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Disengaged client, responding to pro clearance

Hi All,

Having spent a while browisng various threads on this I had to post a question myself on this.

I recently disengaged a client I've had for a 2 years. Reasons for this were failing to pay my bills, initially struggled to VAT Register the client despite the turnover. On registering only one VAT quarter was submitted, the following two were ignored and no information was supplied to me and they remain outstanding. Both VAT & large Self Assessment bills are outstanding, due to the sums outstanding the client has mentioned bankruptcy and limited company formation, plus other personal debts are involved. The relationship was always good despite the above, and  I did my best to help the client during the 2 years but really could not be bothered with the hassle chasing a client which did not care about their own affairs.

On disengagement the client fortunatly paid me the next day (leaving me in shock!). A few weeks on I receive a Professional Clearance letter in the post today for this client from an ICAEW registered firm. No signed authority from the client yet however.

So how do I inform the firm of the 'circumstances that we need to be aware of' without leaving myself open to things like slander, yet giving them the courtsey of knowing how much of a headache this client will be for them.

Do I obtain authority to release the information, and call the new accountant informally giving him a background then forward the paperwork? Speak to my professsional body? Or forward the information and not comment?

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By cbp99
26th Apr 2018 16:32

Reply to the new firm saying you will respond in full when you have the client's signed authority. They will doubtless request the client provide this (which may give them a clue as to his responsiveness).
When you have the authority, simply provide factual information regarding filing dates, outstanding submissions etc.

Thanks (2)
26th Apr 2018 16:44

Do nothing unless you are authorised to by your ex-client. if you get the go-ahead I would be inclined to advise the new firm that you disengaged some time ago (lest they believe you have been sacked). It might pique their interest, but if it doesn't then leave it alone.

How can you be vulnerable to accusations of slander if you tell the truth?

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26th Apr 2018 16:52

Id agree with Andy.
Stick to the facts, you acted until your resignation on date X
Invite them to call you.

Up to them if they do or not.

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26th Apr 2018 18:02

Perfect, thanks for you help all

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26th Apr 2018 18:05

I recently had a pro clear letter from someone I’d disengaged with. I just worked into the wording of my response that I had disengaged and ended with the usual “please contact me if you have any further queries”.

My thinking was that you only disengage for 3 reasons:

1. Client is a PITFA
2. Client can’t/won’t pay
3. Client is breaking the law and you can’t convince him not to.

As per Andy & IReally if they can’t read between lines / can’t be bothered to call you, that’s on them.

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26th Apr 2018 18:14

PITFA is 100% correct!

But very fair points too, thanks

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By mabzden
01st May 2018 11:09

Professional clearance is a nightmare area. A lot of firms consider is to be a "professional courtesy" and a quaint exchange of polite letters. Others seem to be so worried about being sued that they won't say anything negative unless it's in a secret, off-the-record phone call.

I looked recently at the guidance from a professional body and it said the purpose of professional clearance is to make sure:

"The incoming adviser is fully aware of all factors that may be relevant to acceptance of the appointment and the effective handling of the client’s tax affairs."

And:

"The incoming adviser is fully aware of all factors that may have a bearing on ensuring full disclosure of all relevant facts to HMRC."

So you have the responsibility to inform the new adviser of problems that involve not disclosing relevant information to HMRC, such as being late with VAT registration and not submitting VAT Returns.

If the client is disorganised and, and you say, doesn't care about his own tax affairs, then this will affect the new adviser's ability to effectively handle the client's tax affairs going forward. So that should be disclosed too.

Once you've done all that, don't be too surprised if the new accountant completely ignores your warnings. But that's their lookout.

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01st May 2018 12:52

A reply to a professional enquiry letter is protected by qualified privilege. Therefore you can only be sued if what you say is a malicious or reckless falsehood. If you tell what you believe to be true, you cannot be sued even if what you say turns out to be wrong. So don't hang back. I have several times over the years told incoming accountants of the antics of clients.

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