Death of family member operating as sole trader

Looking for advice as executor.

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Hi all,

A family member recently passed away who was operating as a sole trader, and I'm keen to get some advice as a non-accountant who is now the executor. They were no longer ACCA-acredited (never ICAEW to my knowledge) and mainly doing bookkeeping (?) services for a handful of longstanding local clients - self assessments, PAYE, and corporation tax/VAT for a couple clients.

The two areas I'm keen to get a POV on:

- I cannot see that they had PII. At this late stage of their career, with one prior successful claim against them likely pushing premiums up, and no longer paying ACCA dues I think they were just chancing it. Am I right in thinking it would not have been a legal requirement to have PII? Per the ICAEW a claim could still be made against the estate, so is it possible to take out posthumous PII to cover any potential claims?

- Given the above, how should I proceed re returning client documents? Most docs were retained in hard copy only; clients are naturally keen to have documents returned to pass to their new accountants. Do I let these go?

 

Thanks in advance!

Replies (13)

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By FactChecker
29th May 2024 13:57

If they were dealing with "self assessments, PAYE, and corporation tax/VAT" then they were providing more than 'bookkeeping services' ... but we don't know if what was provided constituted 'proper' agent services or just 'sitting next to Nellie' services.

Probably no longer relevant, but if the former than they would have needed to be a registered Agent with HMRC and to have held AML registration and so on ... which sounds unlikely. If operating 'under the radar', then it would seem unlikely they held any PII either?

I doubt any insurer would be prepared to issue cover retrospectively (let alone in what sounds like an unregulated environment), so that seems to be more a matter of cross your fingers and return all the client documents as quickly as possible.

But you haven't mentioned whether any of those clients still owe money to the deceased (or worse are still owed work against pre-payments) ... which as Executor will be part of your research into Assets & Liabilities of the Estate. This is the most likely bone of contention (from which claims can arise later), so I'd concentrate on that first.

Presumably the deceased didn't have any arrangement for 'cover' (if ill or on holiday) with anyone else to provide continuity of service?

Thanks (4)
Replying to FactChecker:
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By lostofbeckenham
29th May 2024 17:23

Thank you for your quick response, apologies for any inaccurate language. It was definitely proper agent services they were providing to clients, as a Tax Agent via the HRMC dashboards.

Food for thought re owed or prepaid amounts so will look into this. Unfortunately no 'alternate' arrangements were made.

Thanks (0)
paddle steamer
By DJKL
29th May 2024 14:15

Maybe not really on point, but any means of selling the client base to A N Other who will take over all the clients (who consent to be transferred)? This might give you a one stop shop re handing over paperwork etc rather than a protracted process of one client after another.

(You might not get very much but might get something)

Thanks (2)
Replying to DJKL:
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By Paul Crowley
29th May 2024 14:56

First thing I thought of and a practical solution.
@OP ignore selling the business, try to give it all to a proper registered accountant.
Clients that know he is deceased will be looking to move soonest.
DO NOT PASS OVER THE FULL FILES. There could be lots of things that could come back to haunt you.
Just give over to former clients things they gave to the accountant.

Thanks (3)
By ireallyshouldknowthisbut
29th May 2024 14:16

On the PII not sure you can even get insured in such a situation.

Quite frankly it would be a horrendous legal claim to make from the other side, and i would have thought most new accountants picking up a client in such circumstances and finding a major error worthy of a potential claim to just say "look, do you know how hard it would be to enforce this on the estate of a dead accountant?" and just say "forget it"

So personally i would not get PII as executor, and prehaps get some buy in from the residual beneficaries in writing of your decision if its worrying you.

On the old papers, if its really old school paper files then I would just deliver them all if local and a dozen or so addresses. Easier than mucking about with collections aas some people wont show and you will end up hanging about. Chose a nice day incase you are stacking it on their front porch!

Then having done than, just ignore further contact from old clients saying "I gave you all I had, sorry!"

Thanks (5)
Replying to ireallyshouldknowthisbut:
DougScott
By Dougscott
29th May 2024 14:48

I really wouldn't be handing over working papers to clients. They belong to the Estate and not the client and could potentially be used against the Estate if given to clients. The only things I would give to clients is their own cashbooks, bank statements, etc.

Perhaps you could find a local accountant willing to take on the portfolio for free and deal with the clients?

Thanks (4)
Replying to Dougscott:
By ireallyshouldknowthisbut
29th May 2024 15:09

I dont know how other people work, but there is nothing in my files I wouldnt give to another accountant.

Unless you are in the habit of putting in rude comments about them or cant do double entry and are just making it up, what is there to hide?

Even if there are mistakes, so what. At least the new accountant can find and fix. If you give them nothing, then you are handing over an impossible job and they will have to resort to guesing games and balancing numbers, and may assume errors exist which do not.

Anyway its personal opinion. Id not put anything in a file I wouldnt say to a client's face, and I am more than happy to show bridging papers as there is nothing to see other than how I got from one set of papers to the final accounts.

Thanks (3)
Replying to ireallyshouldknowthisbut:
paddle steamer
By DJKL
29th May 2024 15:15

Whilst a fair time ago I once had a colleague who did accounts on the:

Stock, say £5,000
Debtors, say £8,000
Creditors, say £4,000

basis

And be honest, how may accountants insist on stocktake sheets to prepare accounts for small traders?

Thanks (2)
Replying to DJKL:
By ireallyshouldknowthisbut
29th May 2024 16:36

DJKL wrote:

Whilst a fair time ago I once had a colleague who did accounts on the:

Stock, say £5,000
Debtors, say £8,000
Creditors, say £4,000

basis

And be honest, how may accountants insist on stocktake sheets to prepare accounts for small traders?

It is generally my assumption from accountants who wont share, they are are done with a big stetson. But somtimes its caution if they know its not been reviewed properly.

I ask for stock sheets if its mateial. Well one side of A4 with the items listed and some values on them. You need some basis for it even if it is rather rough and ready. For most micro businesses it shouldnt take too long to add up how much they have got in terms of half/whole/nearly empty boxes of stock and times by purchase price. And if its not tiny, they really ought to know what they have.

Thanks (1)
Replying to ireallyshouldknowthisbut:
paddle steamer
By DJKL
29th May 2024 16:47

It is getting them to do this at the right date, a six month rollback is not helpful and a later stocktake can be useless for say a seasonal business.

Clients can be difficult, once had one where they issued about 250 fees a year, when they got paid they wrote PAID on the invoices, catch was they never put the date despite my asking year after year, so calculating debtors involved matching up the whole year with the cash book then checking against post year end receipts for bad debts.

Thanks (1)
Replying to ireallyshouldknowthisbut:
DougScott
By Dougscott
29th May 2024 15:27

You implied you would hand the papers over to clients - or at least you mentioned several addresses? Accountants is a little different although even with new accountants I just hand over the info they need.

Thanks (0)
Replying to Dougscott:
By ireallyshouldknowthisbut
29th May 2024 16:33

@Doug, I wouldnt wait for a load of clerance letters, just do a round robin and drop off the papers to the local addreses. All done in a day hopefully.

Its an executor acting here for free for presumably a family member or good friend.

Most people probably couldnt even work out what are client papers, what are the accountants 'own' etc.

Thanks (1)
Pic01
By zxcvb
29th May 2024 15:38

I recently took on a client whose accountant had died. He was armed with all the files handed over by the executor. I was pleased to have them as it would have been almost impossible to have understood the b/f balances otherwise. It was proper old school pencil & paper and extended TB.
There were mistakes (an old loss carried forward "to be used the next time profits are above the personal allowance" and capital allowances used to the full, reducing already low profits) - I explained to the client that it wasn't worth pursuing and he shrugged and said the previous low fees probably balanced things out.

Thanks (4)