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Client funds

Can I hold client funds to pay to HMRC

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I have been given the opportunity for a new client which could be the making of my business, it is a local charity, based within my own office block so I know them very well.  In my consultation with them they explained that they often forgot to pay the paye and nic and I offered to help with this, in that I could make sure the payment is made on time as long they put the funds into my account prior to the payment.  My question is, do I need to tell hmrc of this, the funds will only be coming to me to pay directly to hmrc for a time reason only, my fee will come in separately 


thanks for any advice 


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23rd Mar 2017 18:32

I doubt if you can take the client's money to hold for them.

But it depends on the rules of any body of which you are a member.

In any case, this is a problem waiting to happen.

Thanks (2)
23rd Mar 2017 20:26

If the client had their own gateway account, with a direct debit housed within, you could facilitate PAYE/NI payments on your client's behalf but direct from their account, not yours. Or am I missing something?

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23rd Mar 2017 21:19

Erm if they can remember to pay the money to you, why can't they remember to pay the money to HMRC?

Thanks (5)
24th Mar 2017 07:57

You are missing the point.

This is none of HMRC's business, so forget about HMRC.

What you need to focus on, as lion says, is whether you are authorised by your professional body to hold client money, and what rules of that body you have to comply with when you do so.

But what is the point of the arrangement? If client can't remember to to pay HMRC on time, why are they more likely to remember to transfer funds to you on time?

Thanks (1)
By Chris Mann
24th Mar 2017 09:05

There are always a hundred ways to skin a cat.

Always think these issues through to confirm (to yourself) the positives and negatives.

The only way I handle client's funds is that I will "administer" a cheque payment across to HMRC, the cheque being paid to HM Revenue & Customs Only, followed by the relevant reference number.

I'm quite sure that, at some stage in the future, HMRC will decide that they will no longer handle cheques. At that point I will arrange an adequate reminder arrangement, so that those client's can deal with the matter direct.

Whilst we all want to assist our client's wherever and whenever we can, the responsibility for dealing with these aspects, rests with the "taxpayer", no matter who they are.

Anecdotally I recall a motor engineer friend of mine, being asked by a customer if he (my motor engineer friend) "could fill it up with petrol, while the car was in for service and MOT"? My friend responded - "tell you what, while I'm out, why not ask your wife for a shopping list and I'll call at Tesco's for you too"!

It sounds like you need to know when to draw the line and, where you don't and, how that could affect your reputation, in the longer term?

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24th Mar 2017 09:49

Setting up a regular alarm on your phone to remind you to pay HMRC on, say, 17th of the month is as good as anything.

Costs nothing. Done in seconds.

Excellent points from Which and John about why the client would remember to pay you but apparently can't remember to pay HMRC.

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By cvsmith
28th Mar 2017 10:15

Why not just set up a reminder in your diary/phone so you can remind them to pay at the right time?
Saves a lot of hassle and as you are in the same building easy enough to do.

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28th Mar 2017 10:39

HMRC may come to your (their) aid soon by allowing those liabillities to be taken by DD. In the meantime why the Charity could make payt at the same time as the salaries. Or indeed set up the payment to be made by the appropriate date (19th of the following month)

The excuse sounds to me more like we dont have enough money to pay PAYE & NIC on time.

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28th Mar 2017 10:42

We do this for a client. We have a dedicated cient account just for them, they make sure there are always funds in the account and we schedule the payments to HMRC via internet banking when we do the payroll. Check your regulatory body's rules on client money but ours have seen this on a compliance visit and had no issues. There are risks attached but if the client is worth then why not?

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to BSSRoberts
28th Mar 2017 10:57

I still don't get how they can make sure they pay you but can't remember to pay HMRC.

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By birdman
28th Mar 2017 10:57

Sorry, but why don't they simply pay by Direct Debit? Instructions in back of payslip book, simples...

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to birdman
28th Mar 2017 11:09

Not intellectually up to it was the inference I drew.

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By BH76
28th Mar 2017 12:48

Thanks for all the comments, I've gone down the route of opening a client account, the money will be transferred to this account via standing order, so I am guaranteed the funds. The reason for this is its another service I want to offer and will open up a lot of opportunities for me as they are very well connected to other agencies.

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