Ex-client records - can I destroy them?

Ex-client records - can I destroy them?

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I advised a client that, due to his refusal to pay my fees, I was going to exercise a lien over his (sole trade) records. I had been paid on a couple of invoices, but not the third one (£500+VAT). However, more than two years later, the records are still here and cluttering up valuable storage space. I have no intention of returning them if I am not going to be paid, and I think he may have moved away in any case. The last exchange of correspondence involved him threatening to take my firm to Trading Standards, and me replying to tell him I was happy with everything that I had done, and pointing him to my engagement letters!

The quality of the records was pretty dire, and his tax returns were already overdue when I took him on, but I am prepared to give most prospective clients one chance to reform so I took him on. By the time we parted company, he was under HMRC enquiry, and I am pretty sure that he would have not have dealt with them on his own (and there has been no professional clearance request from a new accountant) so the enquiry is probably still open. There is no current 64-8 on file to allow me to check.

So, what can I do with the records now? My preference would be to write to his last known address(es) by recorded delivery to advise that, unless he collects the papers and settles the fees, I intend to have everything sent away for secure destruction after 28 days.

Replies (15)

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By mrme89
20th Feb 2014 13:38

I don't see the problem. Either: -

(1) Return the records and sue for the remaining debt.

(2) Keep them and let them gather dust as they are doing now.

 

 

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Stepurhan
By stepurhan
20th Feb 2014 13:53

Having cake and eating it

The problem you have is that you have exercised right of lien. Insisting on keeping the records, and then complaining about having to keep them seem in conflict.

That said, if you are more than two years later then you are past the point that HMRC requires records to be kept. If you were still within that period then I would be wary about destroying them under any circumstances. As it stands, I see nothing wrong with your idea of sending a letter giving 28 days notice. Provided you have informed them of the intention to destroy the records and given them reasonable time to forestall that action you should be covered.

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Replying to andyjdicker:
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By B Roberts
20th Feb 2014 14:15

Sorry to hijack .....

stepurhan wrote:

The problem you have is that you have exercised right of lien. Insisting on keeping the records, and then complaining about having to keep them seem in conflict.

That said, if you are more than two years later then you are past the point that HMRC requires records to be kept. If you were still within that period then I would be wary about destroying them under any circumstances. As it stands, I see nothing wrong with your idea of sending a letter giving 28 days notice. Provided you have informed them of the intention to destroy the records and given them reasonable time to forestall that action you should be covered.

..... I thought that a sole trader was required to keep their records for 6 years (or 5 years from the deadline from submission, or whatever the technical phrase is) ?

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Replying to Portia Nina Levin:
By mrme89
20th Feb 2014 14:17

HMRC Extract

B Roberts wrote:

stepurhan wrote:

The problem you have is that you have exercised right of lien. Insisting on keeping the records, and then complaining about having to keep them seem in conflict.

That said, if you are more than two years later then you are past the point that HMRC requires records to be kept. If you were still within that period then I would be wary about destroying them under any circumstances. As it stands, I see nothing wrong with your idea of sending a letter giving 28 days notice. Provided you have informed them of the intention to destroy the records and given them reasonable time to forestall that action you should be covered.

..... I thought that a sole trader was required to keep their records for 6 years (or 5 years from the deadline from submission, or whatever the technical phrase is) ?

 

 

How long to keep your records

You must normally keep your business records for another five years after the online tax return deadline of 31 January, in case HMRC decides to check your return. The same date applies even if you've sent in a paper tax return.

An example

The tax return deadline for an online 2012-13 return is 31 January 2014.

You send your tax return in before this deadline.

You need to keep your records until 31 January 2019, five years later.

But if HMRC send you, or you send back your tax return very late, you may need to keep your records for longer. You need to keep them until the later of:

five years after the 31 January tax return deadlinefifteen months after the date you sent your tax returnIf HMRC has started a check

You may need to keep your records for longer if HMRC has started a check into your tax return. In this case you'll need to keep your records until HMRC writes and tells you they've finished the check.

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Replying to Portia Nina Levin:
Stepurhan
By stepurhan
20th Feb 2014 14:27

Inconsistent HMRC

B Roberts wrote:
a sole trader was required to keep their records for 6 years (or 5 years from the deadline from submission, or whatever the technical phrase is) ?
The page I was looking at earlier only showed 1 year. I thought that was a bit odd, but presumed there had been a change I didn't know about.

http://www.hmrc.gov.uk/sa/record-keeping.htm#3

The 5 to 6 years is more in keeping with my recollection, and is indeed shown on another HMRC page.

http://www.hmrc.gov.uk/sa/rec-keep-self-emp.htm#5

Of course, HMRC will claim that the individuals on the first page is clearly not referring to sole traders. I suspect that most sole traders seeing this page are likely not to realise that. Indeed, just skimming the page (though I admit the specifics are in the opening paragraph now I have read more carefully) I clearly didn't spot the distinction myself.

Also, is that correct? If you do not have a self-employment, do you really only need to keep records for a year after the deadline.

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By Andy Reeves
20th Feb 2014 14:12

Yes, I want my cake

You are quite right, in that I do want the best outcome for me, i.e. payment AND offloading the records, but I am prepared to accept not being paid for getting rid of the papers as long as this doesn't do any favours to the ex-client. I don't believe that giving 28 days notice would be unreasonable, but just wanted to sound out our community to see if anyone had any ideas or experience of a similar situation.

I can't rely on being out of time for the HMRC record keeping point, as there was an active enquiry two years ago. In an ideal world, I would just parcel everything up and ship it to HMRC, but I am quite well aware that I can't do that.

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Euan's picture
By Euan MacLennan
20th Feb 2014 14:17

Just a thought

If he has moved away, your letter sent by recorded delivery will be returned in a month's time marked as "gone away" and you will be no further forward.

If you are still appointed as his agent, just try checking SA Online to see if it is showing a new address.

Otherwise, do you have his mobile number or e-mail address?  Better to contact him that way than fail to contact him in writing.

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Replying to allan613:
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By SThornton
20th Feb 2014 14:39

.

Euan MacLennan wrote:

If he has moved away, your letter sent by recorded delivery will be returned in a month's time marked as "gone away" and you will be no further forward.

If you are still appointed as his agent, just try checking SA Online to see if it is showing a new address.

Otherwise, do you have his mobile number or e-mail address?  Better to contact him that way than fail to contact him in writing.

 

Following on from Euan, I am assuming that as he is a sole trader, he will need to advertise his trade somewhere to gain clients and you could get his contact information from that.

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Image is of a pin up style woman in a red dress with some of her skirt caught in the filing cabinet. She looks surprised.
By Monsoon
20th Feb 2014 14:39

What is the point of having cake if you can't eat it?

If anyone has cake and doesn't want to eat it, I can PM you my address ;-)

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By ted.henderson
20th Feb 2014 14:57

Add storage fees. (Then you can write off a much larger amount when you accept that he's not going to pay you).

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By Andy Reeves
20th Feb 2014 15:47

Keep the suggestions coming...

Yes, the six year rule applies to sole traders too, but in any case the open enquiry trumps that, so whatever the time required to retain the records, it is effectively indefinite due to the enquiry, and I have no way of knowing whether or not the enquiry has been closed down.

Our engagement letters (based on ACCA templates), simply state that we will destroy documents which are more than seven years old (unless of continuing significance - which they would not be, to us), so they are not of much help in this case.

Euan: There is no current 64-8 and he is not showing on our online client list on the HMRC website - already thought of that. A Google search shows a business at his last known home and business addresses, but they could be out of date databases. He did have a company registered at the business address (which he initially insisted was used for the trade, but all of the evidence pointed to the contrary) but that was struck off two years ago, having filed no accounts. He couldn't even spell the words in the company name correctly!

Caeser: He is just the type to blame all and sundry for his failings. We have a very damp basement which is where papers will be going if I can't get shot of them.

Ted.H: Chuckled

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Replying to JDBENJAMIN:
Stepurhan
By stepurhan
20th Feb 2014 16:03

Actually some harm

Andy Reeves wrote:
Our engagement letters (based on ACCA templates), simply state that we will destroy documents which are more than seven years old (unless of continuing significance - which they would not be, to us), so they are not of much help in this case.
I appreciate you want the best result out of this (being paid and getting your money) but you have shot yourself in the foot here.

If the agreed terms say you will destroy records after seven years, destroying them earlier would seem to be contrary to those agreed terms. You might argue that they have already breached the terms by not paying you, invalidating the contract, but you are open to a counter-claim because of this term.

As I said before, you only have the records because you exercised lien. Presumably the records would already be back with the client if you had not.  I do understand why you did it and I sympathise with your position. That doesn't change the fact that you are only in a position to destroy the records because you elected to retain them. If the client had abandoned them, that would be a different matter. With the exercise of the right, I feel you have also given yourself the responsibility of not destroying them needlessly. Seeking to do so just because they are now inconvenient to you is not likely to be a good defence if it ever comes to a court dispute.  

 

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By zebaa
20th Feb 2014 16:16

Scan ?

My only suggestion would be to scan them & then destroy the paper. Depends on the volume of paper, I suppose.

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By Andy Reeves
20th Feb 2014 16:31

Stuffed, I think

Stepurhan: I regret, that you are probably correct, but I was hoping for the community to give me an alternative. So, the damp basement it is then. I might ring ACCA to see what they say.

Zebba: Too much paper to scan.

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Stepurhan
By stepurhan
20th Feb 2014 17:09

Sorry to be gloomy

I'd really like to be able to say that you could set the records on fire and throw them through his front window (verifying the address was correct first of course). Sadly, whilst not what you would prefer to hear, more gloomy advice that could save you grief in a dispute seemed more appropriate.

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