Janice Wilson outlined the problems she faced with a new client in her query of 7 January 2008 [1]. She had just agreed a fee, the client having recently left employment and started his own business. However, amongst other things, the new client had a rental property.

The client is hopeless at administration and had lost the mortgage statements showing interest paid on the property. On obtaining copies from the building society Janice noticed that the previous adviser had entered incorrect information about loan interest, so that tax was underpaid for three previous years.

Janice enquired as to what other advisers would do. She was inclined to sort out the problem, and then charge an appropriate fee. If the client did not co-operate she would refuse to act. Communicating with the previous ‘adviser’ was a non starter. He was just a ‘guy from the pub’ who charged £50.

CFL agreed that, once Janice was sure about the previous three years, she should then inform the client and offer to put things right. 'Anon' enquired what the engagement letter said. His or her inclination was to deal with current matters only. LJ then introduced ‘the small matter’ of money laundering. If the client won't agree to past matters being corrected, then Janice should decline to act and then make a money laundering report to SOCA. 'Anon' did not believe that money laundering regulations required advisers to check earlier returns that they had not prepared. He or she assumed that only small amounts were involved, otherwise HMRC would have picked this case up.

This query highlights a typical situation that small accountancy practitioners face. Should they take on this type of client, or not? Those who work for large firms will not be able to empathise, as their work is ‘on another planet’. The profession is very much divided on ‘size of clients’, and this is often reflected in the pronouncements of the professional institutes.

I believe that the advice given in this case is reasonable. My only proviso is that, if the client cannot be educated to keep a modicum of books and records in the future, then Janice should show him the door. The facts also illustrate the difficulties that accountants face with new clients suddenly appearing in the two months before the self-assessment return submission and tax payment date. Some practitioners charge an extra fee (even double the normal fee) for clients who arrive during this period with their accounts in a mess.

Money laundering reporting should not come into the picture if the client agrees to co-operate and allow Janice to sort out the previous three years where erroneous information was submitted to HMRC. Obviously the engagement letter is important, but in cases such as this some flexibility is needed.

What this query does illustrate is the problem of ‘the accountant in the pub’. This sort of case is manna from heaven for those professional accountants who seek for legal registration of the accountancy profession. It is a scandal that anyone can call themselves ‘an accountant’. Having said that I have encountered, in a long career, some very capable unqualified accountants and some qualified accountants who were a disgrace to their profession. Success in professional examinations and payment of annual subscriptions does not necessarily imply technical competence or business morality. Sooner or later this situation will have to be sorted out as, for example, it is illegal for unqualified people to call themselves a doctor or lawyer if they are not properly registered. Sadly, in this case, if the client does not co-operate, he is likely to return to the arms of a ‘pub accountant’ who will do more further damage than good.