Client goes in to compulsory liquidation following the loss of a court case. The OR has farmed it it to a very difficult IP. I’ve sent them everything I had (we did the bookkeeping on an excel “cashbook”) and said we kept nothing else, ask the client but they insist that:
a) We must have more than this (we don’t)
b) They want our engagement letter (why?)
c) That we have a contract with the client (we don’t, we had an offer and an acceptance, but we never raised an invoice and we have never been paid anything)
d) Download of all our emails with the client (Why? – Besides, we’re old fashioned, we print them off hard copy and file them in files which makes them a correspondence file and therefore, ours)
Does the IP have the right to our engagement letter, to make us do anything else or our emails? I’ve never heard of this before (even when I was a trainee IP) and it’s a shed load of work for us if he can?
Replies (18)
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The IP stands in the shoes of the client, so anything you would have to give the client if he asked for it you will have to give the IP. But I can't see that that includes letters and Emails between you and the client because obviously the client (i.e. the IP) already has them.
But I wouldn't want to appear unnecessarily awkward. Why not just say that you do not consider a request for copies of your entire correspondence files to be reasonable, but if they would care to frame their request more specifically you will do your best to assist?
If stands in place of client
If the IP stands in place of the client send him an engagement letter to execute which covers the charging cost for copying your correspondence file, if he is so entitled. £250 per hour should be about right.
I find it hard to believe that an e mail/ letter to a client's accountant and a copy of the response from said accountant to the client is the client's records. The client's records are surely those copies of the correspondence that they, the client, kept.
It would be different if you acted in this capacity as agent for the client, say raising invoices on the client's behalf and negotiating /settling transactions on the client's behalf, but in the absence of this sort of activity, if your role was merely to record the client's business transactions, then surely all that can be requested is documents re this that belong to the client, anything beyond this is not the client's property.
Were the members of the LLP entitled to see your correspondence file? I doubt it.
Seems to rest on "employment under a contract for services "
235Duty to co-operate with office-holder.
(1)This section applies as does section 234; and it also applies, in the case of a company in respect of which a winding-up order has been made by the court in England and Wales, as if references to the office-holder included the official receiver, whether or not he is the liquidator.
(2)Each of the persons mentioned in the next subsection shall—
(a)give to the office-holder such information concerning the company and its promotion, formation, business, dealings, affairs or property as the office-holder may at any time after the effective date reasonably require, and
(b)attend on the office-holder at such times as the latter may reasonably require.
(3)The persons referred to above are—
(a)those who are or have at any time been officers of the company,
(b)those who have taken part in the formation of the company at any time within one year before the effective date,
(c)those who are in the employment of the company, or have been in its employment (including employment under a contract for services) within that year, and are in the office-holder’s opinion capable of giving information which he requires,
(d)those who are, or have within that year been, officers of, or in the employment (including employment under a contract for services) of, another company which is, or within that year was, an officer of the company in question, and
(e)in the case of a company being wound up by the court, any person who has acted as administrator, administrative receiver or liquidator of the company.
(4)For the purposes of subsections (2) and (3), “the effective date” is whichever is applicable of the following dates—
[F1(a)the date on which the company entered administration,]
(b)the date on which the administrative receiver was appointed or, if he was appointed in succession to another administrative receiver, the date on which the first of his predecessors was appointed,
(c)the date on which the provisional liquidator was appointed, and
(d)the date on which the company went into liquidation.
(5)If a person without reasonable excuse fails to comply with any obligation imposed by this section, he is liable to a fine and, for continued contravention, to a daily default fine.
Blimey!
He'd make me dig in as well. Don't let the b@$!@rd win.
Send him some documents now - whatever you think is reasonable. If it goes to court, it will look like he is the one being unreasonable which will go well for you with the judge.
Good luck.
Have you got a professional body?
I've had a couple of tedious IP's try to bully me over the past year.
The ACCA helpline have been quite useful in suggesting replies. It also lets you distance yourself from the fray by responding along the lines of "I have turned to my professional body for guidance on how to respond to your request and they suggest..."
Also kicks it down the road by two months for the letter exchange. If you do get into email exchanges then I would take 14 to 21 days to respond. Don't bat things straight back like you would with a client.
Good luck with it.
Tell the IP to book an appointment
Since this irritating jobsworth isn't going to be reasonable with you, I would tell him to book an appointment to visit your office. He can then go through the correspondence file himself in his own time, with minimal cost and disruption to you. You would have technically complied with the request to make the records available to the IP. It is up the IP to decide what is important and how much time he should waste copying stuff.
If he wants you to do anything that sounds remotely like work (such as answering questions) then give him an engagement letter to sign and your hourly charge rate.
Bullies
IPs do often have a difficult job but that is no excuse for bullying.
I have in the past encountered this sort of attitude from an IP (joint receivers actually) which ended in court and I won and was awarded compensation.
IP
From the letter sent to you it would appear that he has this prepared for the regular occurences that it is needed.
It is interesting as I am dealing with the OR at present over a company in compulsory liquidation which results from a director setting up a company in direct competition to the one now in demise.
The OR is seeking a case against the director who appears to have acted wrongly and is building the case. He asked for copies of my files but when I stated that they were voluminous he and a clerk came to my office and spent 6 hours copying,
Not only that he took me for a good lunch and paid.
He is sensible as he knows I will now cooperate.
Bull in a china shop gets you nowhere.
IP
As suggested this seems a stock letter to send to anyone who doesn't jump.
I would respond that, as one accountant to another, you anticipated he would appreciate that you were not refusing to supply information but clarify exactly what may beneficially be provided and, in the absence of a crystal ball, you did not appreciate that the former client had not retained any records what so ever for his inspection. Accordingly your request for specificity was not at all absurd.
I would pass on a copy of the engagement letter (he doubtless wants to see what roles you were 'contracted' to under take assuming the client actually signed the letter) and then state that there is no 'apparent lack of understanding' and your files are available for inspection and copying at your premises if he would be kind enough to make an appointment. Alternatively you will be happy to pass the records to your solicitor for him to inspect there instead.
copying at your premises
Is it worth saying that he can not remove the files from the office and that if wishes to use your copying facilitites it is 5p a side for B& W and 15p a side for colour.
It appears this could be very expensive for you otherwise.
I like DJKL's suggest of Terms of Engagement.
I suspect that his refusal to complete may be viewed by the Court as being obstructive.
awkward bully
Sounds like he is one.... Your correspondence file should just contain your office copies of correspondence already sent to the client, tell him he should really ask the client what he's done with them , and S 234/5 mentions "reasonableness" if you think he 's not being reasonable, tell him... at the end of the day you want to co-operate and there are some good points made in the above posts to reign him in a little
ps you say you sent the excel cash book, but you must have some sort of extended trial balance or working paper showing the trail from books of prime entry to final accounts (which belong to client) , so maybe this is what he is alluding to ?
dont be intimidated
face in him court , and remain cool, seem reasonable .. get the judge on your side.. tell him you have supplied all the records belonging to the client .. your file is your property being the office copies only ... and don't forget to ask for costs
ps
perhaps ask why he hasn't pursued the client for these records, after all you provided the client with them, .... he's after you as the easy target because he's lazy .. tell the judge