Do I walk away from these accounts?

Do I walk away from these accounts?

Didn't find your answer?

I have a new client which I have taken on for personal tax and a Ltd company.  The accounts were due in Dec 2015, but she has only just sent me the bank transactions.  I requested these even though the company is no longer trading and what I can now see are two large deposits in the bank and then being paid out in 6-7 lump sums.  The client says these relate to pensions, but has not provided any evidence of these.  An extension from companies house has been granted with the end of Feb as the new deadline.  The whole set up feels wrong to me and even with rep letters I do not want to sign off these accounts.  Would you walk away and lay out to the client why?

Replies (19)

Please login or register to join the discussion.

By johngroganjga
05th Feb 2016 08:03

I am not sure what your problem is.

The accounts are going to be late but is doesn't sound as though you are in any way responsible for that.

Yes you need the client's explanations of the company's transactions in order to be able to prepare the accounts. And you seem to have asked for those explanations. So why would you walk away?

Thanks (2)
Me!
By nigelburge
05th Feb 2016 08:00

Why walk away?

You have a month. Plenty of time to ask the client for chapter and verse on all information you need to complete the accounts and insist it is received BY RETURN or you will not be able to file by the end of the month. Her loss if she doesn't comply, not yours.

Also, you don't have to "sign off" the accounts. There is no requirement to. As long as you are satisfied that you are not in any way complicit in any mis-statement, why agonise over this.

You have plenty of time to do the job - just be very firm with the client and if you suspect jiggery pokery, ask for a substantial fee up front as well. If she won't play ball and is fined - so what?

Some new clients really don't have the first idea what they are doing and just need a very firm hand. They often then turn into very good clients.

Thanks (0)
avatar
By andyjdicker
05th Feb 2016 08:11

I'd be very careful with pensions

I'm always wary of 'pension' payments from Ltd companies. I'd always want some proof of them being company contributions and not personal contributions.

Thanks (0)
By birdman
05th Feb 2016 08:27

It's the bankings

.that are the problem, I assume you are worried they may be taxable income whereas she's suggesting they are not. I struggle to think what a pension Company could be paying to a Limited Co other than a refund of contributions, where perhaps tax relief was claimed when paid? Don't walk away but insist on backup paperwork, she's got a month to provide it, and the amounts are large so she's unlikely to have "lost" it; copies could be obtained if so, I'm sure.

Thanks (2)
Replying to bernard michael:
avatar
By andyjdicker
05th Feb 2016 08:41

Cont

birdman wrote:

.that are the problem, I assume you are worried they may be taxable income whereas she's suggesting they are not. I struggle to think what a pension Company could be paying to a Limited Co other than a refund of contributions, where perhaps tax relief was claimed when paid? Don't walk away but insist on backup paperwork, she's got a month to provide it, and the amounts are large so she's unlikely to have "lost" it; copies could be obtained if so, I'm sure.

 

Isn't it the payments out which are the pension stuff which the OP said. Presumably the client arguement is that there's income, matched by company contribution pension expenses which lead to no profit, but then the client says it's not trading, so there's no income. That seems very dodgy to me, unless its somehow 'all' personal pension things which all goes through a DLA.

 

Thanks (0)
Me!
By nigelburge
05th Feb 2016 08:50

Probably not dormant anyway.

Companies House defines a company as being dormant,

“…if it has had no ‘significant accounting transactions’ during the accounting period. A ‘significant accounting transaction’ is one which the company should enter in its accounting records.”

The only allowed transactions of a dormant company are:

Payment for shares taken by subscribers to the memorandum of associationFees paid to the Registrar of Companies for a change of company name, the re-registration of a company and filing annual returns; andPayment of a civil penalty for late filing of accounts.

Just tell the client that it isn't dormant and will need the accounts prepared accordingly. It is probably a micro-company so you don't have a lot to do. Accounting software will virtually do it all for you anyway.

 

Oh, and either get paid up front or get her agreement in writing to your fees before you start the job.

 

BUT..........  If she insists in regarding it as dormant, then not a lot you can do except put your advice in writing, wave her goodbye and probably breathe a sigh of relief!

Thanks (0)
avatar
By Andp
05th Feb 2016 09:01

I am interested to know please ,what sort of excuse this dis organised client gave companies house in order to obtain an extension ?

Thanks (0)
avatar
By hjhooper
05th Feb 2016 10:24

Thanks for all the suggestions/feedback.  I just asked Companies House for an extension which was granted.

My worry is that the company has not traded, but there are all these transactions going on which are nothing to do with trading.  My instinct is to put everything through DL, but I am just going to go back to client with a list of transactions and ask for evidence otherwise I cannot prepare accounts.  Hopefully this should reveal whether they are indeed taxable income either personally or for the company.

 

 

Thanks (0)
Replying to Paul Crowley:
By johngroganjga
05th Feb 2016 11:15

Exactly

hjhooper wrote:

... but I am just going to go back to client with a list of transactions and ask for evidence otherwise I cannot prepare accounts.

That's exactly right. Much better for your client and (if you are careful) your bank balance than leaving her in the lurch with no good reason.   

Thanks (0)
avatar
By rumpelstiltskin
05th Feb 2016 11:09

If it has an open bank account

then the company cannot be dormant.

Thanks (0)
Replying to scubajoe:
Me!
By nigelburge
05th Feb 2016 12:47

Not quite

rumpelstiltskin wrote:

then the company cannot be dormant.


See above
Thanks (0)
Replying to Mr_awol:
avatar
By rumpelstiltskin
05th Feb 2016 21:58

Yes

nigelburge wrote:
rumpelstiltskin wrote:

then the company cannot be dormant.

See above
I see were you are coming from, but it is very limited as to wehat can go through company's bank account.
Thanks (0)
Replying to Paul Crowley:
By cheekychappy
05th Feb 2016 22:17

Anything

rumpelstiltskin wrote:

nigelburge wrote:
rumpelstiltskin wrote:

then the company cannot be dormant.

See above
I see were you are coming from, but it is very limited as to wehat can go through company's bank account.

 

can go through a limited company bank account. 

Thanks (0)
Replying to scubajoe:
By johngroganjga
05th Feb 2016 13:11

Dormant

rumpelstiltskin wrote:

then the company cannot be dormant.

It depends whether any transactions go through it, and what they are.

Thanks (1)
Replying to scubajoe:
RLI
By lionofludesch
06th Feb 2016 08:51

What ?

rumpelstiltskin wrote:

then the company cannot be dormant.

Of course it can.

Not that it applies in this case.  There are clearly transactions going on.

Thanks (0)
By petersaxton
06th Feb 2016 02:00

Has the OP changed the question?

People are going on about a dormant company but the OPs question doesn't mention a dormant company.

Thanks (0)
Replying to Falcon:
Me!
By nigelburge
06th Feb 2016 02:52

Quite!

petersaxton wrote:

People are going on about a dormant company but the OPs question doesn't mention a dormant company.

But I think we all assumed (perhaps wrongly) from what the OP said that the client thinks it can be regarded as dormant.

Thanks (0)
Replying to Falcon:
By johngroganjga
06th Feb 2016 08:17

Dormant

petersaxton wrote:

People are going on about a dormant company but the OPs question doesn't mention a dormant company.

"Dormant" is the first word in the subheading, which doesn't reproduce in the thread itself.

But I agree that whether the company is dormant is not really the issue. Plainly it isn't, and the OP is not suggesting that it is.

Thanks (1)
avatar
By Matrix
06th Feb 2016 08:25

What does she want to do with the company?  If it is no longer trading you could just default on the accounts and let the company go.  You would need to prepare some sort of accounts to the period to the cessation of trade and the CT600 for that period for HMRC and obviously include any personal tax on her tax return.  So yes you need to sort out the transactions but you don't need to submit anything to Co House if company no longer required. 

Thanks (1)