Clients don't stick to the terms of our contract

How would you deal with this?

Didn't find your answer?

I am contracted by a client to prepare and file their Corporation Tax returns only.

However they keep asking me for advice that is outside of these terms.

They started asking advice about their Self-Assessment returns. I answered the first 5 questions as I wanted to be nice and helpful but after further questions were thrown at me I started thinking this was going a little too far and explained that I normally charge my clients to prepare and file their self-assessment returns.

Then they asked me for some advice regarding their bookkeeping. I explained that I charge an hourly rate to deal with my clients' bookkeeping. To which they replied: It's ok, we fixed it.

I've never had clients like this before and I've been doing this for about 7 years.

How would you have dealt with this? I didn't feel like teling them to refer to our contract as I felt it would be rude.

 

Replies (39)

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By David Ex
20th Jun 2023 13:06

Cylhia66 wrote:

I am contracted by a client to prepare and file their Corporation Tax returns only.

How is that even worth your while?

Cylhia66 wrote:

They started asking advice about their Self-Assessment returns.

If the individuals aren’t your clients (as distinct from the company), you shouldn’t be giving them advice, free or otherwise, should you?

I would have thought polite reference to the (very limited) terms of your engagement was entirely reasonable and appropriate.

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Replying to David Ex:
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By Cylhia66
20th Jun 2023 15:26

It is worth my while I assure you. I have quite a few clients who want to do their own bookkeeping to save some money. Don't you? Well, no, obviously. I know I'm not the only accountant who operates this way.

I agree with your second point but when their question is, for example: Am I employed or self-employed? I feel I need to clarify this for them and coudn't justify charging them. What I'm trying to figure out is where the fine line is.

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Replying to Cylhia66:
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By David Ex
20th Jun 2023 16:23

Cylhia66 wrote:

It is worth my while I assure you. I have quite a few clients who want to do their own bookkeeping to save some money. Don't you? Well, no, obviously. I know I'm not the only accountant who operates this way.

Your OP said you “prepare and file their Corporation Tax returns only”. Who prepares the accounts? Compliant statutory accounts aren’t bookkeeping.

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Replying to David Ex:
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By Cylhia66
20th Jun 2023 17:18

As I said, I prepare the accounts. But sometimes I don't deal with the bookkeeping.

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Replying to Cylhia66:
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By David Ex
20th Jun 2023 17:31

Cylhia66 wrote:

As I said, I prepare the accounts. But sometimes I don't deal with the bookkeeping.

Ah. I must have misinterpreted what you meant when you said “prepare and file their Corporation Tax returns only”.

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Replying to David Ex:
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By Cylhia66
20th Jun 2023 17:46

And I can see now that I didn't express myself very well initially. I should have said : I prepare and file the company accounts and the Corporation Tax returns only.

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Replying to Cylhia66:
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By Roland195
20th Jun 2023 16:32

Cylhia66 wrote:

It is worth my while I assure you. I have quite a few clients who want to do their own bookkeeping to save some money. Don't you? Well, no, obviously. I know I'm not the only accountant who operates this way.

You are certainly the only accountant I have heard of that operates this way other than tax specialists where other accountants prepare the financial statements first.

How do you even prepare the return without the back up to the accounts ?

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Replying to Roland195:
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By Cylhia66
20th Jun 2023 17:19

I prepare the financial statements. I just don't do the bookkeeping sometimes.

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Replying to Roland195:
By Ruddles
22nd Jun 2023 10:02

It's not that uncommon. We have a number of non-audit clients whose own FDs etc prepare the stat accounts but leave the CT work to us.

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By nrw2
20th Jun 2023 13:07

"Based on your questions, you may be interested in our X service which includes X, Y and Z for an additional £X per month?"

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Replying to nrw2:
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By Cylhia66
20th Jun 2023 15:27

I like this approach I must admit.

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Replying to Cylhia66:
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By Hugo Fair
21st Jun 2023 13:33

There is also a middle-ground that I've sometimes used ...

It's not always wrong to 'throw-in' a freebie (friendly & helpful is part of the 'brand' that frequently got me referred to new clients) - but you do obviously need to guard against being taken advantage of (even if unintentionally).

So ... I would sometimes 'charge' for the extra work (by showing it on the invoice even when there was no pre-agreed charge) BUT also have a 'goodwill' line that credited the same amount.
Result?
Clients always notice so will often ask what it's all about ... and you get to explain (whilst remaining the 'good guy').
This way they remember (i.e. learn the lesson for the future), and everyone's happy!

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By CJaneH
20th Jun 2023 13:44

I would be most unhappy preparing CT return without doing the accounts preparation.
Working with small clients you do accounts prep, CT return and directors personal tax returns. Without doing the lot
A - you will not be confident that the returns are correct.
B - You cannot give decent advice because you will have to little information.

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Replying to CJaneH:
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By Cylhia66
20th Jun 2023 15:29

The way I see it is that I am responsible for what they appoint me for and pay me for. If there are errors due to their inputting or negligence or something else, then it's their responsibility. My contract stipulates clearly what I am responsible for.

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By adam.arca
20th Jun 2023 13:49

I'm surprised you've managed to get 7 years in without having this issue arise previously. Well done for managing that, however.

I completely sympathise and can only say in reply that managing client expectations is a balancing act and, except for the naturally gifted in that direction, comes from experience (ie lessons learned of how not to handle the matter).

As you hint at, clients generally don't like legalistic posturing. They don't generally "get" the veil of incorporation and fail to see the distinction when you (effectively) say to them "sorry, I can't answer that question with your Joe Bloggs hat on but I can do with your Joe Bloggs Limited one on."

Nevertheless, you are going to have to draw a line in your head and not allow clients to transgress across it. How you do that is down to you, your relationship with your clients and, as said, the bitter fruits of experience.

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Replying to adam.arca:
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By Cylhia66
20th Jun 2023 15:33

Thank you, yes, I need to find where that fine line is. I like to be supportive and helpful to a point, and I think this is one of the reasons my clients like me. But I can't give away too much (for free) because then it becomes counterproductive.

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By SXGuy
20th Jun 2023 15:14

It happens. I've had clients disengage then ring a month later asking if they can just run through what they've done to prepare their self assessment.

My reply is always, I don't offer advisory services my fee is £x to prepare your self assessment.

Stupidly one who left last year emailed the other week and kindly asked if I could help, he did offer to pay, his only mistake was adding the tax code adjustment figure rather than the 20% stopped on his TR, didn't have the heart to charge to told him what to do. Not even a thank you.

So back to being strickly paid before offering anything.

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Replying to SXGuy:
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By Cylhia66
20th Jun 2023 15:37

That's the thing. Their questions are often extremely simple for us to answer. And I almost feel bad charging them when I can answer in two seconds. That said, without my answer they would have got things completely wrong, so there is value to my answer.

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Replying to Cylhia66:
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By Rgab1947
21st Jun 2023 16:30

Simple for you with your training and experience but it maybe complex. Certainly for them.

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Replying to Rgab1947:
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By Cylhia66
21st Jun 2023 17:02

Agreed.

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By RobbieT
20th Jun 2023 15:19

My stock answer is to refer to my PI insurance: "I'd love to answer this for you, but my PII only covers me for engaged services. Shall we get an engagement in place?"
- Means your services are covered by your PII (as they REALLY should be!!)
- Means you can charge for your time
- Upsell potential for other services
- Deters the "opportunist" semi-client from scope-creeping you

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Replying to RobbieT:
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By Cylhia66
20th Jun 2023 15:38

Good points all round. Thank you.

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Replying to RobbieT:
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By I'msorryIhaven'taclue
21st Jun 2023 09:24

I do the same as you RobbieT, but throw in AML legislation which prohibits me (and you) from dishing out advice without a full AML check (and, for other legal matters such as eg DPA, a current letter of engagement).

Useful shields behind which to shelter when faced with a "solve my problem" prospective client - I'm learning not to take that bait, so rather than demonstrate my super-powers by dispensing problem-solving advice I stick with "sure, we can help you with that if you'd like to engage us".

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Replying to RobbieT:
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By Tromdo
21st Jun 2023 11:44

Scope-creeping: a new one to me! Nice...

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By Truthsayer
20th Jun 2023 15:35

Always say you want to review the matter in detail before you give advice (which you should do anyway), then quote a fee for doing so.

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Replying to Truthsayer:
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By I'msorryIhaven'taclue
21st Jun 2023 09:49

Truthsayer wrote:

Always say you want to review the matter in detail before you give advice... then quote a fee for doing so.

For reviewing the matter, or for giving advice? Or for both?

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Replying to I'msorryIhaven'taclue:
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By Truthsayer
21st Jun 2023 14:19

Both.

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By Matrix
20th Jun 2023 18:56

You need to place more value on yourself (and ensure clients also value you). Even if it only takes a few seconds to answer it has still taken years of training.

I would put the previous questions down to experience and increase this client’s fees going forward.

Most of my clients do their own bookkeeping so you have to have a buffer in your fees to deal with any questions. The upside is that there are fewer adjustments at year end. I also find that after the first year the queries stop.

Who does the payroll though?

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Replying to Matrix:
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By Cylhia66
20th Jun 2023 19:08

Fair comments. Points taken. We have many years of training behind us, it's true.

I wish you hadn't asked me who does the payroll. This client asked me to show them how to do it themself so I charged them for an hour of my time to show them and now they are dealing with it. I know. I'm stupid. I won't do that again. Like I say, I never had a client like that before. They completely caught me out.

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Replying to Cylhia66:
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By Matrix
20th Jun 2023 19:26

Put it down to experience and put the fees up as they are obviously making you feel undervalued.

There is loads of work out there if you lose them. There also some really good mentors if you think that would help, for example, Mark Telford or Mark Lee.

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Replying to Cylhia66:
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By Homeworker
21st Jun 2023 09:46

Cylhia66 wrote:

I wish you hadn't asked me who does the payroll. This client asked me to show them how to do it themself so I charged them for an hour of my time to show them and now they are dealing with it. I know. I'm stupid. I won't do that again. Like I say, I never had a client like that before. They completely caught me out.


If the client is small and needs to keep the fees down, I am more than happy to show them how to deal with the payroll themselves, especially when it is a weekly payroll. When RTI came in, I helped a shop and a hairdresser to take over the payrolls (both weekly but previously run 4-weekly with adjustments on the 4th week), so that we didn't have the hassle.
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By bernard michael
21st Jun 2023 09:48

Who does the client's self assessment returns - refer the client to them ??

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By Ammie
21st Jun 2023 10:01

Respectfully, you should (wo)man up!

Perhaps a little free advice may be good PR for you, but you do need to point out to them what your agreed terms of engagement with them covers and that any additional work will require those terms revised and charged for. You will then see whether they are serious or just digging for freebies.

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By bendybod
21st Jun 2023 11:13

As with many fellow accountants, it is often difficult to appreciate the value of our advice, which is borne out of our training and experience. The clients don't have that training and experience, which is why they ask us. I have learnt to look at it more as a case of whether they would do additional work for a customer - would a tradesman just put a shelf up for me or just hang a picture if I asked them? No, the majority would charge me or get someone else to do it.
If it is a question directly relating to what we're engaged for then fine. If it is a question relating to, say, their bookkeeping, I'd say that I needed to charge them for that. If they decide to go away and sort it themselves then fine. That's their prerogative. I normally say something along the lines of "If you want to take it away and resolve it yourself then that's fine. If you would like us to do it then it will be £x per hour and we would expect it to take in the region of y hours.
Basically, if it involves me doing anything other than talking to them on the phone for a couple of minutes, I would charge them. I have had to learn to do that though. It is unusual for a client to get upset about me charging though. They might decide to do it themselves but I can't think of any that have thought it was unreasonable for me to charge.

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Replying to bendybod:
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By Cylhia66
21st Jun 2023 16:11

That's one problem I regularly have actually. When I prepare the statutory accounts I see obvious mistakes with the bookkeeping such as the vehicles ledger recorded as a bank account, income recorded as en expense, VAT when they are no longer VAT registered, etc... I spend quite a while tidying things up. This is why a couple of years ago I added an article in my contract saying that they can do their bookkeepping themselves but if I have to spend time tidying up I'll charge £x per hour.

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By Moonbeam
21st Jun 2023 11:24

Compare this to going to a supermarket, paying for your goods, and then wanting something extra. Would you be prepared to pay for the extra stuff? Yes you would have to.
Start having a hard look at the way you calculate your fees and EXACTLY what the matching work would be for each client. Then send a polite email to the ones who're getting too much for free to tell them that for the same level of advice your charge will be £ xx in future.
There are far too many accountants charging peanuts out there.

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By Cylhia66
21st Jun 2023 16:17

I am so glad I mentioned this conundrum of mine on this forum. I have received excellent advice from all of you and it was really interesting to see that most of us face this sort of issue and that it's actually pretty common. But also and most importantly there are simple ways to handle this.

Thanks all for your sharing your tips and experience of the matter.

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By JamesDS
22nd Jun 2023 09:13

Client: "how do I do this thing I don't pay you to advise on"

You: "Hi lovely client people, thank you so much for the opportunity. That's part of our service that we offer to all our lovely clients as part of our menu-pricing offering. It will be my pleasure to help you with . Would you like to take up the service?

You can even follow up later with a "did you want to proceed" email on the assumption that you're concerned about missing a deadline or something!

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Replying to JamesDS:
By Moonbeam
22nd Jun 2023 09:45

That's a really nice way of dealing with the issue!
A lot of the time clients honestly aren't sure what our service covers and what it doesn't, so this response doesn't punish them for not knowing.

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