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previous accountants requiring £200 to pass paperwork over!

We have a new client (one director.shareholder company) that used one of the 'specialist' contractor accountancy businesses previously.
Built into the terms is the requirement that if the director terminates the agreement for services, there is a payment of £200 required to pass over information retained on their system (they did the bookkeeping, PAYE, VAT and invoicing customers).
It also says that providing the information can take up to sixty days!
What can be done, if anything?
Who actually owns the records?
The company website says that it is owned by qualified accountants and lawyers, but no way of telling who is a member of what.
Any suggestions please ... apart from paying the £200 or doing without the information?
I presume we are not allowed to have a similar clause requiring payment to pass on information we store electronically (we are ICAEW regulated)?
David

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Is this similar to the recent banks overcharging scandal?
The banks charged cusotmers who were overdrawn high standard fees for various things. eg. overdraft warning letters etc. The customers could not go elsewhere, they had an overdraft, so had to pay these high charges. The letters cost the banks a few £ but charged a lot more. There were some well publicised court cases to decide if the banks were allowed to do this. I cannot remember who won.

Are these accountancy businesses over charging their customers for a service which the customer cannot avoid? What would the courts say if they were asked to decide?

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"owned by qualified accountants and lawyers"

I recently was asked by someone to find out who regulated one of these companies (I wonder if its the same one), and when I rang and asked them - the response was to put the phone down on me!

I had a quick look at Co House as it was a Ltd Co. I noticed it had changed names 3 times in the 9 years its been going, the Co Secretary changes on a regular basis, and so do the Directors. I decided I was not interested enough to pay to see a copy of the "Full" accounts etc...........


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honest
Whilst I personally do not agree with the charge, I have to say that at least it is up front and honest. An ICAEW firm I used to work for tended to raise a fee to "clear their cost ledger for work carried out since the last fee note" and I know of other firms that have done this when I have taken over their clients. In my experience this clearing of the cost ledger can be an underhand way of charging as often the costs on the ledger are old an would otherwise have not been billed.

I have recently had a letter from the previous accountant (ACCA and part of AVN) of a new client. He has billed a modest £150 to clear his ledger. When he has provided the information requested, its as if he has gone out of his way to provide as little info as possible.
For example:-
A specially typed up trial balance that shows no P&L items rather than one from IRIS (which it looks like he uses from the accounts layout) which would have been more useful and easier for him to provide.
A specially typed up summary of the HP account balances, rather than just a copy of the HP accounts from his file

A claim that he has no detail of fixed assets held "because he was never requested to keep a detailed fixed asset register"

A VAT account reconciliation showing errors found in excess of 6k but no detail of the makeup of the errors and although he claims to have already notified the client of these, the client had no knowledge and was sent the same schedule on the same day.

To top off all that, it took nearly three months to get the information because he wanted to meet the directors and try and convince them to continue to use his services, when they said ok come in and see us, he was too busy to see them for three weeks!

All this has had the effect of making me and the client he has lost feel like he truly is unprofessional and has thrown his toys out of the pram.

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whats the problem
Maybe £200 is excessive but why shouldn't there be an admin charge for handover of information?

Its usually an hour or so of someones time to collect and send it so why should it be free?

What is unprofesional about it?? most other professions charge for this so why no accountants?

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childish
It just sounds to me like "throwing the toys out of the pram" because a client has left.

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Professionals get paid, so it's just a case of balacing commercials and where annual fees are under pressure there's nothing wrong with charging clients extras for one-off events if they want low annual fees.

What is unethical (in my mind) is charging clients (or using up their fee) for completing and correcting bookkeeping mistakes year on year rather then supporting clients with technology, training and coaching.

Bob

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Unprofessional
A clause in the terms giving the accountant the right to charge a handover fee may well be reasonable from a legal prespective, but it doesn't make it professional. On the contrary.

It's a sign of a redundant accountant trying to make a last gasp profit out of a client who clearly doesn't want to work with them any longer for one or more reasons.

Penny, you are right that many dis-engagements are perfectly amicable, but you also say you have never charged a handover fee. Would all your friendly farewells have been quite so amicable if you had?

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Robert
Section 210.21 of the ICAEW Code of Ethics states: -

"The prospective accountant often asks the existing accountant for
information as to the client’s affairs. If the client is unable to provide the
information and lack thereof might prejudice the client’s interests, such
information should be promptly given. In such circumstances, no charge should
normally be made unless there is good reason to the contrary. An example of
such a reason would be that a significant amount of work is involved."

I can't work out how to underline the "no charge should normally be made" bit. I presume the other Institutes have something similar and this is why David considers it unprofessional to charge for supplying the normal hand-over information.

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Am I missing something?
Legally, I can fully understand that if this leaving charge is written into the contract, then the client is bound to pay it.

Ethically, however, is such a charge supportable? And by "ethically," I don't mean whether you think it morally right or not but whether this charge is in accordance with the regulations of your professional body.

The ICAEW don't allow their members to raise such charges "normally" and I doubt that other professional bodies would either.

Surely this is a more productive line of argument or is it the case that the current accountants are not regulated at all by any professional body?

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Unprofessional
David - thanks for that. So, let me ask again - why specifically does charging an administration to close a file make an organisation unprofessional?

Bob

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closing file
"David - why does charging a fairly modest fee for closing a file make a firm unprofessional. I can see that not charging could make the unprofitable."


We have never charged for closing a file. However, we don't lose clients. Many of our clients have been with us for 20-30 years. Even those who move to other parets of the country still retain us and wouldn't dream of changing.

But, if a client decided to move, then that can only be because the relationship between accountant and client has broken down in some way. That being the case then a professional will have the good grace to close the file and pass it to the new accountant. If the files are kept as they should be, this should take about 5 minutes to do.

The client has gone - move on.

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Pricing policy
David - why does charging a fairly modest fee for closing a file make a firm unprofessional. I can see that not charging could make the unprofitable.

Did the client have a low price from this service provider? If they did then they shouldn't moan about paying for extras because there won't be a buffer.

Bob

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Buyer beware
I agree with David, David(?), the records are owned by the client. Having said that however, there may well be some other daft clause in the agreement that somehow cuts across this.

Just in case, is the accountancy business a Ltd Co or LLP? if so you could trace the owners @ Companies House.

Be careful though this could be a black hole of time for you and £200 may just have to be a lesson for the client.

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leeches
Unfortunately these "specialist" contractors are leeches.

There are a few around and their behaviour is totally unprofesional.

The prime records belong to the client. The contract, from what you say, does not demand a payment for them. Therefore your client needs to excercise his legal right to the immediate return of his property.

As for the el;ectronic" records held by these con artists. You have to consider, would it cost you £200 to re-do the work they claim to hold. If you can do it for £200 or less then re-do it yourself (at least then you know it will be correct) and tell these people to whistle. After all, they are then stuck with records that are no use to them, and no £200, and no way to extract it from the client.

Take satisfaction from the fact that you denied these vermin some unearned income.

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he signed the contract
Therefore he needs to make the payment.

However if the info is held electronically I agree it should not br4e an onerous job to transmit it to you.

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