Potential client and undeclared cash sales | AccountingWEB

Potential client and undeclared cash sales

I met a potential client yesterday, and during the course of the meeting it emerged that he did the 'occasional' cash sale and these were not included in the turnover. My response was that I wouldn't/couldn't accept clients who were evading tax. He then said that in future he would declare all income, but the trust has gone before it ever got chance to develop. I can't do with the hassle, as I will always be wondering what else he was up to, so the appointment, if requested, will be declined.

My query is .... do I need to report under MLR? All I have is the potential clients word that he has done this in the past. I don't know whether it is true, or whether he was just testing my own honesty.

billgilcom's picture

Yes but    1 thanks

billgilcom | | Permalink

Well you certainly have a suspicion that the individual was evading tax and it came to you by way of business.

However why decline the client if he has been forthright with you right at the start of your relationship and both instructs you to disclose matters (make his disclosure to HMRC)  and undertakes to declare full turnover whether cash or cheque etc from here on in. How many of your clients do you have that haven't told you about their cash sideline or cash spending that they forgot to enter in the records.

ShirleyM's picture

Uneasy feeling

ShirleyM | | Permalink

We didn't discuss disclosing previous cash jobs, and I don't know the answer to your question about other clients having cash sidelines, other than to say 'none that I am aware of'.

There were other aspects to the conversation that make me feel this particular client would be a load of hassle. Things haven't been done right in the past (aside from the cash jobs). 

Daffy Duck's picture


Daffy Duck | | Permalink

I think you are a bit naive if you think that none of your client's do the occasional back pocket job.

I doubt there is a bricklayer -plasterer -electrician -plumber -car mechanic - etc that doesnt do the occasional job for cash.  I wouldn't bet on any shops, pubs, restraunts etc that you deal with not "forgetting" to ring the ocasional sale through the till either.

What your clients tell you is one thing, what they actually do on a day to day basis is probably something else.  

When it comes to MLR ignorance really is bliss - and the best policy.



ShirleyM's picture

Why am I naive?    1 thanks

ShirleyM | | Permalink

I said 'none that I am aware of'.

davidwinch's picture

Privileged information    1 thanks

davidwinch | | Permalink

If the client volunteered this information and was looking for your assistance in doing the 'right thing' then it could be said that he was looking to you for advice on his legal position re past wrongdoing.

That could well come under the 'information received in privileged circumstances' exemption in s330 PoCA 2002.  That would mean that (if you are a member of an appropriate professional body) you ought NOT to report this to SOCA (whether or not you ultimately take the client on).

It may be that your discussion was not in depth and you didn't broach the topic of 'fessing up' his past underdeclarations.  Obviously if he has told you he has made undedeclarations in the past these cannot simply be 'forgotton about' by him.

So your options (or his options) are that you act for him and sort out the past underdeclarations or you don't act for him.  But either way you should not report privileged information to SOCA.


ShirleyM's picture

Thanks David

ShirleyM | | Permalink

Your post was very helpful. I won't be accepting the appointment (if it should be offered!), but I didn't want to fall foul of MLR.

You are not naive. You did the right thing !    1 thanks

The Black Knight | | Permalink

The reality is that he will find the accountant he needs. (or perhaps if he's clever does not need an accountant to complete incorrect returns).

The back taxes will never be paid.

and HMRC will either not notice or will do didly squat anyway.

the MLR (privileged information) just mean he is safe to keep asking the question of accountants until he finds a GOOD one !

A friend once said to me "an honest accountant will never be a rich one" I think she may be right !

ShirleyM's picture

Thanks Kalden

ShirleyM | | Permalink

Thanks for the reassurance, Kalden. I did get the feeling my honesty was being 'tested'.

In our experience, we and our clients get very few problems with HMRC, and I would prefer to keep it that way (and I am useless at telling lies so it would be very obvious if I were to try), so I play safe and keep clear of dodgy clients.

I know I may get some comments about my being 'risk adverse', but it suits me (and my conscience).

Each to our own!

Add comment
Log in or register to post comments