Client not paying

Still expecting me to submit claim under CJRS

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I have a Limited Company client (Sole Diectors) who stopped paying me the monthly fee in February when Covid-19 hit.  He had lost his only contract so sympathised and perhaps foolishly said you can stop paying me for a while if that helps

I have been applying for his CJRS claim each month.  He had been a long standing client and was glad to help.  Didn't charge him extra for CRJS.

He is currently in America and think he is intending to relocate permanently there.  Not working, short of money and in debt

I have sent a few emails about payment but that has been ignored

Now, its coming up to end of November and the deadline for CJRS is 14th December.  I am in a little quandry as I know ultimately he will pay all outstanding debts.

If I don't apply for his November CJRS then probably will get annoyed, have even less money and maybe will not pay anything.

I think it will take him a while to get a contract and start working again be it in US or UK.  His accounts and tax filing is due in the next couple months  He did hint that he intends to close down the UK company.

 

 

Replies (31)

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Slim
By Slim
27th Nov 2020 14:49

I would tell him he needs to make a reasonable payment towards the debt before I did anymore work. If you were employing someone you would have to pay them to do all this work for him, so it shouldnt be any different.

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By Moonbeam
27th Nov 2020 14:39

It puzzles me why you think it's OK to in effect lend him money when he is unlikely to be able to pay you back soon. It's not commercially sound and it won't end well.
It's easy to get oversympathetic with clients.
We're in business to make money and if clients can't afford a service, we should be warning them clearly that without regular payments we won't be providing that service. All my clients (lovely people that they are) are well aware that I expect them to pay my invoices on time or they won't get the work done.
This client will happily bleed you dry if you let him.
Start changing your tune now. He may just disappear, but would have done that anyway.

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Replying to Moonbeam:
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By Paul Crowley
27th Nov 2020 14:54

Concur
Sentiment and trust gets in the way

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Replying to Moonbeam:
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By taxwizard
27th Nov 2020 16:49

Yes I agree normally but these are different and unique times. I do not regret not trying to help him and others but if he said to me I shall pay a portion of his furlough money then can live with that. What I cannot accept anyone keeping me in the dark by not explaining his circumstances and ignoring my emails on the payment.

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By ireallyshouldknowthisbut
27th Nov 2020 14:44

The only time you are going to get any money is if you have a hold over him.

A "can you please bring your account up to date before i file this" email today should yield some cash.

Don't blink first.

Put it to him that he is going to be even more in debt if ht doesn't settle up.

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ALISK
By atleastisoundknowledgable...
27th Nov 2020 14:45

taxwizard wrote:

  ... I know ultimately he will pay all outstanding debts.

 

How sure of that are you?

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Replying to atleastisoundknowledgable...:
the sea otter
By memyself-eye
27th Nov 2020 16:48

I wondered that 'ultimately' could be a long, long way off.....

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Replying to atleastisoundknowledgable...:
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By taxwizard
27th Nov 2020 16:52

I have known him for a while and is a friend of a very good friend of mine

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Replying to taxwizard:
ALISK
By atleastisoundknowledgable...
27th Nov 2020 17:13

taxwizard wrote:

I have known him for a while and is a friend of a very good friend of mine

A friend-of-a-friend, with no money, who is emigrating to USA and shutting down his uk company (and hence presumably his need for a uk accountant). Is that accurate?

Personally, I’d be surprised if you did get paid.

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Replying to taxwizard:
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By Rgab1947
01st Dec 2020 10:15

"I have known him for a while and is a friend of a very good friend of mine"

That has never worked for me.

But if you want to work for free its your choice.

He can always apply for a BB loan and pay you with it. Seeing he still has someone on furlough presume the business still exists.

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By Paul Crowley
27th Nov 2020 14:53

We all do this sort of stuff, and likely to regret
Directors promise all, But change their mind
If he intends to settle up then get agreed in writing that he accepts liability for company debt to you
Why should a share holder pay the debts of an insolvent company

If relocated, even a proper personal guarantee is worthless

Is there a real job being protected

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By Matrix
27th Nov 2020 15:01

If they are not UK resident then I don’t think having a UK payroll works. If the company has ceased trading then I wouldn’t be running a payroll in any case.

If they are relying on the CJRS money and it stops then I am sure they will be in touch fairly fast! Up to you if you tell them you aren’t processing November unless they bring their account up to date or if you say that it is not viable/they are not eligible now they are not coming back to the UK.

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Replying to Matrix:
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By taxwizard
27th Nov 2020 16:58

CJRS rules should have stated that non resident not get anything. He has been overseas for four months but cannot see anything in guidance that doesn't entitle him to CJRS. Yes company has ceased trading but he will just claim that he is trying to generate business.

I will not process the November CJRS which will annoy him no doubt.

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Replying to taxwizard:
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By Matrix
27th Nov 2020 19:22

But you know now that he has left the UK even if you didn’t know before.

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Replying to taxwizard:
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By Rgab1947
01st Dec 2020 10:17

Last time I looked a director could not put himself on furlough but I do not do furlough's as (fortunately) none of my clients needed too.

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Replying to taxwizard:
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By Rgab1947
01st Dec 2020 10:23

You cannot claim if the company has ceased trading.

Generate business whilst on furlough in the USA. Come on this is all beginning to sound very dodgy.

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By Anonymous.
27th Nov 2020 15:04

You know your client but, as an objective observer, I don't read your post and immediately see how you can conclude "I know ultimately he will pay all outstanding debts".

If you do believe that, then there's nothing much to worry about. If someone owed me money, had none and was planning to move continents, I'd be concerned.

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By frankfx
27th Nov 2020 15:28

You owe the bank £1 .
You have a problem.

You owe the bank£1m , they have a problem.

I doubt the client is as concerned as you with this arrangement.

A good client would be in touch and offering something.

However we are in challenging times and the former courtesies may have slipped

I suggest a polite formal letter to put some structure into the arrangement.

Inviting client to agree to the generous terms on offer.

Client may actually welcome this.

Let us know how this progresses.

Wish you success.

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Replying to frankfx:
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By taxwizard
27th Nov 2020 17:03

Thank you but there hasn't been a problem in the past with payment and we are going back 5 years. He has been good and no trouble whatsoever. Sometimes you just have to help people Covid or no Covid. I have always put people before money. Most time it works out well. I am sure many of you will disagree but thats the way I am. Though there is a limit too.

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By frankfx
27th Nov 2020 15:29

You owe the bank £1 .
You have a problem.

You owe the bank£1m , they have a problem.

I doubt the client is as concerned as you with this arrangement.

A good client would be in touch and offering something.

However we are in challenging times and the former courtesies may have slipped

I suggest a polite formal letter to put some structure into the arrangement.

Inviting client to agree to the generous terms on offer.

Client may actually welcome this.

Let us know how this progresses.

Wish you success.

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By lesley.barnes
27th Nov 2020 16:16

Does he owe the airline and any hotels for his trip to the US - thought not. He isn't that poor then. I would question whether he was entitled to CJRS if he has been in the US for a while and there is a question mark over him returning.

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Replying to lesley.barnes:
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By Matrix
27th Nov 2020 16:43

I would too and mentioned this above.

Tax wizard - you seemed very concerned about a client claiming a BB loan off their own back and wanted to report them so how have you got comfortable in making these claims yourself?

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Replying to Matrix:
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By taxwizard
27th Nov 2020 17:20

The CJRS and bounce back loan rules are vague and somewhat subjective. For CJRS he was based in UK when Pandemic hit then went overseas to live with his girlfriend sometime in June/July. I do not know if this is a permanent relocation or if he is coming back He has a house in the UK which has not been rented out. I do not know exactly if he intends to trade with the UK company. He may close the company after the CJRS scheme ends. Do accountants normally know everything about their clients situations including their intentions and movements ? I only found out in this case through a mutual friend.

I am not so much concerned over £500 a month nor I doubt HMRC will be when fraud seems rife. Mine and perhaps the government concerns are some clients who have taken 50K that first of all not entitled to it and secondly illicit use of the money.

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Replying to lesley.barnes:
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By taxwizard
27th Nov 2020 17:07

His girlfriend paid for everything. Yes I did wonder about entitlement to CJRS but its difficult to know about everyone's situation. They will be economical with the truth to ensure maximum gain.

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Replying to taxwizard:
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By Rgab1947
01st Dec 2020 10:20

"They will be economical with the truth to ensure maximum gain."

That statement by itself says it all.

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By SXGuy
27th Nov 2020 18:58

Similar position. Client was in hospital due to covid back in March. Hasn't worked since. Have claimed for him but year end was due last Feb, SA going to be due by Jan. No vat returns have been filed since Feb either. I have explained he will most likely face a strike off if it isn't sorted. And confirmed how much is still owed. No attempt at making any sort of payment. But did receive an email asking if there's any grants available for new business ventures.

Im considering informing him now that some sort of payment needs to be made before any further claims are processed. I sympathise but can't keep working for free. The fact he wants to start a new business says to me he's possibly able to work but is choosing not to. Which doesn't sit well with me when fees are owed.

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Replying to SXGuy:
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By taxwizard
27th Nov 2020 21:29

I would like to think many other accountants would try to help their clients when in need. I mean when client has no money due to Pandemic or bad luck then we need to be little understanding and flexible but there comes a time when goodwill dissipates and we want out money or least a plan to pay. I am perfectly reasonable with clients communicates with me about their predicament or financial position. Where I am ignored and continually have to chase then my patience will start to run out and will take action.

Part of me thinks when I am making the claim for him and he is getting nearly £600 why can't he just pay out of that at least the monthly fee or maybe a little less. Just pay something.

I imagine HMRC or you as the creditor will object if companies house try to strike off the company

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By bernard michael
28th Nov 2020 10:09

How much does he owe ??

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By Andy Reeves
01st Dec 2020 09:59

He DOES have money - the money you are claiming on his behalf from the CJRS. He just chooses to keep all of it, rather than meet his obligation to you, as you are not pressing him for it.

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By PChapman
01st Dec 2020 11:07

I would tell the client that I have stopped work and will not continue until the account is brought up to date.

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By birdman
01st Dec 2020 16:43

Hmmm - no job, no money - on what basis would US accept him as a resident?

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