Client Disengagement

Client Disengagement

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Hi,

I am currently in practice but I am disengaging all of my clients and ceasing to practice. I have a Limited Company client for which I have prepared and billed for the year end (March 2014) but I have not yet filed the accounts. The reason for this is that the sole director has an overdrawn loan account and I was waiting until nearer the 9 months after year end mark to see if the company can afford to vote a dividend to cover the overdrawn figure. This would then mean no S455 tax, which is obviously desirable for any director but especially this one as he is very awkward and hates paying any type of tax. My problem now is that I won't be acting for him at the 9 month mark and I would rather get the accounts filed now. I'm not sure what to do in this situation, should I file the accounts stating the loan account has been paid off or file them with the outstanding S455 tax?

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By Duhamel
15th Aug 2014 21:41

Can't comment on the accounts
But you could file the ct600 showing the liability, assuming the client consents etc.

If it turns out that the loan is repaid by dividend within 9 months then advise the director to have his new accountant file a revised return.

The tax isn't due before 9 months passes after the year end anyway.

If the loan isn't repaid because the company cannot afford the dividend then you have already filed the correct return, so no harm and no foul.

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By JohhnyG
15th Aug 2014 22:36

This issue was not of your making.
Set out his options being;
Vote additional dividend (possibly pay HR tax)
Put money back in company
Vote dividend and reduce withdrawals from company to avoid hr
Set time frame for mutual agreement of selected option.
Ensure your files have evidence of adequate profits if dividend route selected.
Notes of all meetings,conversations etc to be kept.
Ultimately protect your own Position and you have the perfect example in how will the new accountants view your treatment

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By Howard Marks
16th Aug 2014 10:06

Just out of interest
Could you not have sold/transferred the fees instead of disengaging?

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