down any CRA demand or assessment and its date: a notice starts its own deadline (to object to a T2 or GST/HST assessment it is 90 days after the notice is sent; a personal return's can be later), so do not wait for the accountant to answer.
3. Write to the accountant, dated, listing the records and filing confirmations you want back by a set date.
4. Remove the accountant's CRA access if you are ending the engagement, once you have saved what the account shows.
5. Agree how to file the late returns, who files them and in what order. Before anything is submitted, check whether a voluntary disclosure fits; it cannot relieve charges already assessed (see the relief section below).
6. Ask for penalty and interest relief with a clear account of what happened.
7. Decide on a complaint. It runs alongside filing, never instead of it.

A case is not simple when returns are missing in more than one tax account or year, the CRA has sent a demand or assessed an estimate, the business is in Québec, you cannot tell whether filed returns match what you gave the accountant, money you paid never reached the CRA, or the books for the missing periods are behind or sit in the accountant's hands. Unremitted payroll deductions and GST/HST are held in trust, and directors can be personally assessed for them, generally within two years after they last ceased to be a director. Handing the job to an accountant does not remove that duty: a director is not liable who took the care a reasonably prudent person would have, with the steps taken before the failure. Members of a partnership (other than limited partners who are not also general partners) are jointly and severally liable for its GST/HST. Catching up on unfiled corporate returns covers director exposure. These cases need professional judgment on what to file first, whether a voluntary disclosure fits and whether relief is realistic.

Gather: your business number and online access if you have it, the last T2 and notice of assessment, bank and card statements for the missing periods, payroll records, payments to the accountant, the engagement letter if there is one, and every message with the accountant.

How do I find out what my accountant actually filed?

Sign in to My Business Account and check each tax account separately. The CRA lists these services:

Under Profile → Manage authorized representatives, the CRA also lets you view the online transactions a representative made on your business account. That shows what the accountant did online. The direct deposit and address services show where refunds and mail go.

No login of your own? Without one you cannot see the accounts or remove access online. Getting access is the first job, and a professional can help; Form AUT-01X, below, is the paper route for removing the accountant's access.

A filed return in one tax account says nothing about the others. If the business is located in Québec, Revenu Québec generally administers the GST/HST. Québec and Alberta also administer and collect their own corporation taxes, so a corporation there may have a provincial return the T2 does not replace (Alberta's is the AT1), and a Québec employer sends QPP, QPIP and Québec income tax deductions to Revenu Québec. Ask the province's agency for its filing record as well; this page covers the CRA side. If the business is not showing in your account, switching accountants covers adding it.

Which returns could be late, and when was each due?

Each filing has its own deadline and its own CRA account.

A sole proprietor has no T2: the business income goes on the owner's personal return. A partnership may file a T5013; the switching accountants guide lists that date.

How do I get my books, slips and copies of filed returns back from the accountant?

Ask in writing, list the items and set a date. If the accountant is a CPA, the profession's code requires transferring the client's property promptly to the client or to whoever the client names, and supplying reasonable and necessary client information to a successor on the client's written request (CPA Ontario Code, Rules 303.1 and 303.2). The Code text cited here is the February 2016 edition; the regulator's current Code governs.

That split comes from the Code's guidance to Rule 303. The same guidance says a former accountant is not ordinarily expected to give a successor more than the previous year's financial statements and tax returns unless paid for the time, so ask for your property yourself as well.

If your books live in an online accounting file the accountant set up, ask in the same letter to be made its owner or to be given a full export: general ledger, trial balance and bank reconciliations.

CPABC describes the same successor rule for British Columbia and says a former accountant should not withhold client information over unpaid fees. These rules bind CPAs. For anyone else, the engagement letter and other law decide what you can demand; ask in writing, and if the answer is no, a lawyer can say what applies to you.

While you wait, the CRA's Enquiries service in My Business Account provides copies of earlier notices and customized statements of account. The account services above list return status and details, not copies of returns, so ask the accountant first for a copy of a filed T2; if there is no answer, ask the CRA what it can provide. Bank statements, invoices and payroll records are the base for rebuilding anything missing; see catching up on overdue books. The CRA also asks you to tell it about third-party changes that might affect your records.

How do I take my accountant off my CRA accounts?

Delete the authorization in My Business Account, or send a paper form if you cannot sign in. Do it when you are ending the engagement, not while the accountant is still the one filing, and save what the account shows first, including the representative's transaction list.

• Online: open Profile → Manage authorized representatives, then view, modify or delete the accountant's authorization. The access remains until you or the representative cancels it, or it expires.
• On paper: send Form AUT-01X to your tax centre within six months of signing it, or the CRA will not process it. The signer needs signing authority for the accounts, and the name must match CRA records. The same form covers a personal (SIN) account, which a sole proprietor's accountant may also hold.

The form's scope options (the whole business number or one account) and a new accountant's separate authorization are in switching accountants.

What do late filings cost, and what has already started to accrue?

For a T2 or GST/HST return, the late-filing penalty is a percentage of the tax unpaid, so the bill grows with every complete month. Interest runs separately and may already have started.

For a corporation, arrears interest is compounded daily on any unpaid balance from the balance-due day to the date of payment, at a rate set every three months. The balance-due day comes before the T2 filing deadline, so interest can run for months before the return is even late. How each charge is worked out, including on a personal return, is in penalties, interest and relief.

The CRA sent a demand to file or assessed an estimate: what does that change?

A demand makes filing a legal duty with a deadline, and an estimate puts a number on your account that you did not choose. Neither cancels the missing return.

• Demand to file. After the CRA's letter or notice, you are legally required to file the return under subsection 150(2) of the Income Tax Act, and an officer who calls will give you a deadline. For a T2, a demand plus a late-filing penalty that was payable for any of the three previous tax years brings the higher repeat rates (10% plus 2% a month).
• Estimated income tax assessment. The CRA may assess the tax owing under subsection 152(7). It says it will not include voluntary deductions you may have been eligible for. To object, a corporation has 90 days after the notice is sent; an individual has the later of that and one year after the return's filing due date (Income Tax Act, s. 165(1)). Filing the missing return is not an objection.
• GST/HST. The Excise Tax Act lets the CRA assess even when no return was filed, and liability is not affected by the fact that no assessment was made. For a notice covering a period you have not filed, the CRA's decision tree asks whether you received a request to file for that period, then says to file the return for the period shown in the notice unless the notice tells you not to. The objection deadline is 90 days from the notice date. Input tax credits generally must be claimed within four years after the period they belong to, measured to a return due date, so an ordinary claim for the oldest missed periods may be out of time (Excise Tax Act, s. 225(4)). When it assesses a period, though, the CRA must take into account an unclaimed credit that a timely return would have allowed, even if only the claim period has expired, provided the required documents exist (s. 296(2)). Gather receipts for every period before treating old credits as lost.

Read the notice date and the instructions on the notice before anything else. Several unfiled years, or a demand across more than one tax account, are in catching up on unfiled corporate returns; an estimated GST/HST assessment, including old input tax credits, is in unfiled GST/HST returns.

Can the CRA cancel penalties and interest when my accountant failed, and how do I ask?

Sometimes, but not as a matter of course. The CRA's relief circular says taxpayers are generally responsible for errors made or delays caused by third parties, with relief for exceptional situations. Relief is discretionary, and the circular says its guidelines are not binding in law.

The circular names three kinds of situation: extraordinary circumstances, actions of the CRA, and inability to pay or financial hardship. It also says relief may fit where an extraordinary circumstance beyond the control of a taxpayer's representative stopped the taxpayer from meeting an obligation, and its examples of extraordinary circumstances include a serious illness or accident. Its examples are not exhaustive and do not list an accountant's delay on its own, and each request is decided on its own merit, so say exactly what happened.

Among the factors the CRA weighs:

• your history of compliance;
• whether you knowingly allowed a balance to exist on which arrears interest accrued;
• whether you took reasonable care and were not negligent or careless;
• whether you acted quickly to remedy the delay or omission.

The last two are in your hands now: say what you asked the accountant, when you learned of the failure, and how quickly you filed.

To ask, sign in to My Business Account, choose the program and account, and use the Request relief of penalties and interest service, or mail Form RC4288. Give a detailed, complete and accurate description and send supporting documents: the engagement letter, dated messages to the accountant, the CRA account record, and the date you filed. Penalty relief generally reaches back to a tax year (for GST/HST, a reporting period) that ended within 10 years before the calendar year of the request, and interest relief to interest that accrued in the 10 calendar years before the year of the request, plus interest accrued in the request year (IC07-1R1, paragraphs 12 to 15.1). A denial and the next steps are in penalties, interest and relief.

Voluntary disclosure is a separate route, but not for charges already assessed. If the information is at least one year or one reporting period past its due date, the CRA's Voluntary Disclosures Program normally relieves 100% of penalties and 75% of interest when the application is unprompted. It must be voluntary: not after an audit or investigation has started. A CRA letter that names the error or sets a deadline generally makes it prompted, with 25% interest relief and up to 100% penalty relief. It does not cover penalties and interest already assessed (IC00-1R7, paragraphs 11 and 16 to 21; GST/HST Memorandum 16-5-1), so decide before the late returns go in and are assessed. How an application works is in reviews, audits and voluntary disclosure.

Can I complain to my accountant's regulator, and what can it do?

If the accountant is a CPA, the provincial CPA body can review their conduct. Its process does not settle fee disputes, and the outcomes it lists do not include paying you back. Four provincial bodies:

Each linked page explains how to file. Other provinces have their own CPA bodies with their own rules; look up the one for the accountant's province.

CPA Ontario's guide lists the outcomes it can reach: closing the file, guidance or admonishment, referral, and a discipline hearing. Compensation to the client is not among them. A complaint cannot be withdrawn once submitted, and CPA Ontario may share what you send with the accountant, so check what your documents contain first. It asks for supporting documents such as engagement letters, financial statements, tax filings and correspondence. A complaint files nothing for you, so it never replaces filing.

Who can I complain to if my bookkeeper or accountant is not a CPA?

A CPA body's process covers its own members, students and firms. A person who is none of those is generally outside its reach: CPA Ontario says many complaints raise issues outside its jurisdiction and it may advise the complainant to seek legal counsel.

A bookkeeper or tax preparer who is not a CPA may belong to no regulated profession, and then no CPA body has authority over them. Check first whether the person is a CPA; choosing an accountant covers how. If not, your options include the terms of the engagement letter and a civil claim. With no written engagement, rebuild it from what you have: dated messages, bank transfers or cheques paid to the accountant, and copies of what you sent. CPA Ontario's guide also lists the civil and criminal justice systems, local law enforcement and independent legal counsel as other options.

If you find a filed return with figures you never gave, correcting past errors is covered in reviews, audits and voluntary disclosure.

Can I get back penalties or fees I paid because of the missed filings?

Not automatically. Relief cancels CRA charges, not fees paid to the accountant, and the Ontario and British Columbia bodies stay out of fee disputes.

Losses the failure caused, such as penalties and interest that were not cancelled, are one possible subject of a civil claim, which is a legal question. The Québec syndic page points readers to the profession's professional-liability insurance fund and indemnity fund and suggests asking a lawyer about civil recourse.

Time limits apply to a civil claim and are set by provincial law. CPA Ontario's retention guidance (Rule 218) describes a negligence action as arising when the damage becomes known or ought to have become known, and points to legal advice on limitation periods. Get that advice early, and keep the engagement letter and every message.

Example

Illustrative figures in Canadian dollars.

Ontario corporation, T2 never filed

A corporation with a December 31 year-end has a T2 due June 30. The accountant never filed it and stopped answering. The CRA account shows C$10,000 of tax unpaid at the filing deadline, and assume no CRA demand and no earlier late-filing penalty. A new accountant files on October 1, three complete months late. The late-filing penalty is 5% plus 3% for three months: 8% of C$10,000, or C$800. Arrears interest began on the balance-due day, months before June 30, and is on top. The T2 is under a year late, so voluntary disclosure is not available for it; relief has not been asked for yet, and the owner's records of the unanswered messages go into that request.

Sole proprietor, four GST/HST returns missing

A sole proprietor with C$120,000 of sales finds in My Business Account that four GST/HST returns were never filed, and a notice shows an estimate the CRA assessed after asking for the returns. The owner notes the notice date and its instructions. The CRA's decision tree says to file the return for each period shown unless the notice says not to, so the owner gathers sales records and receipts for each period before anything is filed. Ordinary claims for the oldest periods may be out of time, but the CRA can still allow credits on the assessment when documents exist, and credits without documents cannot be claimed; if the accountant holds the records, the letter asks for them first.

BC corporation with five employees

A British Columbia corporation with five employees cannot reach its accountant. T4 slips and the payroll reconciliation for two years are unconfirmed. The owner checks the payroll account in My Business Account for posted remittances and filed returns, saves the return details, deletes the accountant's authorization, and a new accountant files whatever is missing. The late-slip penalty is worked out in the slips guide.

Different for you?

• You have a CRA demand, an estimated assessment, or two or more missed years across T2, GST/HST and payroll, or you cannot confirm what was filed: get corporate tax help to sort out which returns are late, the order to file them, whether a voluntary disclosure or relief is realistic and who files them. A sole proprietor in the same position can get individual tax help.
• Money you gave the accountant never reached the CRA, or a filed return shows figures you never gave: this goes beyond a late filing. See reviews, audits and voluntary disclosure for how correcting past errors works and corporate tax help for what to do first.
• Your corporation has several unfiled years: see catching up on unfiled corporate returns.
• The CRA estimated your GST/HST: see unfiled GST/HST returns and estimated assessments.
• Payroll remittances or slips were missed: see late payroll remittance and late T4 and T5 slips.
• The books for the missing periods are behind or missing: start with catching up on overdue books and get bookkeeping help.
• You are ready to change accountants: see switching accountants and choosing an accountant.
• The accountant also did your personal return: see catching up on unfiled returns.
• The accountant also handled foreign property, a foreign affiliate or a US company: see foreign property and affiliate reporting and missed US returns for a Canadian corporation.
• You want to disclose missed returns before the CRA acts, or the CRA has opened a review or audit: see reviews, audits and voluntary disclosure.