So, we pointed out to a client that it was inappropriate for his domestic staff to be paid through the payroll of one of his companies without a director's loan account or benefit in kind adjustment.
The company - having thrown their toys out of the pram when we pointed out the risks - is now advising that it wants to move to a firm of accountants 'better suited to its needs'.
Do we warn the incoming accountants of this disagreement?
Presumably there's a limited value MLR report to file too.....
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Replies (5)
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Personally, I would want to be told
I would submit a report to SOCA, as the client has refused to allow you to correct the situation.
I would telephone the new accountants and explain the client is rather 'eccentric' in his outlook on claimable business expenses and has refused to take your advice!
Also, I wouldn't wait for him to jump. If he won't let you do the work properly I would kick. Do you really want a client that would put your reputation and livelihood in jeopardy to save himself a few quid of tax that he should pay?
Limited value?
Why do you think this is a 'limited value' report, rather than a full report?
David
Yes
Assuming that the incoming accountants send you a professional enquiry (AKA clearance) letter, it is exactly the "professional or other circumstance" of which they should be made aware before deciding whether to accept the appointment. Do not tell them that you have made (or even intend to make) a report to SOCA, but you can give chapter and verse on the underlying circumstances, without any need to disguise it as "eccentric".
Thank you
Thanks all - it's particularly frustrating, because he is usually a pragmatic individual, and doesn't mind paying his way. He just believes because he hosts the occasional dinner/meeting that these payroll costs are justified. :-/
And thanks David - yes, limited value was just lazy thinking on my part.
Inappropriate?!!!
It is illegal and fraudulent if they are not disclosing the extra tax due in the full knowledge that they should be.
Inform them in writing of their legal obligations and if they refuse to do anything about it, get rid of them toute-de-suite in accordance with your professional ethical guidance.
Then do a SOCA report and inform their new accountant of why you have resigned when he asks for professional clearance - with the client's written consent of course (although you probably won't get it).
Then breathe a sigh of relief that you will never have to deal with them again. This sort of client we could all do without.