Have you had to issue an opinion of high net worth?

Have you had to issue an opinion of high net...

Didn't find your answer?

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)

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By LyneT
07th Jun 2013 17:18

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.

 

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By David Treitel
08th Jun 2013 20:24

You may also think it prudent to speak to your PI insurers to find out if you are covered.

[email protected]

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Replying to D V Fields:
Red Leader
By Red Leader
10th Jun 2013 19:54

still struggling ....

Getting pressure from the client's advisers to provide this as "most of their other clients' accountants have already done so".

What if I ask the client to give me a statement of his assets and liabilities at the relevant date and simply base my confirmation on this? I'm really hating this, it's becoming a major project. The ICAEW have a 20 page (!) technical helpsheet on this very thing.

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Glenn Martin
By Glenn Martin
10th Jun 2013 21:24

Who is asking
For the information.

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By johngroganjga
11th Jun 2013 08:45

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.

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By WhichTyler
11th Jun 2013 10:11

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

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Replying to Glennzy:
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By WhichTyler
11th Jun 2013 10:13

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.”.

 

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Replying to andrew1211:
Red Leader
By Red Leader
11th Jun 2013 11:33

Consumer Credit Order 2007

Thanks for the replies.

My opinion is requested for the purposes of the Consumer Credit Order 2007. For these purposes, H.N.W. is defined as net assets of £500k excluding own residence. The income option is not available for this client.

As johngroganjga outlined, this could be a significant piece of bespoke work, akin to an audit.

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By WhichTyler
11th Jun 2013 12:55

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?

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By ireallyshouldknowthisbut
11th Jun 2013 12:57

.

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".

 

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Replying to lionofludesch:
Red Leader
By Red Leader
11th Jun 2013 13:47

@WhichTyler

No, income's not an option.

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