Problem with previous agent

Problem with previous agent

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I have recently taken on a limited company client and have had significant problems obtaining information from the previous agent.

It appears he is not a member of any institute.

I was unable to obtain from him all the information I requested (including an opening trial balance). With the information I did receive, there were 3 different sets of final accounts - one client copy, one HMRC copy and one abbreviated copy for Companies House. None of them matched up.

Further digging when trying to prepare some draft accounts has uncovered some serious problems with this agent - he has put through a goodwill entry even though the business was started from scratch and there are costs included in the profit and loss account, which are significant, that appear to have been created to reduce tax. He also has advised the client to file nil VAT returns to avoid surcharges and include 6 months figures on the next one (and I have an email showing this advice). 

My client is happy to rework the back years and correct the tax payable. He also did not take the advice of filing nil VAT returns. But I wondered what action I should take, if any, with regards to the agent.

I assume HMRC would be interested in his poor conduct and advice. And if the advice is that I should report him, is there any formal mechanism for doing so?

Also, does anyone have any advice for actions my client should take against this agent.

Thanks all

Replies (7)

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By johngroganjga
17th Apr 2013 11:35

If he is not a member of a professional body the only available option is an action for negligence / breach of contract, but then only if your client has suffered a financial loss as a result of the negligence or breach of contract.  Your professional fees for putting matters right might fall into that category.  Legal advice is obviously the next step.    

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By Robert Hurn
17th Apr 2013 11:47

SOCA Report

I think that the deliberate incorrect VAT returns and what you appear to believe are false charges to the P&L require you to file an SAR

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Replying to DJKL:
By johngroganjga
17th Apr 2013 11:56

With care

bobhurn wrote:

I think that the deliberate incorrect VAT returns and what you appear to believe are false charges to the P&L require you to file an SAR

But with great care as the incorrect accounts are the client's not the agent's!  We are told that advice to submit incorrect VAT returns was not taken. Not sure if offering advice to commit an offence is in fact an offence.

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Replying to memyself-eye:
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By Top adder upper
18th Apr 2013 11:40

Hi Basil and all respondents

I am a member of the ACCA and my firm is an ICAEW firm - I look forward to your response.

 

Thanks

 

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Replying to Duggimon:
By johngroganjga
19th Apr 2013 12:05

ICAEW free legal advice helpline

fawltybasil2575 wrote:

In addition, your firm should use its membership of ICAEW for formal legal advice.    The ICAEW now has a free legal helpline for members ( albeit operated by a private firm of solicitors). 

 

 

The party needing the advice is the client not the firm.  As a matter of interest, does the free legal helpline (which I am not familiar with) allow members to obtain free legal advice for their clients?

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By Top adder upper
18th Apr 2013 14:55

Thank you Basil - I have already notified my MLRO, but will now contact the ICAEW.

Many thanks again

 

 

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By Roger.Thornton
18th Apr 2013 16:11

Notifying HMRC

“I assume HMRC would be interested in his poor conduct and advice”

 

I doubt they would take the slightest notice. We reported a business which had defrauded HMRC of about £40k in VAT. Two years later they are still continuing to defraud HMRC to the tune of around £40k a year.

I came to the conclusion years ago that reporting anything is actually a complete waste of time. By all means file a money laundering report, just to cover yourself, but don’t expect anything to actually happen – it won’t.

Your best course of action is to regularise the client’s position, then take legal advice as to whether a claim for the costs incurred would succeed against the previous accountant.

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