I recently acquired a small client whose outgoing accountant charged him £500 for incoporating a pvt ltd company and another £ 500 for registering his business for Vat.
I wrote to the outgoing accountant , who is unqualified ,for professional clearance twice but have not heard from him. It has been six weeks since my first letter.
Today the client faxed to me a bill received from the outgoing accountant for £1,996 broken down as follows:
£414 registering business for PAYE
£900 assistance with opening a bank account. Client says that the outgoing accountant spent only half an hour with the bank manager.
£250 dealing with new accountant-me. although he has not even acknowledged receipt of my letters.
£432 other services - client does not know what there are for?
I advised client not to pay the bill as these charges are extortionate.
The problem remains that the client needs to get back all his invoices and receipts from the outgoing accountant.
Is there away of putting pressure on the outgoing accountant to return clients records?
Can you offer any advice in this respect?
thank you
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Replies (20)
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Accountants Lien
The accountant has no right to hold onto the invoices etc of the business because it is a limited company. Have a look here: -
Amongst other things, this points out that: -
"Also, under English law, no lien can exist over:
(a) the books or documents of a registered company
that, either by statute or by the articles of
association of the company, have to be available
for public inspection or to be kept at the
registered office or some other specified place or
be dealt with in any special way;
(b) accounting records within section 221 of the
Companies Act 1985; or
(c) the VAT returns of any business (excluding
photocopies).
It follows that a lien may only be exercised over books,
records and documents belonging to an unincorporated
client (eg books of prime entry), or documents (such as tax
returns) prepared on behalf of a company, which do not
form part of the proper books and records of the company."
Lien
Soundslike the firm in question don't care too much about what they can and cannot do.
Not sensible advice but this is what I would do.
Arrive at their offices unannounced. With the client. Demand all papers held back. Give them a cheque for £300 being £100 each for company incorporation, PAYE registration and assistance with opening bank account. Tell them that it is in full and final settlement.
Nothing offered for dealing with new accountant as they have not dealt with new accountant.
Ask for breakwdown of other services and if justified pay in full or in part.
If they are not receptive then advise them that you will be contacting all the relevent authorities and will also be ringing the local newspaper to inform them of a local accountant who rips off his clients. I am sure that they would love a story like that on the front page.
i repeat this is not sensible advice and you probably should not follow it but it is no good [***]-footing around cowboy outfits like this.
Contact Rogue Traders
These sort should be named and shamed and I'm sure if you pass on the details to the BBC, it would make a very interesting Rogue Traders programme.
Report it
I must agree with Jason, don't [***]-foot around and at very least report it to the obvious, HMRC & Companies House... not sure who might actually put pressure on them but if no one else here has tips hopefully one of those two will give advice.
If you were tempted to attend their office, I would suggest a call to the police too and outline the situation. They may attend with you to help get all documents back quickly without problems (and embarrass the "accountant" with neighbours, staff etc)
Have you tried calling the previous "accountant"? Has there been any other contact to or from them?
David Toohey
The Accountants Circle
Following on from Julian's suggestion:
If it was a "qualified" firm as well as all these options you could write to the firm's association, institute, etc.
As it's an "unqualified" firm why don't you name them here. Word does (and must) get around.
Dealing with Rogue Accountants
Would have been a better title. There are plenty of crooks in all layers of the professional business.
I would report the individual for theft if they are holding client property.
And if you are a member of a professional body then why not contact their legal helpline. You are paying for it, and surely they would want to stamp this sort of thing out.
NeilW
Use the police
It's theft, report it to the police and insist they recover the records. The outstanding bills are a civil matter which I would defend at the small claims court.
A similar situation existed with an aquantance of mine where a hotel manager stole the booking records on the day he was sacked, the police were informed and the document returned.
Wish I could get £500 for VAT registration though!!!
Rogue Traders....
I wonder how long it will be before Matt Allwright swoops in on one of these unqualified and unprofessional outfits ??
I agree
I was thinking the same re name and shame, there are often two sides to every story but this one does sound difficult to defend.
This thread has got me thinking, what do people here think is a reasonable time to wait for a response from a courtesy letter?
TRADING STANDARDS
Advise them in writing that the fee is unreasonable and if necessary make an offer of what you feel is actually due. Are their charges disproportionate to their normal fees? Are you being penalised for changing accountants. Then ask for the records back and advise that if they still refuse to do so you will report them to the Trading Standards department. To be honest I do not think the police will want to be involved
Getting back records
I find this quite amusing (except I suspect for the wrong reasons!)
- I have a simular situation, except it is with a Chartered Accountant. The Ltd company had been trading for 2 years, and I agreed to help them to bring it up to date as the fines were starting to arrive. The CA had the first years records but initially due to personal problems had not had time to do anything. In the meantime, regular invoices for fees were being issued - even though work was not being done. But when I tried to get clearance, all I got was the fees were outstanding. I spoke to the CA to find out what work had actually been done, and verbally he admitted - not much. The first years had not been completed. So the director decided to try and negotiate.... The CA insists fees are due for last 2 years - client has agreed to pay 50% to get records back.. in installments, CA is insisting Post date cheques (illegal under banking rules so client request SO mandate - CA refuses)
Client worried CA will destroy records. (Small catch, CA is still ex-husbands accountant, & client is fighting for financial support for children - hence client worried CA may destroy records).
When does the client go to the ICAEW? I suggested when it was over, to complain about CA's conduct in this matter. Perhaps it will be too late.
well, not sure about anyone finding it amusing..
..but couple of comments to last poster :
(i) it is not at all illegal to issue post dated cheques. However, be well aware that the recipient could present them BEFORE the date on the cheque, and the bank could legally clear them, without the drawer having recourse to the bank for negligence. So you could end up having funds cleared out of your account long before you expected !! So it may be commercially very inadvisable, but it is not illegal.
(ii) the client should already have gone to the incumbent's professional body, as soon as it became clear the incumbent was hanging onto the company records. (and the incumbent should of course be pursued for any late filing fees caused by his / her inaction). Delay is only going to make the client's case look LESS good. The longer the complaint is left, the more it looks like a spat over fees. At the extreme, if a complaint is left until after "the end" (as suggested), then ICAEW is quite likely to view it as only a spat over fees and not much else. And they will (understandably) do little or nothing about spats over fees. They WILL however bring pressure to bear on someone holding onto client records. So the more you delay complaining, the worse. I believe your recommended timing of complaint is quite wrong - I would go now, without delay.
Do of course make sure you get a copy of the letter of engagement to see what the contract between the client and the incumbent actually is. This in itself should provide ammunition - unless incumbent is going to be able to prove the client's story to you is not quite the whole picture.
Talking of the whole picture - clearly there are unusual personal complications concerning your client's particular difficulties with the incumbent. But suggesting the incumbent may consider destroying the records implies something pretty out of the ordinary (to put it mildly) is going on?
To original questioner, I agree with most of the other postings ; go round, camp on doorstep, write to trading standards, HMRC etc. Previous poster might want to consider those tactics in addition to complaining to ICAEW !!
Dealing with Rogue Accountants
"Dealing with Rogue Accountants" is indeed a more appropriate name for this thread.
They come in all shapes and sizes. I had to report a top ten firm of chartered accountants to the ICAEW some years ago and the firm was told to act more professionally in future. The managing partner was ordered to give me a written apology.
More recently a four partner local firm said that they would respond to my "clearance" letter when the engagement partner returned from his antipodean holiday. Naturally I threatened to report them for being so unprofessional and they then replied immediately; ie there was no excuse for delaying and they were just being silly. These were chartered accountants too, funnily enough.
Be Firm & Proactive
It would be much easier if the former agent didn't have paperwork. Nevertheless, the client should send them a clearly worded letter, advising them of the weak position that the former agent is in regarding retention, disputing the charges as rendered, include a cheque for the amount which is accepted as 'reasonable'.
The letter should then say that the client will refer the matter to Trading Standards, as Robert has previously suggested. Furthemore suggest to the former agent that if they do not accept the amount offered in 'full and final' settlement, they should issue immediately a County Court Summons following which a Defence will be lodged with a view to a District Judge arbitrating.
If the previous agent issues a Summons, but does not cash the cheque, pay that amount into the Court ASAP. Not only do you get 'brownie points' it reduces any interest penalty.
The County Court route sounds scary if you haven't been down that route before but, in reality, its not that scary when, as appears in this case, the former agent hasn't got much of a leg to stand on.
Wrong heading
This should not have been headed "Unqualified Accountants". In my years of (unqualified) practice I have come across rogue, unprofessional and unreasonable accountants both qualified and unqualified. Plenty of advice has already been given in this case. My view is that HMRC and the police are unlikely to be interested, the latter will say it's a civil matter. Best be careful about naming a shaming; it could backfire. A County Court summons for the return of the documents (advisable to have first paid a "reasonable sum") would probably be the most effective manner. And don't forget that District Judges have been in not-dissimilar private practice themselves and know the reality of things.
Unqualified accountants
Presumably, the not even anonymous questioner headed his question "dealing with unqualified accountants" to emphasise that taking it up with a professional body was not an option in this case and that he was looking for other practical steps that he could take.
Some unqualified accountants are awfully sensitive about their lack of formal status!
I am qualified with a practising certificate
I am also very experienced in practice.
Some unqualified accountants may be sensitive about their lack of formal status but some qualified accountants are rogues and others are incompetent.
Sadly...............
Qualified or unqualified, they are all out there and have to be dealt with. There are those you can trust, and those that you can't, those that do, and those that don't.
Accountants, are no different to any other profession or sections of our society.
Important to be QUALIFIED
Hopefully, the IAASA set example to the rest of the world to follow.
The MIA has already set this example for long and I don't see why the rest should not adopt this policy to weed out bogus accountants aka rogue accountants. These BAs and RAs are taking part of our cake and the qualified ones should not share with them.
Wow
I am not qualified (part qualified only) and I always make sure people know that, i wouldnt dream of charging those fees. Ive set up Paye before and charged one hours charge only , the time it takes me,
Im amazed people charge these fees, esp unqualified.