PITA client

PITA client

Didn't find your answer?

we have a client - limited company, one man band professional service provider. bookkeeping and VAT has always been a mess and done by himself

he doesnt have a company car but runs a privately leased car through the business account and reclaims VAT, also reclaims VAT on  multitude of personal expenses through the business

last year was his first year with us and these issues came to light, we advised him to make a declaration of the VAT error and repay the overclaimed VAT. we also advised how to improve his bookkeeping, to stop claiming private expenses or better still to get in a bookkeeper to do things correctly.

he hasnt done anything and has simply carried on as he was, his current year records and VAT are if anything even worse than before!

not really sure where to go from here, and I'm looking for a bit of guidance of how to proceed. I dont really want to get into sacking a client

thanks in advance

Replies (6)

Please login or register to join the discussion.

By petersaxton
23rd Dec 2015 13:23

Sacking is the only option

if you have discussed the issues with them and they have ignored you.

Thanks (0)
avatar
By Discountants
23rd Dec 2015 13:50

Make your problem his problem

Firstly check when last year you made him aware of the errors in the bookkeeping and see if there has been any noticeable improvement since then - which, if he is the sort to bring you the records at the last minuite will probably mean any improvement only takes effect in the last two months of this accounting period.

Regarding the VAT make him aware of your duties under the money laundering act and the procedures that you have for clients which have errors which result in underpaid tax - although we are not members we follow the CIOT guidelines on this (you can download them from their website).

Let him know that these are errors which do have to be put right and that he has not done so since last year.

Refer him to the communication last year where you stated that the bookkeeping would need to be improved - usually when I send this out I also mention that the first year was done without additional fees as a goodwill gesture but in that subsequent years either the records need to be improved or that the client needs to pay us for the work to improve said records.

Offer to put them right for a fee, which he will probably baulk at - then say that you cannot start work until the records are in a satisfactory state.

Basically whilst this sort of client undervalue proper bookkeeping they usually fall into two catagories, and you need to identify which one he is:

They think that the fee for preparing the accounts includes or should include all the bookkeeping and will refuse to pay for the bookkeeping because they feel they have done it fine themselves and know other people just as lax who get away with it.They have no idea what is involved in doing good bookkeeping and equate it to just tapping numbers into a spreadsheet/bookkeeping package without realising that the skill is knowing exactly where to put said numbers and what the potential implcations of these numbers are.

If your client is type 1 then really you will need to quote him for an all-inclusive package, which will probably include a variable element as you cannot know how long the bookkeeping is going to take. If they refuse then your choices are sacking them or working for peanuts/a loss.

If your client is type 2 then I have found the best option is to give them a bit of free training (maybe 30 mins to an hour) showing them just what is involved in proper bookkeeping - once they see just how much checking and knowledge is needed they will either happily improve themselves, hire someone to do it or ask for an all-inclusive fee.

Hope this helps

Thanks (1)
By Moonbeam
23rd Dec 2015 14:03

Have you spoken to him yet about the lack of improvement?

So much depends on his personality. If he's a likeable chap you will have more chance of being able to push him whatever way you consider best.

If he's a difficult character then that's another can of worms.

Thanks (0)
Red Leader
By Red Leader
23rd Dec 2015 14:06

get serious

You have to be really prepared to resign otherwise you're likely to get nowhere. He has to believe you when you tell him "my way or the high way" - in a nice way of course.

Thanks (0)
By ShirleyM
23rd Dec 2015 14:34

We give them a choice

Much like @Discountants. They put the records into good order themselves, or pay us to do it for them. No other option is given. If they won't agree to either option, then we get rid.

We cut them a bit of slack the first year, but always follow this up with written advice as to what they need to do in future years to prevent a big fee increase,

EDIT: we had a similar issue many years ago with a VAT client who did not correct the errors. We eventually got rid as it became clear he never intended to correct them.

Thanks (0)
David Winch
By David Winch
23rd Dec 2015 19:32

Reporting to NCA?

You should also consider whether you now have an obligation to report a failure to correct past errors under MLR 2007 / s330 PoCA 2002.

David

Thanks (0)