I've been asked to say that in my opinion my client has net worth of at least £x. Based on my knowledge of his affairs, I'm confident that he is very comfortably above £x.
However, the more I look at this, the more doubtful I am that I can sign the declaration. A statement of assets and liabilities is not part of the personal tax work that I do (the client is non-business, so no accounts). What do I base my opinion on objectively? I'm not qualified to value property of which he has a substantial amount. Income confirmation is much more straightforward, I can simply confirm "income as per the tax return". But the net worth is as per ... what? A further complication is that the form asks for confirmation of net worth being at least £x throughout 2012/13 rather than just at the year end.
Any insights, anyone? I really want to refuse to sign but if other accountants are signing these things, I'm going to look a bit sad.
Replies (11)
Please login or register to join the discussion.
Most of my clients are what would be referred to as HNW but I have never been asked to, nor would I sign anything confirming their net worth.
For a start, you may know his assets, but do you know his liabilities? Do you know how many bank loans he has, do you know any HP he has?
As you say, you are not qualified to value property.
Anyway, "net worth" would be different for different purposes. eg it might mean net worth at death, net worth if he divorced. etc.
If I was asked to do this, I would say eg what his income is, what you believe his assets are, etc
I would go no further than this.
You may also think it prudent to speak to your PI insurers to find out if you are covered.
The issue here is with the completeness of what a client gives you to verify.
We can ask a client to provide us with a list of all his assets and liabilities. We can then verify the existence and accuracy of each and every item on that list by asking for supporting documents and / or obtaining direct independent confirmation from the custodians of the assets and the creditors.
We can then state to whoever we are asked to report to whether the items on the client's schedule are accurately stated. There is no problem with that. It's analogous to what many of us do as auditors all the time.
What we can never do of course is verify that the client's list is complete. It is not within human power to do such a thing and lenders who rely on reports from accountants who purport to be able to do so, are fools, as are the accountants in question.
Not what it seems perhaps...
We all think of 'net worth' as a balance sheet measure, but the FCA (which may be why your clients advisers need it) has an income measure as an alternative, of >£100k in the 12 months preceeding the promotion
Note that it is the individual who has to sign it, not their advisor, so perhaps you can just ask your client for the information and then tell him that he meets the criterion
From http://fshandbook.info/FS/html/handbook/PERG/8/14
Fulle definintion: A certified high net worth individual is an individual who has signed a statement in the form prescribed in Part I (Statement for certified high net worth individuals) of Schedule 5 to the Financial Promotion Order. This requires the individual to certify that he has earned at least £100,000 or have held net assets to the value of more than £250,000 throughout the financial year before the date of the certificate. Where the financial promotion is an 5 outgoing electronic commerce communication 5, the earnings or net assets may be of an equivalent amount in another currency. For the exemption to apply, the certificate must have been signed within twelve months of the date on which the communication is made. The validity of the statement is not affected by a defect in its wording or form provided the defect does not alter its meaning or involve failure to place certain paragraphs in bold.
Confirmed here: http://www.icaew.com/en/technical/financial-services/dpb-licence-and-fsa-authorisation/is-it-investment-business/financial-promotions-article-3
PS
If it is for this purpose, it's worth noting the warning that has to accompany the self-certificate: '“The content of this promotion has not been approved by an authorised person within the meaning of the Financial Services and Markets Act 2000. Reliance on this promotion for the purpose of engaging in any investment activity may expose an individual to a significant risk of losing all of the property or other assets invested.”.
One last try
the statutory form here: http://www.legislation.gov.uk/uksi/2007/1168/schedule/2/made
has net income of >£150k as an option. Any use? Or is it not an option because he is on relatively low income?
.
Have you got an audit cert? Just wondering if the ICAEW will actually allow you to do this without one as this is an opinion and not just a statement of fact as you would make with a mortgage reference. Might be worth checking that first before getting to embroiled in the detail.
By the way every sympathy with you on this as I imagine its a huge amount of grief so far, on what the client probably thinks is "just a quick letter".