I know it is not the norm but in the circumstances, to protect one third of my annual income which is derived from this client, I filed the accounts with differences. I have taken the opportunity now to post up the final nine months and post all none sales/purchases figures to the client's Sage figures. I have now dealt with the bank, sales and purchase ledgers and have nearly removed the £485,000 differences on sales/purchase ledgers. The only thing remaining is the sale of a truck for £56,700 (including VAT) that wasn't passed through the records. There is now £75,000 owing to the VAT man which will be explained to the client and if he ignores it will be reported as a MLR matter. If the client refuses to pay all my fee I will resign as accountant for all his three companies. My fee income is so small that my main aim was to protect my income.
Many thanks to all those that were constructive in their replies to my question. Sorry for removing my original question but someone hacked my account and started to alter and remove things I had replied about.
Replies (24)
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It's a bit late now
I have just completed the preliminaries and filed Balance Sheet at Companies House
It's a bit late now to be getting squeamish about the full accounts when you have already filed abbreviated accounts at Companies House. Incidentally, are you suggesting that filing a balance sheet at Companies House is a preliminary - most of us would regard it as the final stage or perhaps, penultimate stage to filing the CT return.
While the Going is Good.
Bill, get paid and resign. It does not sound likely that cash is going to be forthcoming for any future work.
Are you arguing that it is OK to file provisional accounts that you know to be incorrect if you are a one-man band? If that's what you are arguing, then it's pathetic.
More work for yourself
Are you arguing that it is OK to file provisional accounts that you know to be incorrect if you are a one-man band? If that's what you are arguing, then it's pathetic.
Work has been done on these accounts but just ran out of time. At least work has been done on these accounts before filing, in the past when I had considerably more time pressure, but with straight forward clients, I have filed estimated provisional accounts with Companies House and HMRC. The figures are always corrected and it is done to make clients avoid unnecessary interest and penalties.
Maybe you would have more time if you didn't [***] about submitting provisional accounts and tax returns?
Obviously a huge fiddle going on
Dummy invoices that are not forming part of the accounts of company A, thereby reducing profits and CT, not to mention Vat, whilst company B makes full use of the dummy invoices to reduce vat bill, profits and therefore their CT. Run, don't walk.
2p worth
If it were my client I would not do the provisional accounts bit, clients can take the penalties on the chin if late through their fault. IMHO shielding them from the consequences of their poor records just drags out the issue, you are giving an easy way out to the seriousness of the accounting/ record keeping issues they face.
Re the vat issue, and the threat of your reporting to HMRC , IMHO not a good idea.You have a duty of care to the client and passing information to HMRC, without having a legal duty /right to so do, is dangerous.
You should of course do whatever money laundering reporting you think appropriate/ is required by law but direct intimation to HMRC, without client consent, is a dangerous path to take , especially with a possible irrate ex client.
You need to spell out to the client the issues, spell out the costs (estimate of costs to deal with the issues) and get them to::
1. Confirm they will pay you for work already done and still needing to be done.- a cheque on the table ought to suffice.
2. Sign pre prepared letter of authority instructing you to proceed to evaluate vat issues and then submit information to HMRC to correct errors.
If they will not do both then walk away and consider at that point your ML obligations.
I will leave you/him/company
If it were my client I would not do the provisional accounts bit, clients can take the penalties on the chin if late through their fault. IMHO shielding them from the consequences of their poor records just drags out the issue, you are giving an easy way out to the seriousness of the accounting/ record keeping issues they face.
Re the vat issue, and the threat of your reporting to HMRC , IMHO not a good idea.You have a duty of care to the client and passing information to HMRC, without having a legal duty /right to so do, is dangerous.
You should of course do whatever money laundering reporting you think appropriate/ is required by law but direct intimation to HMRC, without client consent, is a dangerous path to take , especially with a possible irrate ex client.
You need to spell out to the client the issues, spell out the costs (estimate of costs to deal with the issues) and get them to::
1. Confirm they will pay you for work already done and still needing to be done.- a cheque on the table ought to suffice.
2. Sign pre prepared letter of authority instructing you to proceed to evaluate vat issues and then submit information to HMRC to correct errors.
If they will not do both then walk away and consider at that point your ML obligations.
I am not registered for ML as 1) cannot get it 2) cannot afford it. Other people may have a lot to say about this but I have been an accountant for 45 years and have dealt with many clients of all types and I know the difference between right and wrong and don't need to pay a back door tax to fill the pockets of bent politicians in The Houses of Commons and Lords.Sorry, £110 p.a. with HMRC.
You are committing an offence acting as an ASP without being registered.
David Winch posted undernoted in April discussing some of the possible consequences, interesting article,
https://www.accountingweb.co.uk/group-thread/effect-failure-register-und...
"But what are the consequences of practising without having registered for any MLR supervision either with a professional body or HMRC?
It has always been clear that an unregistered person practicising as an external accountant by way of business will be liable to a civil penalty or criminal prosecution under MLR 2007.
But, as the recent High Court decision in RTA (Business Consultants) Ltd v Bracewell [2015] EWHC 630 (QB) (12 March 2015) makes clear, fees charged by the unregistered accountant are not legally recoverable from his clients. This is because the activity is an illegal one, which makes the contract for services unenforceable in law.
Whilst the High Court decision involved a firm of 'business transfer agents' who were (unwittingly) acting as unregistered 'estate agents' contrary to MLR 2007, the same principles will apply to an unregistered accountant.
Indeed, it could get worse. Where an accountant is prosecuted & convicted of a criminal offence of acting as an unregistered accountant in breach of MLR 2007 then any fees he has received will be proceeds of his criminal activity & may be subject to confiscation under the Proceeds of Crime Act 2002.
The moral of the story is 'Don't act as an external accountant, tax adviser or auditor without checking that you hold an appropriate practising certificate or registration with HMRC under MLR 2007'.
company that I do the work for are registered for ML. It is just that he was disqualified as a director for two years that I am in the position doing this work. He is now a director again and now as a MLC. No problem there?
I will leave you/him/ the company to your deliberations of what ought to be done by whom and when, the arrangements you have with others are not my concern.
My earlier post stands, lay the situation fairly in front of the client, get him to do the necessary and if client will not oblige walk away and consider who has ML obligations amongst you and needs to act (ensuring you do not in the process stray into tipping off.)
Hmmmm
This is windup. Nobody can be so unprofessional and dim.
You've obviously never met my ex...
Thanks
John Charles = Little White Bull.
It doesn't take much digging to realise.
Thanks - wont waste any more time on this member and his wild ramblings
I thought it was just me
With respect, Mr. Jones, and at the risk of apparent piety, I consider that in my first post, I showed you due respect and offered constructive [and indeed essential] advice, in order to protect your interests.
My last post arose from your having, without explanation, almost entirely deleted your original question, and likewise large parts of later posts, thereby rendering substantial parts of this thread almost meaningless. Perhaps you would very kindly reinstate your original question, and the subsequent posts, to assist other members in understanding the question raised by you.
Basil.
I wondered why some of the posts didn't make sense!
You should probably fashion a hat made of tin-foil. That way you are protected from the evil rays and won't be at the mercy of aliens.
Thread closed
Since the OP has removed their question we have decided to close the thread.