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Money laundering dilemma

Money laundering dilemma

I am retired, but my ex-partner has posed the following question. He recently took on a new client who is under HMRC investigation. He has spent 8 hours compiling a letter to SOCA plus the usual marker letter to HMRC in Llanishen. He has sent her an invoice for £1600 plus VAT in respect of this work. The invoice simply  refers to 'tax work to date'. Sadly, the client has now asked for an analysis of the invoice. How should my ex-partner respond without tipping her off?

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By happy
16th Aug 2010 17:42

I wouldnt have invoiced the time

Difficult one to which I cant offer any answer - hopefully someone can.

I wouldnt have invoiced the client for these charges in the first place.

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By sarahg
16th Aug 2010 17:57

Have to agree

Is he charging the client for reporting them to SOCA when they were already under investigation?

I'm not surprised the client queried it to be honest

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16th Aug 2010 18:05

What a tangled web we weave ....................

Just because someone is under investigation by HMRC that doesnt mean there are money laundering issues.  Obviously it's a new client so he has limited knowledge of her affairs. It is difficult therefore to see what any suspicion is based on.  However, I assume that he feels there are "grounds for suspicion"?  Why else would he write to SOCA. 

That said, this is a duty imposed by government without payment - which in my view makes it bad law as I see no reason why anyone should work for free. If your ex partner wants paying for his time he should send his invoice to SOCA - good luck.

As regards invoicing the client for the time involved, that is, I suggest, highly unprofessional.  The work was not carried out on the client's behalf or for their benefit, or indeed with their knowledge. Indeed should it ever come to a court case and your ex partner be called to give evidence (dont think he is guaranteed anonymity - the courts rarely refuse applications for disclosure), any competent defence could have a great time discrediting him for charging their client for the time spent on informing on them.

I think your ex partner has a serious problem, as he is now faced with a choice of lying (unprofessional), or tipping off (illegal).

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16th Aug 2010 19:43

Some thoughts

I am surprised your friend has spent 8 hours on making a report to SOCA.  I am also surprised that he is doing this by letter rather than by using the standard form (which would save his time and time at SOCA).

It occurs to me that the 8 hours have been spent reviewing information and considering the case and how to present it to HMRC as well as reporting to SOCA.  Therefore (I would hope) the bulk of the time spent is of direct benefit to the client and can be billed as what it is - reviewing the case and collating information for presentation to HMRC.

I would have thought that time spent on completing a report to SOCA should not be charged to the client.

In very limited circumstances it is permitted to tell a client that you have reported him to SOCA, see s333D(2) PoCA 2002, if you are a "relevant professional adviser" (as defined by s333E(5)) and the report is made "for the purpose of dissuading the client from engaging in conduct amounting to an offence".  But unless the client is planning to beat up the accountant if he cannot justify the bill, then I don't think this falls within the exception!

So I am thinking in terms of reducing the chargeable hours to those spent for the client's direct benefit and not telling him that a report has been made to SOCA.

(I am assuming that the accountant suspects, or has reasonable grounds to suspect, that the client has engaged in tax evasion or other criminal conduct in the past from which he has obtained a benefit.  The mere fact of an HMRC enquiry is not itself sufficient to automatically trigger a report.

I am also assuming that the client did not approach the accountant intially with a 'confession' and request the accountant's assistance in regularising matters with HMRC - because information received in that situation could be 'privileged' and in that case should not be reported to SOCA.)

David

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16th Aug 2010 22:39

Bloody hell!

8 hours!  8 minutes should be nearer the mark - surely its SOCAs job to do the leg work, all you're doing is setting out the outline of the issue.  In any event where its already under HMRC investigation a simple notification and x-reference to ongoing investigation should be more than adequete.

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20th Aug 2010 10:31

Unbelievable

I too can not believe your ex partyner took 8 hours writing the report!!!! The last one i did took 20-25 minutes to complete the SOCA form .

and no you cant bill the client !!!!!!!!!!!

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20th Aug 2010 10:43

How about.....

Under the money laundering regulations, I am not allowed to tell you the work that I undertook, but rest assured as a professional acccountant I can confirm the work was necessary.

I think that solves your dilemma.....

 

 

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20th Aug 2010 10:57

But thats tipping off???

Surely that would be tipping off!!!!

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20th Aug 2010 12:23

Tipping off

A tipping off offence occurs when a report has been made (either internally to the MLRO or externally to SOCA or other authority) and disclosure is made of the fact that a report has been made.

So the suggestion by 'Tom 7000' along the lines of "trust me, I'm an accountant - pay the bill" would not amount to tipping off. (But that doesn't mean that I think his suggestion is a good idea.)

David

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20th Aug 2010 15:28

Disclosure

So the suggestion by 'Tom 7000' along the lines of "trust me, I'm an accountant - pay the bill" would not amount to tipping off. (But that doesn't mean that I think his suggestion is a good idea.)

David

 

Posted by davidwinch on Fri, 20/08/2010 - 12:23

 

 

I rather suspect the reply might be "trust me I used to be a client - get lost".

More importantly, if the client simply says no Im not paying there is nothing the accountant can do.  His only recourse is to sue in the small claims court, the client will then be entitled to full disclosure, and just how is the acountant going to do that without "tipping off"?  The courts wont wear the "trust me" approach.  Unless of course he lies about what the charge is for - which would be perjury. 

I rather think he should forget it, dont you ?  

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20th Aug 2010 15:33

I agree totally, he will have to write it off and learn the lessson not to spend so long next time!!!! (still not sure exactly what he was preparing)

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