Hi all
I’ve the following scenario and would appreciate some input from fellow members in practice to see how they would approach it.
Prepared ltd company accounts and ct600 for a client, records a mess (one of those were the bank account could be about 20 pages of statements but actually over 60 due to them treating it like a personal bank), so took a while. Bill them for the years service which included FRS VAT returns and payroll. They come in, didn’t have a clue the CT bill would be so high and nearly faint when the 16/17 director tax comp is presented. According to client ‘spent all my money doing my house up and haven’t got anything left’. Went away to think about matters. In the meantime we advised a fresh start, close the old company once the CT bill and all creditors are settled and open a new one, new bank account, monthly management accounts etc, set aside funds for year end tax.
Three months later client gets in touch, we enquire when payment will be made to be told our fee was too high and could they only pay part of it, which we told them in no uncertain terms not a chance. We fall out and client goes elsewhere.
In the meantime a DS01 has been filed even though CT600 hasn’t been filed and no tax paid.
New accountant gets in touch for clearance for new fresh company and personal tax, we tell them fee not been paid, and nothings been filed per company policy. We therefore cannot supply any information until it’s settled.
They then get back saying client has no idea about these accounts, never see them etc, usual bull. We email them back saying client has seen them but did not sign, and have an exact date and time when they attended the office.
In their wisdom HMRC do not object to the strike off so we do as an unpaid creditor.
We are going to update the new accountant tomorrow that the strike off has been suspended due to non payment or any form of contact from said client and the debt has been referred to a debt collector.
In no shape or form do I want them to get away with the CT liability.
Before anyone asks why we didn’t set them up on a monthly yes that’s our fault but we didn’t envisage this scenario.
Do we file these accounts even though they haven’t been signed?any input, advice or opinions be gratefully received.
thanks
Replies (12)
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I know why you want to file the accounts (to flag the debt to HMRC), however if the accounts haven’t been signed by a director, you can’t.
NB I want to make that clear for the legals that I am DEFINITELY NOT saying that someone could sign the accounts pretending to be the client and paper file then.
Maybe a file a SAR? Or do HMRC have such a thing as a a fraud detection team that you can call anonymously?
FYI About a year ago I raised an objection to a DS01 in an identical situation & got a call from CoHse telling me that they’d accepted the objection, but only for 3 months, unless by that time I could show some legal progress eg court dates / CCJ etc.
Good luck ...
IMHO you probably ought not to have filed vat returns without client agreement to the figures, slippery slope to leaving yourself open to blame if there are subsequently found to be errors.
Client express authorisation just gives you a little distance, I always send workings/figures to clients and get by return their express permission to submit.
2 solutions to stop this problem occurring:
1. Get some money up front.
2. Letter of engagement should state directors personally responsible if company becomes insolvent. Can then sue
Best plan of action?
Either:
1) Start the legal process to collect it; or
2) Take his family hostage until your fee is paid.
Whichever sits best on your conscience...
I would be tempted to fill in a SAR if you suspect the client has deliberately avoided tax. Its entirely his own fault he's spent money that didn't belong to him. Did he give you authority to file his personal tax return? I know you said that you are holding the ex - clients paperwork because he hadn't paid you but at this stage you've nothing to lose by sending the accounts and personal return that he didn't sign to his new accountants. If they filed his personal return it might be different than the one you did if he gave them the figures. On the plus side it might make them think twice about working with him.
https://www.moneyclaim.gov.uk/web/mcol/welcome
Have you not started this yet? Get cracking today.
Q Where does it say that you can't file the accounts without approval?
A The directors report detail states that the accounts have been approved. So you can't file as they haven't
Q is the company solvent ?
If it is serve a Statutory Demand immediately
Well presumably your T&C's which they must have signed before you started work allow for you to collect any unpaid fees from the director's personally?
Just smack 'em hard for it.
Always laugh at this.
Such a clause has no hope of success in court.
Debts owed by the company are owed by the company.
Debts owed by the director personally are owed personally.
The two are NOT and never will be interchangeable, and slipping some utter rubbish into an engagement letter or T&Cs will never stand up in court.
Personal guarantees must be:
IN A SEPARATE LEGAL DOCUMENT
BY DEED
WITNESSED
and though not fatal, the guarantor must have the opportunity to seek independent legal advice.
The poster has asked what to do about the non-payment of Corp Tax.
I feel that he should submit a SAR to protect him at least. He suspects that the winding up of the company is to avoid paying the CT - not sure how the new accountants are going to deal with this as it appears they are aware that the first company is being wound up to avoid a tax bill.