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Client convinced I am taking him for a ride.

Do you also have clients who don’t have a clue and as a result are convinced you are taking them for

Didn't find your answer?

a ride.

Starting this month my client’s client stops paying him through his company and pays him as a subcontractor instead, directly into his personal account.

As it happens my client’s latest business accounting year is August 2020 to July 2021 so I felt it was time to give him a forecast of his future Corporation Tax liability.

His reply was this: “this surprises me as iv not long paid corp tax of £2600? And now my money is taxed like paye and paid into my personal account which I felt this means  my business account is now inactive/redundant ?”

I replied that the fact that he is now self-employed doesn’t wipe out the profits he made through his company since August 2020 and that the £2,600 he paid recently was for the accounting year 2019/2020.

Is that not very frustrating when this happens?

Replies (24)

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By Paul Crowley
24th Apr 2021 15:07

We all have clients with a one sided view
Ask him how long company traded before paying any tax
Answer
1yr and 9 months
So he is borrowing tax money for 9months at all times, in addition to the part year that he is in

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Replying to Paul Crowley:
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By Cylhia66
24th Apr 2021 17:10

Precisely.

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By New To Accountancy
24th Apr 2021 16:42

I've not had this situation yet as I don't do Corp Tax, but I have been recently accused of 'scare mongering' when I tried to explain the entitlement criteria of SEISS.

People do not listen, regardless of their age. They do not understand when you're trying to help them. Nobody wants to take responsibility anymore, it's all blame and ignorance.

If somebody stopped me from walking out in front of a car - I'd say 'thank you', not - 'ouch, you've just pulled my arm'

Edit : You wouldn't believe I only deal with one difficult client, everybody else is great. I should not ' tar them all'. (Felt guilty after posting on the other clients)

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Replying to New To Accountancy:
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By Cylhia66
24th Apr 2021 17:13

The difficult clients are the ones we mention the most. It's logical :-)

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Replying to Cylhia66:
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By New To Accountancy
25th Apr 2021 09:38

Absolutely.
I've just had a client text to ask when he can send an invoice as he needs the money. I think I'll send back
'if you do it Tuesday, it won't get taxed but if you do it today, it will. Wait until Tuesday'
I try to stay as open minded and look at things from a client perspective all the time, but sometimes I'm completely baffled.

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Replying to New To Accountancy:
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By New To Accountancy
25th Apr 2021 10:15

Confusion solved, he had a perfectly reasonable excuse for his question:
He thought HMRC didn't want invoices putting in during April as they were still catching up from the previous year and although his YE is March 30th, the banks might be ahead and backdate the income so it slides into 20.21 turnover.

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Replying to New To Accountancy:
ALISK
By atleastisoundknowledgable...
25th Apr 2021 13:04

Obviously - can’t believe that you didn’t guess that.

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Replying to atleastisoundknowledgable...:
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By New To Accountancy
25th Apr 2021 15:06

Well initially I thought it was a debtor query and thought it was perhaps dated pre 30th March. He also had already sent invoices since so I couldn't understand what was different with this one. I still don't! Don't think client knows his question.

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Replying to New To Accountancy:
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By Paul Crowley
25th Apr 2021 13:35

It is not deliberate
Clients have strange ideas, often fed by people deliberately winding up. Building sites well known for deliberate wind up.

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Replying to Paul Crowley:
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By Cylhia66
25th Apr 2021 13:50

That's a very good point.

That same client claimed the first SEISS grant when he wasn't eligible. He was no longer self-employed. But all his mates on site told him how easy it was to claim it so he went ahead. Unfortunately for him HMRC picked up on this and promptly asked him to refund the whole amount. Needless to say he hadn't mentioned anything to me until HMRC sent him a nasty letter.

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Replying to Cylhia66:
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By New To Accountancy
25th Apr 2021 15:17

We can tell them, but we can't make them listen.
This client calls me to ask if he's entitled to the grants, like he wants to pin the blame on me if not entitled.
I have to send 'to recap on our call' emails to this client all the time, as back up.

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Replying to Paul Crowley:
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By New To Accountancy
25th Apr 2021 15:10

I've been thinking it is to do with the 4th grant. And yes, he is a subbie.

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By frankfx
24th Apr 2021 16:30

Is he self employed?
His paying customer may have got the worker status wrong.
Not his immediate problem though.

Are there assets to extricate from limited company?

Tax consequences?

Commercial consequences?

Is there an overdrawn director loan account.

A PAYE Scheme to close.

VAT matters to address.

New letter of engagement.

Your client may be surprised to learn that the wind down costs now await him.

What moody do you anticipate when you show your professionalism on these matters, along with a fee note.

Expect more strife.

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Replying to frankfx:
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By Cylhia66
24th Apr 2021 17:21

Well spotted. His paying customer stopped paying him through his company because of IR35. Now I’m not convinced that paying him as a subcontractor with no NI deductions is what they are meant to do either. Oh well, their lookout.

I ceased PAYE. No VAT involved here.

However, he can’t strike off the company. Companies House won’t let him as he has an outstanding BB loan and an overdrawn DL .

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Replying to Cylhia66:
By Husbandofstinky
27th Apr 2021 11:12

Marie Sharman-Forgue wrote:

However, he can’t strike off the company. Companies House won’t let him as he has an outstanding BB loan and an overdrawn DL .

I think that sums it all up nicely....

Disengage?

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ALISK
By atleastisoundknowledgable...
25th Apr 2021 01:43

I have a (non-VAT) lorry driver ltd client who moved to become a PAYE e’ee in Apr 20. Similar to your client, he decided that as he’s now employed, he doesn’t need to do anything else for tax/CoHo. That includes Dec 19 YE, 19/20 SA, Dec 20 YE. Tens of attempts to contact him unanswered. What can you do? Hopefully it’ll catch up with him 1 day, but then I’m sure he’ll say that I didn’t let him know.

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Replying to atleastisoundknowledgable...:
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By Cylhia66
25th Apr 2021 06:13

Facepalm. Well I imagine he'll get in trouble for failing at his duties one day. Hope you saved all the messages you sent him somewhere safe to show HMRC you did all you could. That's all you can do with this sort of clients.

Another client of mine failed to notify HMRC that she didn't need to file a SA return for 19/20. As a result she received a penalty. Now she says she doesn't understand why she got fined when she followed my instructions. Although clearly she didn't follow my instructions. She won't communicate with me anymore. It looks like she has decided to make me responsible for her mistake :-(

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Replying to atleastisoundknowledgable...:
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By SXGuy
25th Apr 2021 08:33

Seems to be a common theme. Had a client tell me he's moving to paye so I advised he needed a final vat return, final accounts and Tax returns to wind the company up. Heard nothing for 9 months. Clearly thought now paye he could ignore anything that happened before it.

Finally made contact, still waiting to finalise.

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By SXGuy
25th Apr 2021 08:30

Yes. Had a client that when preparing his tax liability for an april end and he would finally give everything I needed by the December of that year, his answer to the tax owed would be "but I haven't worked" and I'd have to repeatedly tell him regardless of what he's done since April, the tax was based on income for the year prior. Every single year I'd get the same answer.

Another one recently, was shocked to discover his late father owes cgt on the sale of his rental property. He even asked if he could sell to someone else to avoid it. Like that made a difference.

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By Tax Dragon
25th Apr 2021 10:39

Solution: make tax digital, make tax payment digital* and make it instant. (30 days for CGT is a step in the right direction.)

Oh and maybe reverse charge everything, so it's not your client dealing with the tax, it's the other fella.

The clients you are talking about presumably think this is how it happens already. So they'd be happy with this idea, I'm sure.

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Replying to Tax Dragon:
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By Cylhia66
25th Apr 2021 11:10

I like your thinking. They would be good solutions to these problems.

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Replying to Tax Dragon:
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By Paul Crowley
25th Apr 2021 13:46

Comments like that make me wonder if you you are considering the dark side Anakin

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Replying to Paul Crowley:
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By Tax Dragon
25th Apr 2021 20:29

Are you my father, Lu-Pa?

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By David Gordon FCCA
27th Apr 2021 17:43

No, it s not frustrating, it is just that the client did not ask wha would happen beforehand.
It is the law of unintended consequences.
I have a number of now ex- clients, who because of IR35 have moved to PAYE.
this means that they are unable to pay last year's CTAX because the company has no income.
So, I just write to HMRC and tell them the company has no funds, what are you going to do?

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