A couple visited our office today asking for help. Seems they have deliberately understated self employed profits in one tax return for six years, what makes it worse is that they produced full set of 'reported to HMRC' figures and the real figures.
The business should have been VAT registered around 4 years ago based on the real numbers, and they have declared around half of the real profits. I am aware of what I need to do if they don't decide to come clean, however, would you accept the appointment or not?
I estimated an annual bill to HMRC Of around £8-£10k each year, not including interest and penalties for them.
Any words of wisdom would be appreciated
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Probably not reportable to the NCA
Assuming your firm satisfies the criteria of s330(14) PoCA 2002 then it is most likely not reportable to the NCA under MLR 2007 / s330 PoCA 2002 as the information they have provided to you will be covered by 'PoCA privilege'.
See this recent thread for a full discussion.
If you are competent to deal with the case there does not seem any reason why you should decline to act.
David
Just curious
As David said if you are competent to deal with the case, then there shouldn't be a problem.
If it was me, I would want to be sure I trusted them before taking the case on. If I feel that a potential client is fudging or not telling the "whole" truth, I tend not to take them on.
Just curious, why are they coming clean now?
To the OP
A couple visited our office today asking for help
What is not clear is why is this couple making the confession before you? Is this a referral from an existing client? That said there is nothing wrong taking up a client having problems with their tax affairs; however do make sure the engagement letter addresses all your potential concerns.
I think
Taxguru......one of their self employed people had a call regarding Business records, and HMRC are now coming out to visit the self employed individual. The people that came to me run the salon. They provide the self employed people with their details for their tax return....
They are extremely worried and upset, as they should be!
They came to me because my husband handed in my card to them six years ago when he used their services. Are you implying that perhaps I have dodgy clients who have referred them? If I have any concern whatsoever about a potential client, I don't engage.
I think they were implying that if they'd been recommended by a friend that they'd 'trust' you more from the word go to explain their situation than someone they'd not heard of and/or had a recommendation for. Not that you have a dodgy client base.
No I'm not
Are you implying that perhaps I have dodgy clients who have referred them?
No, I'm not.
From your OP it wasn't clear what made them decide to come clean all of a sudden.
Agree with the above. No
Agree with the above. No reason why you shouldn't help them to the best of your ability, but my main concern would be keeping them out of jail. How would you be introducing the new figures to HMRC and what action would you be taking to ensure that the settlement was wholly civil?
Hairdressing salon?
and six years at (say) £10k plus interest, penalties and VAT....interesting.
I don't think there was any suggestion about 'dodgy clients' though; seems like your client was duped too.
Providing they have the resources to pay you up front, I see no reason not to take the appointment.
Honesty and prudence
If you believe they genuinely wish to come completely clean, there is no reason you should not act for them. Their honesty being somewhat belated is no reason that they should be denied professional help in correcting matters. If you think the "real" figures may just be sufficient adjustment to keep HMRC happy, step away.
But, if you do take it on, insist on payment in full up front. With the amounts you are talking about, their attack of conscience could evaporate. They still might choose to bury their heads in the sand and hope this enquiry does not get to them. An MLR report won't recompense you for the time spent.
get away with what?
You have declined the work, the other guy might actually be well placed (in terms of his experience) to deal with it.
Sour grapes?
Dodged a bullet
Well done. You've dodged a bullet, Bor2903! From your initial query, it sounded (to me) like you had a gut feeling that something was not quite right.
Imagine how much worse it could have been if you were half way through the work and they found this new guy.
Have a great weekend.
The grass isn't always greener
A dodgy accountant has no scruples, and any client asking a dodgy accountant to represent their dodgy dealings is likely to be ripped off by the dodgy accountant who wants his share of the booty.
I doubt the help would extend to an enquiry though, and can imagine the dodgy accountant would plead ignorance of the facts and leave the client to take the full blame.
Leastways, that is what I think may happen, and it all makes perfect sense (to me!).