Should I help this guy or walk away

Should I help this guy or walk away

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A potential client called me yesterday - he found me through the ICAEW website which is a first for me. He works in the Constrution Industry, had a large number of sub-contractors at one time but was declared bankrupt in 2010 (now discharged) and gave an explanation for this which included blaming former dodgy accountants. A company has been set up with his wife as shareholder and he now just works on his own, trading within the company. The record keeping is not great, and they appear to use the company bank account to fund day to day purchases which will have to be retrospectively put right (they claim they do not really understand how this should work). What really alarmed me however was when I saw some sales invoices with VAT and commented about quarterly returns. His reponse was that they had not yet registered for VAT and it was these sorts of issues for which they needed help. Now I am sure some of you are screaming at your computer by now but I do always have a starting point - a client has contacted an accountant, they are looking for help and why should I not at least start to provide assistance even if that trust is subsequently shown to be misplaced. Or is it a case of a leopard and spot changing etc and I should steer well clear.

Bill

Replies (20)

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By bernard michael
06th Dec 2011 09:24

Seeemples!  Walk away -  all

Seeemples!  Walk away -  all the signs of future trouble are there again!!!!

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By Mouse007
06th Dec 2011 09:25

Actually

I'd run

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By MarionMorrison
06th Dec 2011 09:28

Brutally

There's only one question - will you get paid and will you get paid adequately for what's necessary?  If you will then go for it, think of it as rehabilitation.  I'd only refuse a client with a dodgy back-story if they were an unpleasant human being.  

So quote them appropriately and how you will be paid on an SO/DD basis and try to show them the error of their ways (with them paying for their lessons).

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By pauld
06th Dec 2011 09:30

Agree

Could be trouble waiting to happen. 

Alternatively due to his track record, see if he is happy to pay your fees up front to sort all this out for him. I think I would want a fee up front to sort the current mess out and then put him straight on to standing order so the first years accounts are paid for by the time you come to prepare them.  His reaction to this should help you to decide whether to engage or walk away.........................

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By ShirleyM
06th Dec 2011 09:30

A balanced view ... I hope!

There are some stupid people out there. If they are genuinely thick then I tend to give them benefit of the doubt. Whether you will find them frustrating to work with is another matter!

Given that he had a company that employed lots of other people, do you really think he is too thick to understand that VAT should only be charged if you are VAT registered? it sounds like he is a risk-taker, or has no respect for the law.

He may just be looking for a scapegoat to blame for all the problems, or he may genuinely want to get to all the problems sorted and start toe'ing the line. If I was really interested in taking the work, I would contact the accountant that dealt with the last company and try to get them chatting 'informally'. If my fears were confirmed I would then sack the guy.

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Replying to Democratus:
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By dwgw
07th Dec 2011 12:10

Toe-ing?

ShirleyM wrote:

 toe'ing the line. 

Everything that needs saying on this topic seems to have been said except that, with apologies Shirley, this phrase leapt out at me.  Is this similar to giving someone a good shoe-ing!?

It's "towing the line" isn't it?  Someone will know the derivation, I'm sure - something nautical?

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the sea otter
By memyself-eye
06th Dec 2011 09:33

There is another question

Will you be dammed by association?

It's the sales invoices with VAT bit that I would be wary of. Is he really saying he doesn't know that he can't apply VAT if not registered...

Some folks are just beyond helping whether you get paid or not.

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Image is of a pin up style woman in a red dress with some of her skirt caught in the filing cabinet. She looks surprised.
By Monsoon
06th Dec 2011 09:54

How busy are you?

If you've got the time to spend on a particularly awkward job, then consider it. If you're flat out, then I'd probably leave it.

If you're considering it, then I'd look at whether he was going to be easy to work with, whether he is genuinely clueless or being a dodgy geezer, and whether he was going to do what I said and sort it out going forwards.

If I decide he was going to be a good client, and wasn't just a dodgy chancer, I'd then get payment up front and crack on.

If my gut said no, then I'd say no.

Damned by association - not if you correct all the errors, surely?

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By neileg
06th Dec 2011 10:17

Depends

If the client wants to get on the straight and narrow, this could be a long and happy relationship.

If the client doesn't want to play ball, there's a world of pain ahead of you.

Knowing one from the other is the trick.

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By young ronaldo
06th Dec 2011 10:48

Did he put a VAT number on the invoices? If he did then it clearly wasn't an honest mistake.

I'd quote him a fee double that for a clean client with good accounting records explaining that the fee can come down next year once he corrects his ways. At the very least put him on monthly standing order and make sure that he is never in arrears for work done to date.

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By bernard michael
06th Dec 2011 10:57

Did he quote a VAT no on the invoices you saw? If he did have you checked it's  validity and for which organisation it was registered to? My immediate suspicion is that is was his banrkupt business's. If you cannot check it call me and I will do it for you

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By Marion Hayes
06th Dec 2011 11:30

Benefit of the doubt

I would always give the benefit of the doubt to the client - without necessarily accepting the dodgy accountnant bit.

If he was personally bankrupt the trade was probably a sole trader and they have jumped into a company to protect themselves in the future.

Explain to him this doesn't always work!!

I have met many people who assume they need to charge VAT, or caculate mark-up on pre vat costs when not registered,

I have just started to act for a recent bankrupt who is not yet discharged, and tried to move on on her own but ound it very difficult. As a true bankrupt there are little or no funds yet I am having great difficulty in getting HMRC to deal with things properly - but she is very appreciative and arrived with a cheque to make sure I am not out of pocket.

What is making you feel that this is not just our usual type of small client, who treats company as bank account as doesn't have money anywhere else etc etc? I would follow your instinct

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Replying to Fast German Car:
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By david5541
07th Dec 2011 14:03

dodgy client

 

it depends on the size of your firm and the fee he actually pays(not what you quote)-and therefore how desprate he is:

maybe his sob story was genuine and he was good with business but hopeless with tax/paper.

most high street firms would just refuse for money/laundering/PII reasons.

Marion Hayes wrote:

I would always give the benefit of the doubt to the client - without necessarily accepting the dodgy accountnant bit.

If he was personally bankrupt the trade was probably a sole trader and they have jumped into a company to protect themselves in the future.

Explain to him this doesn't always work!!

I have met many people who assume they need to charge VAT, or caculate mark-up on pre vat costs when not registered,

I have just started to act for a recent bankrupt who is not yet discharged, and tried to move on on her own but ound it very difficult. As a true bankrupt there are little or no funds yet I am having great difficulty in getting HMRC to deal with things properly - but she is very appreciative and arrived with a cheque to make sure I am not out of pocket.

What is making you feel that this is not just our usual type of small client, who treats company as bank account as doesn't have money anywhere else etc etc? I would follow your instinct

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By The Black Knight
06th Dec 2011 14:37

and don't mention the CIS

I expect the VAT issues are just the tip of the Iceberg.........and sounds criminal.......Cash up front if you do sort..........he will go bust again I expect...

And you could have a long and happy career filling in reports to SOCA or explaining why not !!

Depends whether he wants your badge to make him look OK at HMRC ??

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By User deleted
07th Dec 2011 12:32

Businessman's view

I'm not an accountant, I'm a businessman.

1. Tell him you can't help him because of the VAT fraud.

2. Report him to HMRC because when they catch up with him the chances are he'll try and drag you in.

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By User deleted
07th Dec 2011 12:41

Toes

http://en.wikipedia.org/wiki/Toe_the_line

Toeing the line is correct - see above. It's all to do with following orders and doing what's expected of you...

But then I'm not a big fan of the water :)

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By User deleted
07th Dec 2011 13:00

Shirley is correct ...

... except for the aberrant apostrophe!

Funny, I always thought it was from competitions like archery, and latterly darts!

My view is this

http://www.youtube.com/watch?feature=player_detailpage&v=eDd-GXkMrJs#t=70s

I am inspired, off to time out!

 

 

 

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By ShirleyM
07th Dec 2011 13:22

Sorry guys :)

I am an expert at something at last .. ie. getting apostrophes in the wrong place :)

I wrote it without the apostrophe originally .. but it didn't look right!

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By willkyne.blueyonder.co.uk
07th Dec 2011 18:39

Response to 'Should I help this guy or walk away'

I am very grateful for all the responses which have helped me in formulating a decision. Charging VAT on invoices while not registered is a tipping point issue and I have decided not to act for this individual. My professional reputation, such as it is, means a lot to me and the risk of being dragged into what appear to be fraudulent practices is simply too great.

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By mcaine.moorsam.com
08th Dec 2011 13:23

The fist thing your going to have to consider is filing a report under the Money Laundering Regs' isn't it?

Not a particularly auspicious start to a relationship is it?

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