Fee for Coronavirus advice, grants, loans etc.

A rather insensitive, but highly relevant question regarding Coronavirus advice and related support

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Dear All,

As I am sure is the case across the board, recent announcements by the Chancellor have resulted in huge increases in requests for advice from clients. These range from simple "hand-holding" exercises to full-blown business plans to support loan applications and everything in between. Furthermore, in relation to local authority grants (and no doubt VAT and payroll support following today's announcement), my recent suggestions that clients contact the local authority have resulted in those self-same authorities advising that they contact their accountant - who has all the answers.

In light of the above, time which would normally be spent preparing accounts, tax returns and other compliance-related matters, is now being diverted. It is instead devoted to answering, researching and attempting to interpret the sporadic (and often scant) information being provided from "on high". Indeed, from Monday 23rd, I already know of a few clients who are looking for assistance with the provision of information in relation to CBILS loan applications. At the moment, it does feel like my only purpose in business is to be a professional advisor, financial advisor and HR advisor - all for UK Plc!

I know I will not be alone in this and realise that you will (pretty much) all be under the same pressure.

Now, here is the insensitive part! It is readily expected that professional advisors will assist their clients with navigating and understanding the daily changes in the protocol (that is, after all, our remit). It is also readily expected that such advice will be provided as part of ongoing service agreements. It is furthermore assumed that those same professional advisors will review their fee structures to assist struggling businesses (offering discounts, extended payment terms etc.). However, in reality (as a sole practitioner) I do not have the capacity to provide unlimited free advice and support. I am also unable to hold the hands of every business owner throughout this entire period (let alone to then discount or write off any potential fee income). Furthermore, at this stage, no element of any of the announced support packages applies to me, nor to my business so, the prospect of 3-6 months, working full time (and more) without any due recompense, is clearly concerning!

So, to my question(s)...

How are other accountants handling advice relating to Coronavirus? Are you simply providing free advice, free business plans, free cashflow forecasts (etc.) whilst taking the hit in-house? Are you charging clients additional fees for advice (I mean relevant advice, not generic advice) even though this could potentially be classed as unethical/ profiteering from others misfortune? Are you simply telling clients who to approach and (effectively) telling them they are on their own?

As I say, this is very insensitive and, in an ideal world, I would prefer to have unlimited time to provide to unlimited clients without any charge. Indeed, I do feel very sorry for everyone who is in an unfortunate position as a result of Covid-19. However, there must certainly be a limit to the help and assistance we are able to offer. After all, if we spend all our time attempting to freely assist clients with keeping food on their tables, who will then assist us in putting food on our own tables? We are accountants and most of us are not charitable organisations.

I look forward to hearing any thoughts on this matter even if the general response is just "there are many people in a worse position than me"!

Many thanks

Dave

***EDIT*** 21/03/2020 15:21

For clarity...
 - I AM NOT A CHARLATAN! Quite the opposite in fact!
 - I am not seeking to make a profit at the expense of  vulnerable clients, am not seeking to kick people while they are down and am not trying to be greedy or profiteer from the unfortunate position our clients are in, through no fault of their own
 - I, as I am sure is the case with many other sole practitioners, put clients first (all of the time), offer additional support (all of the time) and keep client bills to a minimum - just sufficient to keep food on our own tables
 - I, as with many other sole practitioners, do not make huge profits, take grand holidays, drive flash cars, go for slap-up meals (even though many of our clients do!) and are only able to keep trading through making a modest living from even more modest/ non-existent ongoing fees
 - I, as with many other home-based, single-person businesses are thus far ineligible for any of the supportive measures announced by the Chancellor (even though most of our clients are), and it has to be understood that these announcements will cause additional work for accountants
 - Furthermore, on the subject of advice, I as with many others on here, always offer free advice - be it 5 minutes of the phone, 5 days preparing a report or 20 emails regarding HR issues. We simply "take the hit" out of our modest income. Indeed, for many of us, anything outside of preparing accounts, CT returns, tax returns, submission (not preparation) of VAT returns and submission of (not related advice regarding) payroll, goes uncharged - this can amount to anything from 2 to 200 hours per year! Clients just expect that picking up the phone, asking detailed questions, requiring additional works - is all part of the service! I, as with others on here would not wish it any other way!
- Indeed, my situation is slightly different because, I also offer a considerable amount of time on a pro-bono/ reduced basis to people who are struggling to get by and do not have the funds to, or do not wish to budget for, an accountant. It prevents them from ending up in trouble with HMRC! These are not clients who would approach (or be readily welcomed by) most large firms.

However...
 - I do know that it is generally accepted by many other accounting firms that anything other than generic/ general advice does not come free. Yes, the odd 5 minutes on the phone doesn't go on the time cards but a letter, report or business plan does!
 - This question is therefore whether it would be appropriate to charge for time spent in carrying out additional work that may be required for a client to obtain benefits, loans, grants, lay-off funding etc. Clearly, the usual questions would be asked... is there a benefit to the client, is the client in a position to pay, is it appropriate to charge - given the circumstances?
 - Picture the situation where a client has huge reserves, the business will barely be touched by the outbreak (or even benefit from it if they supply hand sanitiser and PPE - I do know one - not my client!), will qualify for the £10K business rates grant, will be entitled to a 9 month VAT break/ 6 month SA POA break, will apply for a 12-month interest-free loan, and will see little (or no) difference in bottom-line profit. This is not a "struggling" client, but they will need professional time equivalent to 2, 5 or even 10 times their annual fees in order to receive the support measures they are entitled to. I agree the client shouldn't have to pay to get what is rightfully theirs and shouldn't be put out in any way in order that they may receive it and, as we are the only cog between client and authorities, and cost (time and fees) should, therefore, fall to us. However... if the client can afford to pay?!

Finally...
 - I appreciate the calls for everyone to "do their bit" but, for reasons given above, I, and many other sole practitioners (and firms), have been "doing our bit" for many years and, as a result, do not have endless reserves
 - I accept that it may be the "right thing to do" to discount, write off, offer payment holidays or work for no fees but the practicalities are - with many of my clients, the only way I could discount further would be to start paying them a retainer!
 - I further accept that we have a moral and ethical duty to provide our services, without charge, until such time as the situation has improved (could be 12 weeks but, with a potential recession, could be many years)
 - I also understand that any ongoing recharges of costs incurred for a client (e.g. cloud software subscriptions, annual fees paid, CH form fees etc.) should probably cease - i.e. we take the hit
 - However, the practicality is... many sole practitioners are not taking a small hit on profit, they are taking a hit on the minimal income they need to "get by" (cheaply) - for the record, I live on substantially less than £10K per annum (in the North) - considerable less than the majority of my clients!
 - I do appreciate that, to some on here, sole practitioners operating as I do, are viewed in a dim light. We are often seen as a thorn in the side of larger firms and are regularly held responsible for "de-valuing" the profession. However, please remember, and in "ordinary times" we take the clients you possibly won't (too much work for too small a fee). If we're not here, and we don't take 'em, they'll either fall below the parapet, cease trading, or fall foul of HMRC!

I hope this amendment has put a bit more light on the situation? I have previously been answering all (or most) of the posts in line with the above. However, I hope this explains in a little more detail the issue I'm getting at? It really isn't a case of "pocket lining" or profiteering! It's more about ensuring business continuity and basic living so that we are actually able to continue supporting clients throughout these uncertain times.

Kind regards

Replies (45)

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blue sheep
By NH
20th Mar 2020 20:30

I would say with all due respect you need to get a grip and if you really care about your clients and fellow human beings start to provide whatever they need and forget about your own profit.

It might sound harsh but we really are all in this mess together and if that means you have to work a few extra hours so be it.

I was considering lowering fees nevermind increasing them, the fact of the matter is that if you take the attitude that you are going to charge more you will not retain clients and those clients may not survive this anyway.

Sorry to be so blunt but your question is wrong on so many levels imho

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Replying to NH:
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By DKB-Sheffield
20th Mar 2020 21:13

Many thanks for your response.

Just to clarify, and for the record, this is not about "profit", it merely a question of sustainability. I already spend around 80% of my working week (which is always in excess of 60 hours) working for clients on a "pro bono" basis - that is off-book, uncharged and not part of any sort of retainer. I only charge clients for annual compliance - very rarely anything else.

The question is basically whether the correct thing to do is to over-work, take personal risks with health and finance, and lose our own businesses, in order that we may ensure clients are as unaffected by the situation as possible?

We are clearly bound by ethics (and are potentially in the firing line for litigation if a client's business fails due to this crisis). However, our ethical duty extend to bankrupting ourselves (both financially and health-wise). I believe your response suggests that we should.

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Replying to DKB-Sheffield:
FT
By FirstTab
20th Mar 2020 21:23

Thank you for the OP. It is a question. I had in on my mind as well.

I will charge for my time. I am running a business and I am not a charity. I cannot go to my local supermarket and not pay because we are in this together. Neither will I be exempted from paying my bills.

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Replying to FirstTab:
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By meadowsaw227
27th Mar 2020 11:52

I do not expect to be charging for my time as I want to have a client base at the end of it.
With self isolation I will not be spending much money anyway and now all my holidays have been cancelled and the refunds coming in.
I know all of my clients personally and will do whatever it takes to help them through it and not make a charge for it .

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Replying to FirstTab:
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By meadowsaw227
24th Mar 2020 09:29

Lets hope your clients that are left will think the same when all this is finally over .
I will not be charging any extra fees and expect to do a lot of handholding/applications over the next 6 -12 months with a lot of my normal monthly/quarterly fees being stopped/waived.

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Replying to NH:
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By Rgab1947
24th Mar 2020 09:52

Sorry we are not charities or Gov with unlimited funds.

I can certainly not see the plumber to help with your internal flooding for free even where you are older or whatever. They are in business so not exactly an eldery cancer patient to whom I would show sympathy and do a freebie. We all presumably do pro bono work at times.

I will charge but will extend terms if they struggle.

I do send out info as I always do and never charge. But a budget and cash flow projections and what have you. No its work so is charged.

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By chrisacc1985
20th Mar 2020 20:37

Hi Dave

Being a solo practitioner, I am in a similar position to you. I have sent out a mailing to all clients covering the details of the measures announced so far, and given clients links to where they will be able to get additional information as it is released. I have also included contact details of the Government’s Business Support Helpline (0300 456 3565), where I hope a number of them will go to ask various queries.

Beyond that, I am responding to individual queries, partly out of civic duty, partly out of loyalty to the client (and partly out of self interest as I don't want to lose the client). So far I have not had the impression that my clients are expecting "hand holding". Should a client expect more involved assistance, such as with business plans or cash flow forecasts I would certainly expect this to be paid work and would be weary of the credit risk of a client.

Whilst having sympathy for clients, and helping where you can, I do believe that you are entitled to factor in commercial realities and your own personal capacity when deciding on where you give your time.

I would also be interested in hearing other peoples approaches/thoughts.

Chris

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Replying to chrisacc1985:
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By DKB-Sheffield
20th Mar 2020 21:18

Thank you Chris.

I did actually send an email yesterday and will be doing the same every other day to keep clients informed.

I do feel personally responsible for each and every client and if a single client fails as a result of this, I will hold myself personally accountable.

However, it does fall the practicalities of whether there is really capacity to provide unlimited hours of support to each and every client. There simply aren't enough hours in the day or week.

Thanks again

Dave

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By sanjay100
20th Mar 2020 20:49

Look to be honest there is going to be less work around no one is filing VAT returns, others will delay self assessment unless they are entitled to a refund, no one is going to be a particular bothered about other filings as well. None of us can do anything apart from work at the moment so might as well help others.

I am just calling clients to provide them moral support and see if there is anything I can help him with. Obviously I wouldn't dare to charge them for any advice.

Yes if they require a cashflow or business plans then will charge if they can afford it. If they are desperate then I may decide just to produce it for them free of charge. I believe if you do a good deed for someone it will come back either through this client or another way in life. Yes we have a business to run but there has to be a human element too when so many will lose their jobs and businesses to no fault of their own.

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Replying to sanjay100:
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By gavinbrown1984
20th Mar 2020 21:14

I think vat returns still have to be submitted, it’s just payments that are deferred.

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Replying to sanjay100:
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By DKB-Sheffield
20th Mar 2020 21:26

Thanks Sanjay,

I believe VAT returns are still required and CT returns and accounts etc. will surely still incur penalties for late filing?

As I have stated in a previous reply, I am not trying to "money-grab" as 80% of my fees are pro-bono. However, there does have to be a limit - not just financially but from a health perspective. Or does there?

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By Figurate
20th Mar 2020 21:19

To be honest, anything Coronavirus related, I'm doing for free.

It feels like the right thing to do.

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By Tim Vane
20th Mar 2020 21:41

So you only currently charge 20% of the time you work? Again, I find it astonishing that fellow accountants put such a low value on their time. I do the odd bit, as I'm sure we all do, but if I found myself working a lot of hours that I'm not getting paid for, I'd seriously question my business plan.

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Replying to Tim Vane:
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By DKB-Sheffield
20th Mar 2020 22:17

Hi Tim,

Thank you for your response. "Yes", that is correct. I decided a few years ago that, if I had just enough to get pay subscriptions, software fees and keep a roof over my head (or half of one), I'd offer my services F.O.C to small (fledgling) sole traders and companies who otherwise would not employ the services of an accountant - in other words, I'm not offer free services in order to compete. Basically, for reasons I won't go into, an acquaintance got into deep water with HMRC because they were unable to pay for an accountant which was quite an eye-opener and I have adopted this policy ever since.

I'm simply not in it to "make" money - just to cover costs. I clearly have some paying clients to keep the business ticking over (i.e. ones that can/ could afford to pay), some of whom will (believe it or not) potentially "benefit" from the situation (e.g. one will receive a business rates grant equal to 6 months turnover). However, because of Coronavirus, the expectation - and advice on here - is that we waive all fees, provide unlimited free advice and go the extra mile to ensure a client's business (not ours) survives.

Incidentally, I'm not suggesting a couple of extra hours advice here and there. So far this week (since Monday) it's 40 hours on top of 20 hours "contracted" pro bono work with another 20 hours set aside over the weekend.

Thanks (1)
Replying to DKB-Sheffield:
blue sheep
By NH
21st Mar 2020 06:32

hmm, in that case your original question was somewhat misleading as 99.9% of people on here will not be in the same position as you are and we can only respond according to our own circumstances.

All I can say, and I think I am probably fairly typical of other small practices, in a normal week I probably work average full time hours spread across the 7 days, that gives me a decent living. This week has been exceptional and I have been working 12 hour days. I will not be charging any more for that time.

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Replying to Tim Vane:
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By JS23
24th Mar 2020 10:58

I agree with Tim

We value ourselves so low, unlike to law professionals where hourly rates are set standard for all levels of staff and clients do not haggle.

This is one reason fellow professionals find hard to quote bigger fees because someone else is willing to take a lower fee in return for the same service even if it means working longer hours or poor service.

This is just my general observation, not targeted to the professional who wrote this article.

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ALISK
By atleastisoundknowledgable...
20th Mar 2020 21:50

My thinking is that if I can do my bit to guide clients through this, then I will keep a grateful client at the other end.

I’m giving support & advice as best I can, in lieu of less work being done over these months.

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boxfile
By spilly
20th Mar 2020 22:01

We’re giving general advice where requested and pointing clients to other sources of information in the hope they will start to source information from there rather than ask us every time something else is announced.
Most of our clients pay monthly so we have given payment holidays to some clients in the entertainment & event industries and suppliers to them as their income has plummeted to virtually nil.
Not been asked to do any forecasts or cash flows yet, but it would depend on the client as to whether we charge for this, and if we deferred payment for doing them.

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paddle steamer
By DJKL
20th Mar 2020 23:16

The tricky bit will be advising about some of the Rates based support packages before we have the small print (and possibly even when we do), there is scope to mess up and one has to ask whether , in the event of a client legal claim that poor advice was offered, that one could readily demonstrate appropriate qualification and training.

Loan applications, fine, pointing out what is available, fine, advising? -not so sure.

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Replying to DJKL:
blue sheep
By NH
21st Mar 2020 06:24

nonsense, you just tell people we do not have all the details, this is what we think will happen and refer them to their local authority

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Replying to NH:
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By DKB-Sheffield
21st Mar 2020 12:47

I believe this may be where we differ on the definition of unlimited advice/ client expectation.

We clearly have very sifferent clients/ client relationships.

In my opinion/ experience, referring a client to the authority is not covering client expectation, let alone exceeding it. They simply don't have the capability (and in many cases, the ability) to complete and file any of forms that may be required.

At the end of the day, it comes down to client expectation. Clients hear the Chancellor say "all SSP will be repaid", "80% of all salaries will be paid", " VAT/ SA will not be payable", "guaranteed loans will be given", and "all businesses will receive a £25K grant". Until all of the above is paid into the client's bank account.. they haven't received the right level of support - regardless of their individual curcumstances! Some clients are not interested in the detail... just the headline promises!

Following the suggestions in this post, I realise that many of you are ceasing to bill clients indefinitely and, I assume writing off all work in progress. Afterall, and in the eyes if many clients, our profession is a "zero-cost" business. Theee actions just reinforce that assumption. I will therefore do the same in the hope that SAGE, Iris, Associations, subcontractors, staff (not relevant to me) and other service providers will do the same.

Hopefully, when all is over (and it could be many months/ years before clients are back to 100% productivity - hence when it is ethical to start charging again), clients will more than happily start paying again for our "zero cost business" fees.

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Replying to DKB-Sheffield:
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By rockallj
21st Mar 2020 20:06

Following the suggestions in this post, I realise that many of you are ceasing to bill clients indefinitely and, I assume writing off all work in progress. Afterall, and in the eyes if many clients, our profession is a "zero-cost" business. Theee actions just reinforce that assumption. I will therefore do the same in the hope that SAGE, Iris, Associations, subcontractors, staff (not relevant to me) and other service providers will do the same. “

All very laudable, but you’re on a hiding to nothing. Do you think my professional body is going to waive my fees? We have to live through this too and put food on the table.

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Replying to NH:
paddle steamer
By DJKL
21st Mar 2020 17:27

Precisely what I was saying, pointing out to them what is out there is fine but that is not advice re what they should do, advice is dangerous without full knowledge.

For instance if a client is considering , to save money, giving up a month to month lease, if they so do and it turns out the qualifying date for the £10,000 grant is after they have given up the unit, they lose, but if they carry on letting it as someone advised them about the grant and it turns out the eligible date was 21 March, they may have expended money on the lease they could have saved- without the detail re how and when one precisely qualifies beyond requiring at some point to be eligible for Small Business Bonus Scheme advice is not possible.

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By mtoms
21st Mar 2020 07:31

Surely this is all about balance. Most of what we have done so far will be for free and we all need to help one another at this time. However a client with £1m of cash who wants to know the result of paying off loyal staff? Maybe a fee? When we come to helping claim grants and 80% of wages, this will no doubt be on a case by case basis.

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Replying to mtoms:
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By DKB-Sheffield
21st Mar 2020 12:58

mtoms wrote:

However a client with £1m of cash who wants to know the result of paying off loyal staff? Maybe a fee?

These are actually the clients I'm teferring to. The ones who can afford to pay, will barely be affected by the situation and are advised that because of Coronavirus they should refuse to pay for anything.

It is not actually the smaller clients who are willing to pay (or are pro bono) or need cashflow assistance!!!

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By williams lester accountants
21st Mar 2020 11:53

We are offering free advice to client and non-clients alike, all we have asked in return is for these businesses to make a donation to a local homeless charity or food bank, even if it cannot be done now, then some time in the future.

There is a bigger picture here than how much money I have in my bank account, so if we can help another business, we will.

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Jennifer Adams
By Jennifer Adams
21st Mar 2020 17:56

May I refer everyone to an article I wrote a few days ago on this very subject. Please note: the article was written before the government announced its initiatives

"Covid-19 - helping clients through the crisis'
https://www.accountingweb.co.uk/practice/practice-strategy/covid-19-help...

in that article I pointed out that
"clients are looking for a guide. They want to know that there is someone there who cares about their business, so send an email round to clients, and phone any who do not email"

"Tell them that you will keep in touch and stress that they must do the same. The sooner that you are made aware of any problem, the easier it might be to solve especially with reference to HMRC payment"

and:

"As accountants, we are best placed to consider the financial impact that this outbreak will have on each of our clients' businesses and ours".

and most importantly..." If they go under then we also lose business".

>> I have written 4 blogs/notices so far and sent them round to relevant clients. I've told them that I am here and directed them to info on HMRC's website and the FSB site.

I've had a couple of clients ring in a state and in need of guidance and a sympathetic ear - one has worked it out that he has 5 weeks and that is it even with any loan (he's a bespoke kitchen fitter'). There is so much being announced, downloaded, emailed, said on Tv that its difficult for many clients to know what is what.

Sorry... no I'm not charging. Many of my clients have been with me for years and years. These are unusual distressing times, never encountered in the majority of our lifetimes and (hopefully) will never be met again.

Clients who get through this will remember your help and stay when things get better.

The USP given on nearly all accountants websites is ' we care about you and your business'.. now is the time to put your money where your mouth is as they say.

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By DKB-Sheffield
21st Mar 2020 19:12

Dear All,

This question seems to have been taken all out of context and was never intended to be a question of "how much profit one can make from other people's misfortune". I clearly worded it incorrectly!

The question posed was one I was sure I was not alone in considering. I have genuine business concerns - not just for me - for my clients.

I have never run my practice to generate vast profits. I would rather go without myself than prevent clients from having the lifestyle they deserve. I cover my business costs and my basic living costs. I don't build up reserves - my clients keep more of their money (i.e. they make profit, I don't). I hold off billing/ chasing clients for months (even years) to assist with their cashflow. My clients do appreciate that. However, I am reliant on the small amount of fee revenue I generate (£0-£160 per client per annum in general) - not for me to live a luxurious lifestyle, but to keep going for my clients. Surely I am not alone in this?

The advice seems to be cease charging fees, write off any WIP, and work pro-bono until all of this is over and clients have recovered from the after-effects (potentially months and years). It just isn't sustainable and I really do not believe there is a practice in the country who is considering ceasing all fee-based charges indefinitely.

As I have said, I am not the money-grabbing Del Boy this post has made me out to be. I will now be greatly discounting (not writing off my WIP book), will be deferring payments, will be reducing my fees to the minimum possible operating level and will not charge clients for non-compliance services over the next 12 weeks (or until the peak has passed). I will also consider paying pro-bono clients a small retainer as they will not benefit from a reduction in fees.

In all honesty, I can do no more. If software subscriptions, membership fees, insurance premiums, stationery costs etc. were to be reduced, I could pass that saving on to clients as well however, this is unlikely.

Incidentally, I agree that without our clients we have no business. However, if we cannot sustain our own businesses or keep a roof over our own heads, we are no use to anyone - particularly the clients we are trying to protect. That's not selfish - just practical.

Thanks (2)
FT
By FirstTab
21st Mar 2020 20:06

You should not feel guilty about making profits. I would not be so concerned about the opinions of others. They may have the luxury to be so charitable.

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By Manchester_man
21st Mar 2020 21:06

So these people who are providing help for free, are you saying that you have cancelled your monthly fees so that all income has ceased? Or are you talking about ‘only’ the clients whose businesses have had to cease?

I too am spending a lot of time helping clients at the moment and I have some huge decisions to make next week about who should still pay the monthly fees and who shouldn’t.

So far only one client has had to close, although I fully expect that to change in the next week.

How exactly do we survive if we stop taking monthly fees?

I’m just trying to find out what the consensus is this.

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Replying to Manchester_man:
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By marks
21st Mar 2020 21:42

Quote:

How exactly do we survive if we stop taking monthly fees?

Couple of options

1. Living off built up reserves and cut costs
2.Take the advise you are giving clients; get £10k rates grant, take out interest free loan.

Personally I wouldnt stop. If client asks will see if can reach agreement over the next 3 months.

Only have one client ask so far. They have rental accommodation that had dried up overnight and they want to cut costs so they can pay mortgages on them. Advised them to apply for 3 month holiday mortgage which is their biggest cost.

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Replying to marks:
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By DKB-Sheffield
21st Mar 2020 22:55

Quote:

Quote:

1. Living off built up reserves and cut costs

This would suggest having made sufficient profit from clients in the past!

For those of us who truly have supported clients for years by covering basic costs and not making opportune gains, we have little or no reserves! Yet, it is those of us who have done the right thing by our clients all along, who are now completely in the wrong for being unable to support them through this without passing the lowest possible fees on to them now.

If you never made a profit from client fees before, how do you give it all back now?

Is anyone, other than someone with significant financial support from elsewhere, able to - hand on heart - say they have never made a significant profit from clients, yet are still able to wipe their fees indefinitely?

If over the last 10 years you have built significant reserves through charging clients significantly more than an apportionment of your overheads, please do not now take the moral high ground and dictate that others who have supported clients through thick and thin, for very little (or no) recompense are being immoral in suggesting that some clients, who may be able to afford to pay for some services, pay a little to cover time spent during this period.

Believe me, if I had £100K in reserves, I'd not be asking the question. I'd budget to provide free services to all and look to take on some of my client's overheads. Alas, that is not the case.

As for costs... without reducing client services (which we should be increasing) costs are already at bare bones level - how can anyone provide true client value for money if that money is wasted on non-essentials?

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Replying to marks:
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By DKB-Sheffield
21st Mar 2020 23:10

Quote:

Quote:

2.Take the advise you are giving clients; get £10k rates grant, take out interest free loans

£10K rates grant isn't applicable to home working.

We're supposed to advise clients not to overstretch themselves and not take on debt they could never repay - surely! Clients will already build ip tax and VAT debts which they won't be able to repay next year. A loan on top would simply tip them over the edge. If they survive the crisis, they'll never live with the repayments!

So, if we take out a loan, with no apparent future income stream, so that a client doesn't have to take a loan themselves, this is surely madness?

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Replying to Manchester_man:
blue sheep
By NH
22nd Mar 2020 06:19

[quote=]

So these people who are providing help for free, are you saying that you have cancelled your monthly fees so that all income has ceased?

I dont see cancelling all monthly fees as an option at this stage, the clients need us more than ever to bring some sort of clarity to all the confusion and to help in claiming whatever they can. Therefore we need to survive.
In addition to that not all clients will struggle to pay so this has to be on a case by case basis.

The message I am getting back from clients is, "your payment is one of the essentials we will not be cancelling until it gets to the point where we cannot pay". I am sure other clients that we may not have a very close relationship with will be thinking, "thats one I can cancel but leave it for now in case we need them".

The other aspect is that the worst is yet to come and I can see big problems in a few months when we start SA season billing as 50% of our business is annual billing and expect a lot of those clients will be paying late if at all, so to my mind we need to be building up whatever resources we can now so we can continue to operate right through the year.

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Replying to NH:
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By DKB-Sheffield
22nd Mar 2020 17:32

Quote:

Sorry to be so blunt but your question is wrong on so many levels imho

Quote:

I dont see cancelling all monthly fees as an option at this stage, the clients need us more than ever to bring some sort of clarity to all the confusion and to help in claiming whatever they can. Therefore we need to survive.

What an about-turn seems to have occurred here!

The question... and whilst I left out the figures... was basically would it be relevant to charge a (small) fee (say £100 or £200 for a £50,000 loan application, money to be used to ensure the client can pay his personal remuneration for 6 months) to a client (not on a retainer or monthly fee) to basically cover the costs of preparing such an application (could run to a few days work)? After-all, this would mean not being available to support other clients (without then employing subcontractors - at cost)

The answer a firm "NO" - not to mention the suggestion that this was attempting to profiteer from clients who are already struggling and that my suggestion was completely unsympathetic to clients who were facing hardship - through no fault of theirs (and incidentally through no fault of ours)!

I do not charge retainers/ monthly fees, do not charge for advice, and support clients throughout the year - whether they pay for annual/ quarterly compliance or not (i.e. true pro-bono clients)! I am reliant on charging for (not all) compliance work and any other project-specific contracted work as is it done.

The question was met by such ferocity from some that I, therefore, made the assumption that all the respondents to this question were writing off all client debts and ceasing to charge for all compliance works - let alone monthly subscriptions (which after all, would under normal circumstance - cover the advice I provide FOC). Furthermore, and given the scale of the response, I was left in very little doubt that such a cessation to charge should cover all recharges (filing fees, software subscriptions, equipment purchased for clients) - although I often take a personal hit on most of these anyway.

However, it now turns out that those who took the moral high ground in the first place may not be acting quite so charitably as they, at first suggested. They are not writing off debts, they are continuing to charge monthly retainers and they intend to continue charging for annual compliance (maybe reducing the charges - but NOT completely absorbing the cost in-house). This is not to mention the fact that, where clients "can" pay, they will simply be charged as normal which is, in my mind, completely unsympathetic. After all, a client who sees their profits/ reserves fall by 10% should certainly be treated in the same manner as one who is on the brink of losing their business (free for all, not just for those who can't afford it!!!). Indeed a 10% fall in profitability/ equity is as important to that client as the one in dire straits. Why should either pay fees for a disaster that is not their own fault? In "normal" times, would we say to the client making a £100K profit that their bill was 10 x greater than the one making £10K - seriously, would we? (I wouldn't - particularly if the work was the same).

So, if you are receiving monthly retainers from clients, yet don't believe it is ethical to charge a small amount for "contracted works" which will "benefit"/ "lessen the burden on" a client (by an accountant doesn't charge such monthly fees with no other income), I would suggest you really are in no position to preach what is right and wrong. Unless you cancel your retainers, stop charging ANY clients fees, and really do your work for free (i.e. no income from any source), I believe it completely inappropriate to pass judgement on others who may choose to operate their businesses differently to you.

If "we're all in this together", the appropriate action would be to offer our services at a minimal (or zero) rate to all clients - not just the ones who can't afford it! A billionaire will have as much "worry" on their plate, and will feel the impact of a downturn as the labourer living hand-to-mouth - maybe even more as they are likely to receive little in government assistance!

So, if you are critical of my initial suggestion, please confirm that you are actually practising what you preach. That you are considering (or have already) cancelling all retainers, refunding all clients who are "in credit" (payments on account), and reducing/ cancelling fees for ALL (near-term) "annual fees" for ALL clients. At least then, your criticisms would be credible and we would be on an equal footing.

I have been supporting clients (rich and poor), with fairly fees (or nil), making a minimal profit, for years and hence am not now in a comfortable position to allow slashing fees, writing-off all WIP, or ceasing to charge. indefinitely. However, I will do whatever I can, even if it means going without personally, or taking on personal debt - to support my clients. That is the true meaning of "charity".

If, on the other hand, you take the moral high ground and offer free advice (which realistically the client has paid for in their retainer, or through profits you have made from your clients in the past), yet still continue to charge clients retainers and annual compliance fees - please don't consider yourself a "cut above". And certainly don't criticise someone who is simply looking to cover overhead costs which would simply not be covered elsewhere.

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Replying to DKB-Sheffield:
blue sheep
By NH
22nd Mar 2020 17:47

Wrong.
You were suggesting charging more in the current situation.
I took exception to that.
We are not charging any more for more work in the current situation but where we can we will continue to take payments expecting that at some point with some clients that might change.
Sorry if you took offence that really was not intended, I am sure you will do whatever you feel is best for your clients.

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Replying to NH:
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By DKB-Sheffield
22nd Mar 2020 18:21

Sorry, it must have been in my wording!

I would never charge "extra" for such "advice", or actually charge at all. However, you must accept that many in the profession will charge for every small amount of advice they give - generic and otherwise - and some probably will now! That IS wrong!

However, I would "normally" charge if I were to spend a considerable amount of time preparing a business plan or assisting with a loan application as that is not covered in "advice relating to a tax return" etc. - and would take a lot of time out of the normal working week. That would be "extra", and under normal commercial terms would be chargeable (I do not cover any of this through retainers etc.). That was the purpose of my question - i.e. do we throw the commercial terms out of the window due to the situation. This has been met by an overwhelming "yes" and is something I will adopt - whatever the cost.

I certainly never meant to suggest that I was looking to charge extra - because of the situation. Just that where I would normally charge for contracted work, as you would normally charge a "subscription"/ "retainer", that such a charge should be nullified.

So, basically, and to sum up a very long "Any Answers" section...
1. No: don't charge for any advice (I wouldn't anyway)
2. No: don't charge for non-compliance work or any "normal" one-off charges
3. Write off WIP where possible
4. Reduce/ nullify fees where possible
5. If you are able - please consider offering work on a pro-bono basis
6. MOST IMPORTANTLY: STAY SAFE!!!!!

Kind regards and good luck!

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By mfbrown185
24th Mar 2020 09:16

It's an interesting problem, thank you for asking the question. For own our small practice (two partners - only) we are providing all that we can on an "as needs" basis. I sent out an email to all clients with the first batch of measures and have answered as many queries as I can thereafter. Each subsequent clarification or addition to the measures have been communicated also and I have reiterated many times that we will be swamped IF clients do not drive their own applications.
As is usual with our practice - some clients do not appear to need any help, some couldn't even tie their own shoe laces without massive help. Then there are those who are not being helped by the system - Banks are not being helpful, Local Authorities are an unknown quantity for us at this time.
I do not consider that I will charge any of my clients anything extra for ongoing advice - I have urged them all to continue paying their monthly fee's because (presumably) they will still want PAYE and VAT returns filing etc.
The only additional charges would be for Cashflow forecasts or management accounts where we do not provide them to the client as a matter of normal business.

Long winded - apologies for that. I doubt any of us can support all of our client base if they all need unlimited help try and target your efforts to client size and capability would be my advice

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By sallyrichardson
24th Mar 2020 09:34

We have updated our website blog regularly with simple summaries of the government support as soon as it has been released. We have then directed clients to the website. We have also updated our FB page and shared that with a lot of local groups, offering free advice to non clients. The amount of actual calls and emails has been small - but 3,000 have looked at our posts and website.
I've probably spent 30+ hours in the last week doing this, and offering advice to our clients. I now actually have to start running the payrolls myself today as my staff are self isolating.
I sympathise with you in that we are a 4 person practice and as we work from home we are not eligible for most of the support. My parents are elderly and at risk, my daughter has had her A-levels cancelled and I predict that half our clients will probably not be able to pay us going forward for a while. Some clients have also directed their anger and frustration at us, which has been pretty horrible.
Our philosophy is - we understand what support they can get, and these people don't. They're worried, and scared, so if we can help them to feel better we will. We're not charging anyone, and we're not dropping anyone that can't pay. If we need to apply for a government loan so we can give clients longer to pay, we will. If they are furloughed and not trading we will reduce our fees as much as possible.
Yes, all of this might get us some new clients in the future, but that's not why we're doing it. We're doing it because we think it's the right thing to do.

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Replying to sallyrichardson:
blue sheep
By NH
24th Mar 2020 09:47

Quote:

Yes, all of this might get us some new clients in the future, but that's not why we're doing it. We're doing it because we think it's the right thing to do.


Sally, we are in exactly the same situation, and have taken exactly the same approach - there is so much confusion out there and we are trying to bring some clarity, most of our clients have been with us for years, this is not the time to be thinking about our profits, survival mode for everyone
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Replying to sallyrichardson:
FT
By FirstTab
24th Mar 2020 09:48

Human nature (clients) are experts at sharing their misery but not their fortunes.

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By meadow
24th Mar 2020 09:37

I too am a sole practitioner & work alone. Last Wednesday, I had an e-mail from my Institute - ICAEW - sending me a practice assurance questionnaire to complete within 3 weeks. I wrote yesterday asking them for an extension & was given an extra 2 weeks!!! Are these people for real or do they live in their own little bubble? Meanwhile I have every client ringing me & asking for help which is hard to give as we don't yet have many details & no, I won't charge extra but I have total sympathy for the OP.

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By pauljohnston
24th Mar 2020 10:05

Ok. What I have observered is if you work for a govt/ local authority you will get full pay (Courtesy of us tax payers). If you work for alarge company you may well be working from home for normal pay. If you are a business with reserves you are expected to pay and get nothing back. If you are a business that spends all the profits you will get help.

I am being asked questions by my clients that I can not answer. Eg how to we get the rate grant. Apply to Local Authority but how, they dont appear to have details from HMRC yet. How do I get back the 80% cost of Furlongh ?

Am I alone. We wont stop collecting our monthly fees if we are approached we will give a three month holiday and then collect the missed payments over the remainder of the term. How are we going to afford this - dont know as we have small reserves and probally wont be able to claim the Furlongh because it will be in the future when we know how hard this has effected our business,

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By DKB-Sheffield
24th Mar 2020 12:13

I WILL REITERATE ONCE MORE... THIS IS NOT, AND NEVER HAS BEEN ABOUT MAKING PROFIT, OR EVEN COVERING COSTS, FROM VULNERABLE CLIENTS

BUT... NOT ALL CLIENTS ARE VULNERABLE!

A little bit of perspective...

Most clients are very understanding and need assistance to keep their employees (and/ or themselves) fit and well.

However, and following a couple of conversations with other professional advisors, here are some of the things that (a small number of clients) have been asked:

- Coronavirus Job Retention Scheme Money (but, wants to try and find whatever was possible to keep the money and not hand this to employees)

- Rates Grant (landlord believes that, where the property is rented to third parties, this money is his as it is his land - not the ratepayer)

- Commercial Tenants with outstanding rent and no rental agreement (i.e. more than a week behind) be evicted (just change the keys) before it gets too difficult to do so

- Supplier Invoices be written off, yet supplies should continue as normal - note that client is not mandated to close as yet (there is more than sufficient money in the bank to cover this and many months of potential closure)

- CBILS Loan be applied for as it is a perfect opportunity to raise finance at a preferential rate (i.e. not needed for business interruption reasons)

- Refund fees charged over the past year (or more) or face litigation - because I have never advised the client that this may happen or, what the likely impact of a Pandemic would be on their business

Clearly, all of the above is - Coronavirus related. And following my email to clients at the weekend, would come under the banner of "Coronavirus Free Advice/ Support". And I agree, it is our duty to assist clients who need us FOC at this time...

BUT there are truly people out there who are seeking to profit - not just from others - but from our generosity. Furthermore, and without subcontracting work out (I would never dream of asking someone to subcontract for free!), the only way to carry out some of the work above (unless we start getting more hours in the day) would be to hold off on working those who are vulnerable (generally those who shout the quietest!)

Anyway... on a slightly lighter note...

HMRC's current favourite debt collection agency has just rung me about a client who left the UK and moved to Italy 5 years ago. They were seeking payment of a £10.02 debt. I explained the situation - that the client had left the UK etc. and was advised that the matter is now being considered for collection. When I asked where they would be sending their collector, they said "to the client's home" and asked if I had a forwarding address?! I said I'd get back to them on that one but asked when they were going to send someone, only to be told: "within the next 7 days". I assume I was misheard on the Italy font (or that the call handler simply didn't understand) but are HMRC/ debt collectors seriously sending doorstep agents out to collect, pathetically small debts, at a time when we are all told to remain indoors?!!!

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By Gillian Mill
24th Mar 2020 18:02

As a sole practitioner with 5 staff and an office with a £16k rateable value (so no grant or rates holiday) i'm struggling to pay my bills if cashflow drops much more. I have made the decision to furlough half my staff so i can get some help with wages but that gives the remainder a heavy workload. For monthly clients I will be offering a 50% reduction - not in the fees but in the payment and they will have to catch up over the second half of the year. For time billed clients the time spent will definitely include specific Covid19 advice and help but again i'll try to offer sympathetic payment terms.
I agree with the comment that my clients won't be offering handouts or free work except possibly to vulnerable / at risk individuals and if i have any of those on my client list i will help them.
I have to protect my business and employees.

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