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Do I hand over my calculations?

New'ish client. Keeps questioning my advice and mow wants my calculations

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Recently gained a new client, who approached me, as he was about to have to register for VAT and did not know how to handle the returns and such like.

A point of note. He was sorting his own accounts and tax returns. I checked through his past efforts, and found what we would consider 'school-boy' errors e.g. claimed mileage allowance plus vehicle service costs, car insurance, tyres etc. After answering a hundred and one questions, he finally relented and agreed he had made incorrect tax relief claims.

I advised him to go FRS, as he would not be deemed as a Limited Cost Trader (he is one of the few who will benefit under the new rules).

He has now asked for all the calculations 'for his files'.

I have never been asked this before, but following on from all his questions and challenges to my advice, I suspect he is simply going to use these as a template and produce his own returns.

Doesn't seem right that I do all the study and research, only for a client to take my work and get to sort out his returns for free.

Would be interested to hear what you guys would do.

Thanks 

 

 

 

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By mrme89
01st Sep 2017 10:45

You've still done the work. If he doesn't pay, sue him. As a side issue, all the money up front or large deposit should be a must for this type of client.

There's no reason why you can't PDF them. Or create another spreadsheet with the values pasted so that all formulas are removed.

Thanks (3)
By Tornado
01st Sep 2017 11:24

With MTD on the way, there will be a lot of people wanting advice about how to use 'free' software and such like.

We need to be sure that all charges for time and advice are agreed in advance for all work that is or is likely to be carried out, and a payment in advance as well.

It will be up to the software developers and HMRC to provide support to those that want to go 'Free' or alone otherwise we will be doing a lot of work for nothing if we are not careful.

Depending on your arrangement with this client, I think you should produce the information requested (in some form) as you have (or will) make a charge for doing this. If he then uses that information to go it alone then that is OK as you will have provided your opinion on the situation, provided your reasoning and made the appropriate charge for this.

Thanks (3)
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01st Sep 2017 12:47

Only pass over when he pays your bill.

If you think he will then do things himself, issue a fee for the set up time involved, I do this and then agree that I will issue a credit note to cover the amount over say the next 3 years(1/3 per year). If he stops using your services then he has to pay set up costs. We had this a couple of time on B2L and the tax returns - we did all the initial work and issued fee on the assumption we would continue to do the work - then the client just copied our work and did it themselves the next year.

Thanks (1)
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01st Sep 2017 12:52

Agree with the above.

On the assumption you are happy to boot the client down the road, then:

You have to provide the breakdown because the client is paying for it. You don't have to provide it in a re-usable format: you are being paid to prepare a calculation not to prepare xls templates.

Your breakdown should be self explanatory as to calculation but not as to modus operandi because, as per point above, you are being paid to prepare a calculation not provide an educational service to the client.

Thanks (3)
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02nd Sep 2017 13:37

Hi All,

Thanks for all your suggestions.

Think I'll simply provide a pdf of the calculations.

If he wishes to work out how I came to the figures, then that's up to him.

Will also be sure to take deposits if I have this type of client again.

Cheers.

Thanks (0)
04th Sep 2017 07:14

The answer, legally, is no.
I had a situation last year where I had been asked by a solicitor acting on behalf of my client to send both him and the othersides solicitors my working papers to back up the letting accounts I had prepared. The case was nothing to do with my work - my client was being sued for the usual 'you've taken more out of the business that I have' claim.
anyway... I was not happy about this and rang my professional indemnity people for advice.
Their solicitor said that my working papers were legaly mine and mine alone and neednt be handed over to anyone unless told to by court order.
in your case it seems to me (as others are seeming to agree) that he is using your brains only to do the work himself in the future by copying your methods etc.
I would tell him the above that your working papers are legally your own and as such you wont be sending to him, issue a final invoice, wait 30 days for payment and if not paid go down the suing route. In any event get rid - you have other clients to deal with.

Thanks (4)
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04th Sep 2017 08:02

Thanks JAADAMS

Good to know that I can withhold critical info.

Thanks (0)
By DJKL
to CardiffAccountant
04th Sep 2017 09:50

I am not wholly convinced, amended vat calculations are presumably part of the business accounting records. If paid to prepare same then are these now the client's records not the firm's?

The line between firm working papers and client's accounting records can be thin, there is certainly no one size fits all.

Edit-presuming what were created were actual vat calculations used in a return rather than vat what if calculations.

Thanks (1)
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05th Sep 2017 11:43

Get him to sign a letter of engagement and specify the cost should he leave you before a reasonable fee is paid - presumably a monthly arrangement. If you have invested a few hours in research etc., it is only reasonable to be compensated at a reasonable rate.

Thanks (1)
By DJKL
to Yorkshire Blue
05th Sep 2017 12:08

Depends on the research.

Always thought it strange to pay a professional £250 per hour to research an issue, at that charge out rate I expect them to already know the law/similar, so what particular research should be needed and why should the client pay for it?

I do not charge my clients for my reading up on an issue, imho they ought to be able to expect that a sufficient knowledge level comes with the role I provide, if that is not the case ,or I am rusty or stale, surely that is my cost not theirs?

The premium rates we charge assume a knowledge level and it surely cannot be fair to charge a client for our deficiencies.

Thanks (1)
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to DJKL
05th Sep 2017 15:45

The research done may not have been done for this particular client, but hours spent generally with staying upto date and to be able to offer a service deserves to be compensated. Similarly, it is unreasonable of clients to expect researched advice for free unless it is offered for free, eg, free initial consultations, where it would expected that recovery will be made during the relationship.

Thanks (0)
By DJKL
to Yorkshire Blue
05th Sep 2017 16:04

Surely one charges for the time spent applying such research/knowledge to the client's affairs, but not for the research (self tuition) time acquiring said knowledge.

The charging rate in itself assumes the knowledge- we are hired at the higher rates we charge because we are assumed to have the knowledge the client requires and the ability to apply it to the client's problem.

So, I have no problem someone charging for the time taken to do calculations, applying the knowledge to the client's particular case, but it seems somewhat strange to charge the client for my acquiring the knowledge, I expect to recover that cost by selling it to multiple clients over and over not the first one who comes over the threshold needing this particular knowledge.

Thanks (0)
05th Sep 2017 12:25

Check with your professional body. ICAEW always used to say that only audit papers beloonged to the auditor. Other working papers belong to the client as the accountant acts as agent. I have not checked this out recently. Obviously, the client must pay for the work you have done, assuming he has signed or agreed a contract or letter of engagement. If he is worried your figures might be wrong, he should still pay and can always sue you afterwards if he can prove an error that is your fault!

Thanks (1)
By DJKL
to tonyaustin
05th Sep 2017 12:42

tonyaustin wrote:

. If he is worried your figures might be wrong, he should still pay and can always sue you afterwards if he can prove an error that is your fault!

and can show he has suffered loss, fault is not enough.

Thanks (1)
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05th Sep 2017 13:51

Hi All,

Thanks for your views and comments.

FYI - I always complete a Letter of Engagement and confirm my fees in writing, before any work is undertaken.

DJKL - When I mentioned the research undertaken, I was alluding to the fact that as accountants we spend many hours ensuring our knowledge is up-to-date.

For someone to then 'take' my research/study and use it for their own purposes (without any payment), I feel is wrong. I was not suggesting that I charged the client for research.

Once again - thanks all.

Thanks (0)
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05th Sep 2017 22:25

Hi DJKL,

Thanks for showing such an interest in my situation.

As I have been trying to explain (though not very successfully - my fault), I am not suggesting that I charge the client for the research I conducted in order that I put myself in a position whereby I can handle his particular requirements.

All I am trying to say, is that I have studied and researched for many hours (to gain an in-depth understanding of VAT and such like), and to then pass my gained knowledge to a client free of charge, only for them to use this information to produce returns for themselves, just seems unfair.

I am the one who paid for 'webinars' (Instant CPD), travelled to various workshops, fought my way through the HMRC website and waited anything up to 45 mins. for a HMRC adviser to answer any queries I have. Why, having gone through all this, I should then pass onto a client the knowledge that I have gained?

Just seems wrong - that's all.

Thanks (0)
By DJKL
to CardiffAccountant
06th Sep 2017 10:25

So, supply the calculations you prepared in pdf form, as previously discussed on the thread. You are not passing on all your knowledge merely that part inherent within these calculations. You just need to charge for the time required to prepare the calculations.

If you were to take any other approach where would you draw the line; not let clients have a copy of their tax returns or capital allowances computations in case they crib these next year and go DIY?

And just console yourself that if the client does go away on a DIY trip he will make mistakes, his business will change slightly and the calcs you did would need tweaked but he will be unaware of this and likely sail on using the model purloined; you will get your revenge.

Always remember that a client with a little knowledge can be more dangerous to him/her self than one who is totally ignorant.

So in the long term console yourself with my late father's favourite toast,

"God bless the man who writes his own will"
(he was a solicitor)

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