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Bankrupt client wants access to his data

Should I release it to him? Not been paid for my services or the software costs

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Long story short, a sole trader client of mine filed for bankruptcy three days before the tax deadline in January, owing me nearly £4k (£75k to others).  As a result, I did not file his tax return for 2018/19, nor did I file his VAT return due 7th February as I was not prepared to do more work for no payment.

I paid for his Xero and ReceiptBank subscriptons throughout the engagement, which was used to process his bookkeeping and receipts.  I checked with the Insolvency Service and they advised me that they would not need access to the data and said to close the accounts as to not incur anymore costs, which I have done (although the data can be accessed).

The client has now contacted me asking about transfering the accounts to him and I have a few questions and issues I would like some input on please:

1. Do I even have to reply to this message?  After lots of broken promises and no sign of payment I am in no mood to assist him or provide him information.

2. The subscriptions will require a payment to take them over, and as I'm told he has no funds I am presuming his wife will be taking it over.  Can I refuse to transfer the subscription until at least my costs of providing the subscriptions have been paid?

3. Who does the data belong to legally?  Its his information obviously, but the data has been processed and stored at my cost. Hotmail hosts my emails for free, and presumably they could stop doing so at anytime and refuse further access to the information I have stored on their servers and at their costs.  If I havent taken back ups of the information from them surely that would be my issue, not theirs?

4.  If he has been declared bankrupt, what does he even need the information for?  Will HMRC still be expecting his tax and VAT returns even though he is now bankrupt? 

I like to be polite and professional as much as possible even in difficult circumstances but I am in no mood to help him and don't want to spend another moment of my (unpaid) time assisting him, but at the same time if I could recover any of the fees I would like to do so (as long as its not a long drawn out process).

Many thanks

Replies (8)

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By atleastisoundknowledgable...
18th Feb 2020 17:33

Whether the data belies you him is a regular topic on here. I think I’m right in saying if you recharged for it, he should have access. Although him not having paid you does put a spanner in those works.

TBH, I’d go back with a quick email and say that the subscription has been cancelled but that I would be prepared to reinstate access if he paid £X to me, X being all of your software costs to date (and whatever Xero would charge to get it reinstated). I don’t think you’d get away with insisting your fees were paid, but at least you’d recoup the outlay.

Thanks (1)
By Tim Vane
18th Feb 2020 18:12

I think you’ve already spent too much time on this loser. I wouldn’t even have bothered to spend the time posting the question. Walk away

Thanks (3)
By ireallyshouldknowthisbut
18th Feb 2020 18:33

I think I would have a frank 'informal' discussion on the phone and arrange some sort of "cash for access" compromise. Tell it like it is, you are heavily out of pocket and whilst you sympathise with his position, you will be bankrupt too if no-one pays your bills.

Suggest that any work would be on "cash in advance" basis.

Bankrupts have some money, but clearly you are not seeing any of it.

Thanks (3)
By kestrepo
19th Feb 2020 09:28

I would work on the basis of being reasonable - he no doubt does not want to be in this situation anymore than you do! If he has put in a GDPR data request I would go back to him and ask if he can be more specific about what information he actually requires. If it turns out that he wants his books, receipts, sales and purchase invoices etc back I would let him have them back provided that he signs a document confirming the receipt (and word the receipt to acknowledge that he is entitled to be removing these items). If he wants anything that involved work that you have undertaken but not been paid for I would withhold this information. Explain the Xero situation to him and ask for a cash payment. I would not spend any more money or any more your time on him. Try to be kind but pragmatic. I expect to get flamed for this but ultimately you can sit around thinking about the problem, worrying about what you should or shouldn't be doing but for your own sanity I would step away from the issue, move on and make a claim in the bankruptcy proceedings.

Thanks (1)
By lionofludesch
19th Feb 2020 09:30

"Pay up or do without" would be my message.

The cheek of the man !!

Thanks (2)
By bernard michael
19th Feb 2020 10:00

Have you put the full position to the Insolvency Service regarding the bankrupt wanting access to data. This may raise alarms.
I understand you agreed with them about closing the subscription access but this is different. He may be up to something that requires historic information

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Replying to bernard michael:
By Rammstein1
19th Feb 2020 10:43

That's a good point to make.

Thanks (1)
By legerman
23rd Feb 2020 14:50

Given that any debt due to HMRC will have died with the bankruptcy I can't see any possible need for the request. HMRC will have issued a new UTR if he wants to continue trading.

On point 4 I would only comply if the request comes from the Official Receiver

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