The debt is old and i cannot get any sense from the client, ie just lies about having sent a cheque twice.
Is it ok to say i will not start work on 04/05 until payment is made?
What is my position if this results in penalties for late filing etc?
Andrew
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Its not the sending, but the receiving....
of the cheque that is important. Since he states he has already sent you a cheque (twice) he is "obviously" willing to pay you!!! (Well, he has no excuse now does he?) I would go round, ask him face to face for another, and undertake not to bank either of the original cheques if they ever show up! He can put a stop on them (if he ever did issue them, can't he?
One way or another, you are going to find out the true situation this way, aren't you?
Vicious Circle; Cut Your Losses NOW!
Moving on, even if they do agree to pay, this can usually end up with an installment agreement if they dont have the means to repay in full. The regular amount repaid in this way can sometimes be so measely so as;
1. To take up more of your time again, and again, in ongoing administration charges keeping tabs on the debt. This, after the legal hassles of getting to this stage in the first place ; and
2. You never seem to feel the economic benefit of having successfully completed the work for them in such circumstances in any case. Stress and demotivation can then result.
I would recommend that you just hand the matter over to a professional debt collection agency. However, some of them are better than the debtor in their procrastination and inertia and it really does make you cynical.
Combo deal
Tell the client that you can't do any further work without payment and that any fines incurred as a result are their problem (hopefully thus spurring them onto pay) then if they do pay tell them (once the cheque has cleared) to go elsewhere. Might be a bit unethical but if they don't pay you've not done any more work, and if they do you're quids in. And like Nicola says, you're better off getting rid long term because if they don't want to pay this time why would the future get better (unless you can get full payment in advance for next time)
Engagement Terms
Do you have a letter of engagement that confirms the services you provide and the terms of payment. If there is, it sounds like your client has breached the terms.
In any event, I would write to your client confirming that your fees are outstanding and you will not commence any further work until these fees have been paid in full. I would also consider asking for a deposit against future work given the history. Finally, I would set a timescale for payment, say 14 days, after which you will take action to recover the debt.
Don't worry about losing the client. If he doesn't pay you don't want him.
Send him elsewhere
I know its tempting to do your best for all clients particularly when you are trying to build a practice. However those that wont pay, and waste your time, really arent worth your time or efforts. I'd tell him to find some other accountant asap. It is demoralising having clients like this individual and you will get alot better if you provide a good service.