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Charging for services not provided/discussed

Does a business have to pay for services not discussed?

(Sorry in advance for a bit long story.)

In the summer of 2015 we engaged with an accounting firm for the preparation of and filing corporation tax accounts for our company for the tax period ended in 2014. The service and the fee were discussed and agreed by email before the work was started. The service was then properly provided, the invoice was raised by the firm and immediately paid by our company in the same year. With that we believed our engagement was over, but we were actually wrong...

A few months later, in November 2015, an email from the firm was received where it was offered to review and approve the annual return to be filed by the firm with Companies House for our company. We were a bit confused because the only service that we previously asked for and engaged was the preparation of and filing corporation tax accounts. We explained all that to the firm's agent who contacted us, and it was found out that the offer was just automatically generated by the firm's computer system which decided that we had also engaged for secretarial services. Because we hadn't, we did not approve the annual return nor did we authorise the firm to file the annual return. The incident was over.

Since then till last week we did not receive any emails from that firm nor did we ask them for any services.

However, last week we received an invoice asking to pay a fee for the registered office services for the years 2016 and 2017. It was a real (negative) surprise. We replied that we did not ask for any registered office services, and the only service we asked them for was the accounting service properly provided and paid in 2015. In response they wrote that the services they are currently charging us for are within the company secretarial compliance, which implies completing and filing annual return (now confirmation statement) for the company. Yet, according to their email, those secretarial services appeared when we engaged for the accounting services in 2015, and the firm is sorry for not making those secretarial services clear when we engaged.

They mentioned two options: 1) if we consider all this is not fair, they will credit the whole fee; 2) alternatively, they suggest a compromise by reducing the fee by a third.

I would really appreciate if someone could answer the following questions:
1) Is it a normal practice to receive invoices from accounting firms after such a long period of time without having any contacts?
2) Are there any reasons to raise an invoice for services which have not been agreed on, nor even discussed?

Notwithstanding these two questions, a yet another question is: What is a good manner of behaviour for a business in such a situation? Although formally there are reasons to disregard the invoice for the services not provided/discussed/agreed, would it be OK from the standpoint of credibility of our company?

(Sorry again for a long story. Your answers would really help. Thanks in advance!)

Replies

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By mrme89
09th Nov 2017 06:32

It doesn’t matter what is usual and what isn’t.

They’ve offered to credit you in full. Take the credit and move on.

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09th Nov 2017 07:39

Was the registered office service ever provided? Have they actually prepared your Annual return?

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By sceptic
to free-rider
10th Nov 2017 07:40

No, they have neither provided the registered office nor filed our annual returns. That is why I was confused to receive an invoice from them for these services.

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to sceptic
10th Nov 2017 09:11

If they have not provided any of the services they are trying to bill you for, then I do not see a reason to pay the invoice.

Also, are you intending to using them in the future? If not, then might be worth to ask them for a disengagement letter.

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to sceptic
10th Nov 2017 09:44

sceptic wrote:

No, they have neither provided the registered office nor filed our annual returns. That is why I was confused to receive an invoice from them for these services.

Gosh.

I'm not sure that a one third off the invoice offer is all that generous.

I think that alone would be pushing me into looking elsewhere.

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By Ruddles
09th Nov 2017 09:09

Presumably the options are:

1) Credit entire fee and part company, or

2) Reduce the fee and continue the relationship

If both options involve parting company (or indeed continuing) it’s an easy decision!

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By sceptic
to Ruddles
10th Nov 2017 07:46

Yes, you are right with respect of the two options. And the question is: Which one should we choose? Should we consider sending us such an invoice as a sort of insufficient professionalism?

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By Ruddles
to sceptic
10th Nov 2017 11:26

No-one can answer that for you. It's up to you whether or not you want to continue the relationship. Once you've decided, (a) or (b) is easy.

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09th Nov 2017 09:53

I can't really understand the two options. Pay nothing or pay two thirds ?

Like free-rider, I'm bemused by whether these services were actually provided.

I have to say that my default position is that I'll do the annual return/confirmation statement. Happy for the client to take it on if he wishes but I only have two who do that. I don't offer registered office except in truly exceptional circumstances.

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By sceptic
to lionofludesch
10th Nov 2017 07:52

Yes, the two options are exactly as you described. And I wonder which one should we choose, given the fact that the services of registered office and filing annual returns have not been provided and have not even been discussed in the engagement letter and related documents.

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By SJRUK
09th Nov 2017 09:47

You should have a letter of engagement stating exactly what you are paying and for what services.
If they haven't issued one in respect of this, which I suspect they haven't due to the offer of a credit, then they are in the wrong.
However your company would have had to complete an annual return each year to Companies House and if they have carried out this service then it should be paid for. They should have asked you first though and asked you to approve the return first.
The answers to your two questions are no!

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By sceptic
to SJRUK
10th Nov 2017 07:58

Yes, we signed a letter of engagement, but that letter was only about the accounting services, i.e. preparation of corporation tax return. Nothing else has ever been discussed, and no other services including the registered office and filing annual returns have been provided to us by that firm.

Of course, we comply with the law and file annual returns each year, but we either do it ourselves or asked for assistance from another firm (actually, that was our company formation agent; it assisted us with filing for the first two years after the incorporation, as we were not familiar with that matter).

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09th Nov 2017 09:50

Are you saying they changed your registered office without authorisation from you and you didn't become aware of it until they billed you much later?

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By sceptic
to andy.partridge
10th Nov 2017 07:59

Yes, exactlty.

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to sceptic
10th Nov 2017 09:55

Where was the registered office before?

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to andy.partridge
10th Nov 2017 10:17

Just a thought, how could you not notice the absence of post till 2017 if they have changed your reg office back in 2015?

Surely, you should have had some kind of correspondence from the accountants during this period or did they not forward any mail to you?

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to free-rider
10th Nov 2017 11:08

Come, come.

How many letters do any of us get from CoHo these days?

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to lionofludesch
10th Nov 2017 11:29

I was more thinking re: letters from HMRC CT team as they pick up the company's address from the CoHo.

I just find it hard to believe that the company does not notice that the address was changed.

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to free-rider
10th Nov 2017 11:35

Sure - at least one director should be "following" the company.

But it's easier to notice a letter you receive than one which you don't.

Would I notice if HMRC didn't send a Notice to Complete for one of my client companies ? Probably not. I'm not interested. I know the deadline without them writing to me. I probably have the UTR. There's no information in there which I need.

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By sceptic
to andy.partridge
10th Nov 2017 11:33

It was there where it is now and where it has always been since we incorporated, that is it has never changed. Since the moment of the company formation we have properly received all correspondence both from HMRC and Companies House.

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By Tornado
09th Nov 2017 11:24

If filings have taken place online at Companies House, then you must have given these Accountants the passwords/ID. Was this not questioned at the time?

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to Tornado
09th Nov 2017 11:41

Here's a great prompt to set up "Following" and "PROOF" for all client companies.

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By Brunel
to lionofludesch
12th Nov 2017 12:40

I was trying to setup Following but I'm struggling to see the link on CH?

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to Brunel
12th Nov 2017 14:09

Brunel wrote:

I was trying to setup Following but I'm struggling to see the link on CH?

Find a company you want to follow and click "Follow this company".

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By sceptic
to Tornado
10th Nov 2017 08:02

No, we did not provide them any passwords or authorised them anyhow else. On the contrary, when they once sent us an annual return for approval, we explained that we did not engage with them for that service and we just disregarded that return and informed the firm about that.

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By Matrix
to sceptic
10th Nov 2017 08:09

Well tell them that since the services have not been provided that you would like a credit note to be issued and ensure that the engagement has been terminated. They seem to be ruled by their automated systems and may not have even checked that the services have been provided. Not a way I would run my business.

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By sceptic
to Matrix
10th Nov 2017 11:39

Yes, I am inclining to the same explanation: they have been simply ruled by their automated system rather than made a deliberate fraud.

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10th Nov 2017 11:19

Either;
a) they supplied unauthorised services and billed you
b) they didn't supply unauthorised services but billed you

If a) - they have actually done something for the money, but shouldn't have
If b) - they haven't done anything wrong except billed you in error.

If I were you my reaction to these alternatives would be quite different.

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By sceptic
to andy.partridge
10th Nov 2017 11:46

I am currenlty inclining to the b). Honestly speaking, I have no intention to consider this as a fraud. We all make mistakes from time to time.

If so, would it be reasonable to write them and ask to revise their decision, as there are no any evidence for providing us the services they claim, while we can prove with documents that our registered office has never been with them and we have always filed our annual returns ourselves?

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to sceptic
10th Nov 2017 12:22

Well, now I am confused because if they really haven't done anything (and were not authorised to do anything billed) where is the justification to reduce the bill by (only) a third? That doesn't make sense.

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to andy.partridge
10th Nov 2017 15:08

Exactly what I was thinking after reading the various responses. How do they possibly justify the offer of reducing by a third if the invoice was a complete error?

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to sceptic
10th Nov 2017 12:01

sceptic wrote:

I am currenlty inclining to the b). Honestly speaking, I have no intention to consider this as a fraud. We all make mistakes from time to time.

If so, would it be reasonable to write them and ask to revise their decision, as there are no any evidence for providing us the services they claim, while we can prove with documents that our registered office has never been with them and we have always filed our annual returns ourselves?

Revise their decision ? In the OP, you said they were prepared to credit the charge in full.

Simply accept this offer.

I've no idea what the problem is now.

Mind you, I never did understand the one third discount for work they didn't do anyway. What's all that about ?

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By sceptic
to andy.partridge
10th Nov 2017 12:40

Sorry for expressing myself unclear. Of course, "asking to revise their decision" was a polite form to ask them to cancel (withdraw) their bill, as no services for that have been provided.

Is crediting the fee in the whole, as they suggested in one option, will mean the same that cancelling the bill? That is, we will not have to pay anything and the incident will be over?

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By Ruddles
10th Nov 2017 12:07

Did anyone sign an engagment letter with the OP for all the advice given so far? In my unprofessional haste I forgot to and - slap my wrist - I haven't followed ML procedures either.

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10th Nov 2017 12:32

mountain...mole hill....

full credit back....job done....or are we heading for compensation....geez they seem to have made a mistake....I wait to meet a person who doesn't.

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By sceptic
to justsotax
10th Nov 2017 12:46

Yes, as I now understand from the answers obatined here, to bill us was probably just a mistake.

The only reason of mine to ask for opinions at this site was that similar things have never happened to us before, so I decided to ask what experienced people think on that.

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By sceptic
to justsotax
11th Nov 2017 21:29

The case has been successfully resolved: we provided them with evidence of our previous correspondence, and they have agreed that the invoice was raised by an error on their part.

I do thank all of you at this forum for your kind attention and responses. You have really helped.

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to sceptic
11th Nov 2017 21:49

sceptic wrote:

The case has been successfully resolved: we provided them with evidence...

I can't believe you were asked to provide evidence.

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By sceptic
to lionofludesch
11th Nov 2017 23:13

We were not. But we decided to, in order to substantiate our position.

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to sceptic
12th Nov 2017 10:09

Sounds like you were playing on after the final whistle.

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12th Nov 2017 23:20

Wow. You are really over thinking this one, OP. It is very simple. If the registered office is still the same registered office address as it was when you first set up the company, i.e. it was NOT changed to the accountants' address (you have already confirmed this, after some prodding), then any charger for registered office facilities is clearly not warranted.

The company record will confirm that the registered office was never in fact changed. Therefore, a one line email to the firm stating that you never received the services they want to charge you for, and referring them to the Companies House record for proof of this, is all that is required.

Tell them that you assume they have made an error and you await confirmation thereof, together with a credit note for the full amount. End of story.
Simple

Or, if you can't be bothered doing that, simply accept offer a) and forget the whole thing.

Mistakes happen. Move on, forget it. Badda bing badda boom.

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