Selective Clearance Letter received

Selective Clearance Letter received

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Before Christmas I received a Clearance letter request from a 6 partner Chartered accountancy firm. The letter concerned a small family property Limited Co with an August year end and as not time critical I did not rush to reply to their 2 pages of information requested. I received a reminder today so moved it up the to do list.

I completed the 2010 SA for one director/shareholder ( the director who manages the company).He was a part time employee of a UK company until September 2010. He had formed his own company and draft accounts for the first year to April 2011 and 2011 SA have been prepared and with him for approval. The company does consultancy work for his previous employer plus another UK company and a Dutch company. He received £20,000 from the Dutch company in March 2011 as a gift for work done during his employment when the Dutch company won a major contact with his former employer. His view was that the £20,000 was not taxable. I viewed that it was, either on him personally or through the company.

I have checked and found that his 2011 SA has been submitted ( he is still on my SA list) and Abbe accounts for his Consultancy Ltd have been submitted to Co House by new accountants. They did not ask for clearance for the SA or Consultancy Ltd. They knew of my involvement because the Reg Office was my Office I  calc that based on the' to pay' on SA and tax bal on Abbre the £20,000 has been ommitted from both. 

I am not sure if I can mention the SA / consultancy issue as they did not ask for it. Advice would be appreciated (smug comment only 4 SA to do so can spend a bit of time on this!)

Of course I havent been paid for prep of SA or draft accounts not that non payment is a reason to withhold. Also cloud based so cant put lien on books I have been fully paid for family property company

Replies (12)

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By girlofwight
12th Jan 2012 10:05

Logic?
Logic suggests that you simply provide what's been asked for?

There is no reason confidentiality wise, why you can't give the outline of the other detail you've referred to, but you would need a seperate authority to release papers.

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By grahamtreadwell
12th Jan 2012 10:13

Selective Clearance Letter received

SOCA?

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By djw090
12th Jan 2012 10:38

Shop him

When a client leaves because he does not like the tax treatment you propose and which you believe to be correct you should shop him if he then files using a different treatment.

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Mark Lee headshot 2023
By Mark Lee
12th Jan 2012 12:28

Taxability of the gift will depend on the facts

It's not cut and dried and is probably NOT taxable if unsolicited, unexpected and paid over after work done has been paid for in full at normal commercial rates.

Mark

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By ireallyshouldknowthisbut
12th Jan 2012 15:15

.

Pick up the phone, speak to the new accountants. Discuss.

 

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By edward33
13th Jan 2012 15:17

Update simple explanation

Phoned new accountant and spoke to manager dealing with job. They didnt send clearance letter re SA or Consultancy Ltd as didnt need any info from me.

Will consider ML Report

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David Winch
By David Winch
13th Jan 2012 16:00

ML report?

I am a bit puzzled that you are considering a report under MLR 2007 / s330 PoCA 2002,

Unless I have misread your original post it does not appear to be the case that the £20,000 was a bribe or that the (ex) client was induced to behave improperly.

Also you indicate that the client (apparently genuinely) believes the £20,000 was not taxable so this cannot be a case of criminal tax evasion.

On what basis do you suspect a money laundering offence may have been committed?

David

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By edward33
13th Jan 2012 16:21

ML Report and more detail

During the period he was employed he was also doing consultancy work for the Dutch Co which helped them get the contract with his now former employer.He was paid about £4300 for this work.He invoiced the Dutch Co about £23,000 from the cessation of his employment to his year end. I cant see how the £20,000 is not taxable as he has had a working relationship with the Dutch Co before when and after the 'gift' was made..

I spotted the amount in a personal account and it was only mentioned when I questioned him regarding it. To me the 'Gift ' excuse is weak. He had no paper work to back it up.

I am now doubting myself

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David Winch
By David Winch
13th Jan 2012 17:11

Just to clarify, I have no opinion as to whether the £20,000 is taxable or not.

What I am querying is whether the client genuinely believed it was not taxable.  If he did then he is not being dishonest in omitting it from his tax return figures.  If he is not being dishonest he is not guilty of criminal tax evasion and no question of reporting to SOCA arises.

(He may of course be mistaken in his belief and subject to additional tax, interest and penalties if HMRC discover the monies received - but that is a different issue.)

David

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By The Black Knight
17th Jan 2012 12:33

belief

Clients frequently believe that the tax treatment is unfair...and or don't believe what you tell them......

However If you have told the client treatment (professional advice) does that change a clients belief ? (again no comment on whether £20K is taxable or not)

I get the deliberate point for money laundering purposes.....but how on earth do you CYB from PC Plod ?  After all some people still believe in God and Santa Claus !

Do you perhaps have a suspicion that he has not made full disclosure to the new accountants ?

and would that change your view of your clients beliefs.

an impossible answer but get it wrong one way and someone might want to hang you !

Get it wrong the other way and no one will ever know !

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Replying to chatman:
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By jackcorr
17th Jan 2012 17:13

belief

I find the comment "some people still believe in God" very insulting and totally uncalled for. If Black Knight doesn't believe, millions do.

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By The Black Knight
17th Jan 2012 18:12

Correction

Many people still believe in God !

and all sorts of Gods each being different.

My point is you can believe in whatever you want, whether it exists in reality or not, or can be shown to exist.

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