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Bankrupt client ...

Bankrupt client ...

A client of ours (sole trader) who owes less than £12k of tax has been made bankrupt. The last return we prepared was 2009 which we didn't get paid for.

The amount outstanding wasn't a lot but now the Insolvency practitioner appointed as trustee wants us to send to them accounts, returns and breakdown of all items on the accounts, the accounts that we weren't actually paid for!

She says that we are obliged under Insolvency law to do this free of charge presumably so they can do as little work as possible and rake in a big fee.

What are our actual rights , do we have to waste our own time collating this information and sending it in ,what about paying the postage ?


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03rd Nov 2011 11:14


We have had a similar case recently but involving a Company. Unfortunately you are obliged to provide the data free BUT the liquidator on our case realised that what he was asking for ( involved going back about 5 years) would take a fair amount of time and agreed to be charged. This was done by speaking on the phone and confirming in writing. On balance then ,it depends on what is involved and how the IP views your request.

Regarding postage ( and paper ) why not print to pdf and send via e mail

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03rd Nov 2011 11:52

If lawyers bayonet the wounded, IPs strip the bodies

See here:-


It may be the easiest option to stick the accounts & return in an envelope. I would tell them to whistle for any analysis work though.


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03rd Nov 2011 14:05

Asked the insolvency practitioners for the relevant legislation as was offered by an earlier conversation this was sent immediately by email.

At the bottom of the email was added:-

"I trust a court application will not be necessary in this case"

The two conversations we had were amicable and in the end the work took 3/4 of an hour  and is ready to send , in view of the above veiled threat I think I'll wait a couple of weeks.


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03rd Nov 2011 16:52


for 45 minutes I think I would not chase the IP for fees. It is part of the everyday joys of being in practice !!!!!

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03rd Nov 2011 17:18

i am delighted to hear that

a lot of the tight correspondents on here would be itching to charge !!

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04th Nov 2011 12:17

To be honest thought it would take a lot longer it was just like the handover work for a client leaving . Would hate to have to do it with one of our bigger clients

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09th Nov 2011 11:50

Slightly different situation but a similar question.

I wonder whether anyone has any comments on a slightly different situation we are in?

We acted for a client for many years that ceased trading in 2003 retaining its property until selling in 2005 and then being struck off in 2007 once clearances had been obtained for a capital distribution. Following this the Revenue enquired into the company as they had carried out a tax mitigation scheme (not through ourselves) to create a loss to be offset against the property sale gain. The Revenue won the case and resurrected the company during last year to raise an assessment within it. Obviously no assets as the company hadn't existed for several years so the company has now gone into liquidation. Liquidators have been appointed (presumably by the Revenue) and I assume are trying to build a case against the Directors for having done something wrong.

I had a letter in February asking for all information we held on the client since we had begun acting for the them maybe 15 years ago. I responded saying we no longer had this only more recent information and even that would incur some time to collate as all now offsite or on backups etc. No response until end October now from solicitors acting on behalf of liquidators asking for the same information. Responded saying can they be more specific for me to see what we have but again saying unlikely to be much. Have now yesterday had a letter asking me to arrange a 'mutually convenient' time to attend the liquidators offices to discuss their affairs and the advice we provided.

We are in the Midlands and the liquidators are in London. Cost to attend will therefore be over £1,500. In addition they still want all the records we might have so several hundred maybe a thousand of further time. Sections 234 to 236 of the Insolvency Act are quoted which I appreciate oblige me to provide certain information but does anyone have any views on whether I really do have to commit this much time to the situation?




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to HillClimber
09th Nov 2011 12:04

Are you chartering a helicopter?

sbutlerhwca wrote:
We are in the Midlands and the liquidators are in London. Cost to attend will therefore be over £1,500. In addition they still want all the records we might have so several hundred maybe a thousand of further time. 


I assume that this £1,500 includes you time at your usual rate along with costs.

I would write back requesting a detailed agenda for the proposed meeting along with asking what it is that it hopes to achieve. I would assume that they must think that your firm was invloved with whatever dodgy scheme the directors burned their fingers so it would be in your interest to sort this out quickly.

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By lme
09th Nov 2011 12:27

shame about the attitude

... of your insolvency practitioner. I am grateful to have a good relationship with one who is currently helping with one of my clients. I am able to bill all my time for preparing accounts etc. In return if I have another problem in future or am ever asked for a recommendation I would not hesitate to use or recommend my Insolvency practitioner. It really should work both ways.

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09th Nov 2011 12:45

Thanks Roland195

What you say is one of my concerns. We did not sit in on the meetings with the scheme provider and the client so we certainly don't have notes or information on this as it was done outside our remit. We were sat in the middle during the tax enquiry as we had the agent role forwarding responses from the provider to the Revenue on behalf of the former client just out of goodwill (although at the time I did try to update the agency to the provider to cut myself out!). This concern of course makes me even less keen to show up for a meeting which will cost a significant amount of time and may be used by the liquidators to somehow try to pull us into the situation.

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09th Nov 2011 15:17

Let them come to you

Firstly let me declare an interest - I am an insolvency practitioner, but hopefully one more akin to the one lme has a relationship with than the one you are being forced to deal with in London. I totally agree that you should be very polite and very specific in your response. I would endeavour to find out exactly what documentation do they require and exactly what do they wish to discuss? Explain that you will be more than willing to help them but would request that the meeting be held at your offices. Offer them say three or four options when you are available.

Above all what you are trying to demonstrate is that you have nothing to hide, want to co-operate and are being as reasonable as possible. If they refuse, and take it to Court, that is what the Court will see!

Phil Wood

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By mtyler
09th Nov 2011 22:18

As per Phil's comment

Let them come to you. Don't incur any costs unless you really have to.

There is a legal obligation to return the records that you hold (234 and 236 I think of Insolvency Act), but you can always reach a commercial agreement with a liquidator for fees relating to any work that you perform. Bear in mind the costs they would need to incur if they try and obtain the information by legal routes - anything less than that cost could be negotiated with them.

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10th Nov 2011 09:26

Should be built into fees

This kind of unforeseen cost is nothing more than a "cost of business" and needs to be factored into charges for all clients as part of the business overheads.  All businesses can find themselves facing costs for which they can't charge anyone.  It's only because the likes of accountants and solicitors are accustomed for charging all their time that this kind of issue arises when there is no-one to charge.  

The answer is to mitigate and minimise the costs to yourself.  As advised above, tell them that you'll be happy to meet them at your premises - it's unreasonable for you to travel miles to meet them at theirs unless they're willing to cover your expenses.  As for provision of information, doing a bit of photocopying isn't going to take hours - get someone else to do it, i.e. the office junior, or if you're a sole practitioner, how about your spouse or teenager doing it to help you out.  Better still, them them that your files will be available for them to view when they come to you for the meeting and they can copy whatever they want whilst at your premises.

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10th Nov 2011 17:47

S237 Insolvency Act

In answer to sbutlerhwca comment. We had a similar threatening request from a liquidator and on a Tax Counsel's advice we were obliged to attend a tape recorded meeting with the liquidator in London. My colleague had to travel from Birmingham. The Insolvency Act has quite draconian powers S237 covers those powers. Section 236 includes a power to arrest for failure to comply.

After a lot of hassle we eventually got paid travel expenses but the liquidator refused to pay for any time.

Revenge is sweet though as the ex-directors have fought back and have managed to put forward a petition to have the liquidator removed from her duties. The creditors meeting will take place shortly.

Malcolm McFarlin

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