Anonymous
Share this content
29

How to reply to a Clearance Letter

How do handle a Clearance Letter with regards to an irresponsible client?

Didn't find your answer?

I have posted anonymously for what I believe to be obvious reasons, and I apologise for the length of this post - but wanted to give a complete picture.

I was asked to take on a client 6 years ago. This client has been nothing but trouble from day one. I should have realised something may be amiss when asked to take him on. NOTE TO ME - Be more selective!!!

I appreciate that he is a very busy man (he's a builder, limited company director, with about four/five sub-contractors).

Please forgive me if I sound a bit 'wingey', but I do not have any other clients who act so irresponsibly.

He very rarely returns my calls, answers emails or texts. He is constantly late in paying me. I once left a message saying that I needed to talk to him about an important issue. When he eventually returned my call, I explained that he was again quite late in paying me, to which he answered 'I thought you said it was important'. I should have put the phone down on him.

I have to constantly chase him for information; eventually I receive the info at about midday on the seventh (VAT returns). The same goes for CIS.

He is constantly making purchases from the company bank account, and cannot advise if they are business related or not. Maybe because when I am able to get him to the office, he says he only has 10 mins and has to leave (which he does). Oh, and he seems to keep losing his cheque books - so again it's a 'guessing game'.

He would be more than happy for me to send in an incorrect return (VAT, CT or any other) with a view of me amending at a later date - I refused blankly.

He owes about £40,000 to HMRC (a mix of CIS, CT &VAT) and has come to a repayment agreement. This is not up to date.

The final straw came when I advised him I was going on holiday, and I said that I wanted to complete his CT Return and Statutory Accounts before I left, as the deadline was whilst I was away. I gave him at least three months notice, with about three or four emails leading up to my departure. I simply wanted him to confirm some payments that I had listed neatly in an email.

Suffice to say - he did not reply.

He is now late with his returns, and has had a statutory notice, which I have forwarded to him by email.

Within an hour of my email being sent, he was on the phone - 'fortunately' I was in a meeting and could not take the call.

I suspect (hope) he may go to another accountant (happy for that), but when it comes to replying to any clearance letter, am I to disclose what a pain this guy has been? Or, do I say nothing, and wish the new accountant good luck?

By the way, not only have I written to him on two occasions (about 4 years and 2 years ago) advising he look for another accountant (he persuaded me to 'keep him'), I even doubled his fees believing he may go elsewhere (he didn't). 

 

Replies (29)

Please login or register to join the discussion.

By Tim Vane
17th Oct 2019 01:52

I can't be bothered to read such a long post but I'm guessing that you are rather long-windedly describing a PITA client. We all have them. Your clearance letter should be concise, professional and stick to accounting matters. Any negative comments about the client are likely to be seen by the requesting accountant as sour grapes on your part for losing such a high fee.

Thanks (1)
Replying to Tim Vane:
avatar
By CardiffAccountant
17th Oct 2019 09:00

Thanks for your views.

I am only too happy for the client to go elsewhere, and would not criticize unduly - certainly would not have 'sour grapes' over this.

Invariably, any clearance letter will have something along the lines of: '... inform us of any circumstances or information of which you have knowledge and which we need to consider....'.

Should I advise the new accountant on how the client has acted during the term that he has been with me?

Or do I simply pass over the 'normal' info, and just say nothing more?

Thanks for looking at this.

Thanks (0)
Replying to CardiffAccountant:
By Glenn Martin
17th Oct 2019 15:26

I love it when an Anon poster gets busted by replying to the first response on his anon thread.

Thanks (8)
avatar
By Open all hours
17th Oct 2019 06:41

The opening line would likely be : ‘We were delighted to receive your letter of.....’. If they can’t get everything from that then they really do deserve each other.

If he is paid up to date and you can take the hit I would advise sacking him. We always have 3 clients in the relegation zone and we do eject them when we have the option to upgrade through new better prospects.

Only ever do it professionally and politely no matter what the provocation. Hopefully you’ll never see him again and he will only ever appreciate what he had after he lost it.

Good luck.

Thanks (2)
Replying to Open all hours:
avatar
By CardiffAccountant
17th Oct 2019 09:07

Thanks for your views.

I am only too happy for the client to go elsewhere, and would not criticize unduly - certainly would not have 'sour grapes' over this.

Invariably, any clearance letter will have something along the lines of: '... inform us of any circumstances or information of which you have knowledge and which we need to consider....'.

Should I advise the new accountant on how the client has acted during the term that he has been with me?

Or do I simply pass over the 'normal' info, and just say nothing more?

Thanks for looking at this.

Thanks (0)
Replying to CardiffAccountant:
avatar
By Open all hours
17th Oct 2019 20:36

What has worked for us in the past has been a phone call just confirming that everything is on its way etc. On the last occasion it was for a one year client who came recommend by a friend who is not a client. It was ‘just a little job, small holding’. It turned out to multi layered and very bitty. Client didn’t grasp this (or pretended not to). Went elsewhere (having been ‘relegated’ by ourselves).
In call to new accountant, warned them of what we’d found and they were heading down the same road. Recommended by a friend and just finding the ‘add ons’.
If clients can review businesses and traders, there sometimes needs to be someone reviewing them. Sadly.

Thanks (0)
avatar
By busacrun
17th Oct 2019 08:22

Whilst I appreciate that sometimes its better the devil you know, and we all need clients, but if this guy has been such a pain why on earth have you not disengaged from him a long time ago

Keep your clearance letter professional and to the point, giving your personal opinion on the client won't make you look good - its up to the incoming accountant to make a judgement as to whether the client is worth having or not

Thanks (0)
Replying to busacrun:
avatar
By CardiffAccountant
17th Oct 2019 09:07

Thanks for your views.

I am only too happy for the client to go elsewhere, and would not criticize unduly - certainly would not have 'sour grapes' over this.

Invariably, any clearance letter will have something along the lines of: '... inform us of any circumstances or information of which you have knowledge and which we need to consider....'.

Should I advise the new accountant on how the client has acted during the term that he has been with me?

Or do I simply pass over the 'normal' info, and just say nothing more?

Thanks for looking at this.

Thanks (0)
avatar
By Wanderer
17th Oct 2019 09:16

I tend to keep it fairly simple without opinions, but if you are worried about not mentioning that they are a PITA maybe something like:-

"We can confirm that we are not aware of any reasons which would prevent you from acting act for the above".

Generally the new accountant has already decided to accept the appointment.

Thanks (0)
Replying to Wanderer:
avatar
By CardiffAccountant
17th Oct 2019 09:22

Great - thanks.

Sometimes, these things are simply so obvious!!!

Thanks (0)
Replying to Wanderer:
Psycho
By Wilson Philips
17th Oct 2019 13:20

One should no longer “confirm” that there is nothing to prevent appointment. One simply confirms (if appropriate) that there are no factors that the new agent needs to consider before deciding on whether or not to act. That’s the written protocol. However, depending on your relationship with the new agent, he might be grateful for a quick phone call.

Thanks (1)
Replying to Wilson Philips:
avatar
By Wanderer
17th Oct 2019 13:33

Don't disagree however it's then subjective and relies on the previous agent making a decision on what they consider is relevant for the new agent to consider. Also my suggested answer (not one I've used) addresses the OP's concerns.

In the OP's situation would you put in writing that there is nothing that the new agent needs to consider then ring them up and tell them there's loads they should?

Thanks (0)
By Moonbeam
17th Oct 2019 09:58

You've described the worst possible type of client. He is clearly defrauding HMRC behind your back. If he isn't already running a dual and secret set of books he may start soon.
Even if you were happy to be his doormat a moment longer, if skeletons of which you know nothing get out of his cupboard on your watch it could be bad for your reputation with HMRC and something you would regret forever.
He doesn't care about you. He's just using you to hide behind.
Get out asap.

Thanks (1)
By ireallyshouldknowthisbut
17th Oct 2019 10:08

Sheesh, stop apologising.

Just sack the loser now.

And yes I would start any letter "I was delighted to receive your letter this morning"

Thanks (2)
avatar
By bernard michael
17th Oct 2019 10:32

You've put up with this PITA for 6 years - are you a saint ??

You haven't said whether you have dumped him - if not you should ASAP
In the meantime no more work until outstanding fees and deposit for new work paid
In answer to your question. I suggest an off the record phone call to the new accountant works wonders and is very satisfying but reply formally in the clearance letter

Thanks (2)
avatar
By FCExtraordinaire
17th Oct 2019 10:45

Stick to the facts in the transfer information, eg, accounts are overdue for filing, PAYE and tax payments not up to date, etc, and then the new accountant can make up their own mind.

Thanks (1)
avatar
By Montrose
17th Oct 2019 11:26

"Dear Sirs
Re ABC
Thank you for your letter of xxxx. We can confirm that we acted for zzz from pppp to qqqq.
Yours faithfully"
Do not have any other communication "off the record"

Thanks (0)
By Moonbeam
17th Oct 2019 12:00

Most accountants can spot how it's going to be with most prospects. Your client will have PITA stamped in bold on his forehead. If the new accountants are the "backstreet boys" they'll be happy to take him on no matter what you tell them. If they've got integrity they will say no thanks.
So I wouldn't do anything beyond the formal handover when he goes.

Thanks (1)
Jennifer Adams
By Jennifer Adams
17th Oct 2019 12:02

First- here is an article about 'how to deal with difficult clients'
https://www.accountingweb.co.uk/practice/practice-strategy/practical-tac...

Second - one on 'how to sack a client' https://www.accountingweb.co.uk/practice/general-practice/when-and-how-t...

Re Clearance letter... I phoned my prof indemnity solicitor on one such client (for once these solicitors are good and thats what they are there for - to give advice in such situations!) and he said that you shouldnt write words to the effect of 'the client's a s--t dont touch with a bargepole' in case it comes back on you as in defamation etc. He said to just be professional and give the info requested.

But you can always do as I did on the last client who left (at last!) and I put this at the end of the letter:
'We trust that you now have all the information you require in order for you to take over as accountants. We would prefer not to enter into any further communication with regard to this client'.

I never pass anything over until I've been paid and if there is a deadline impending I would ring the new acc warning him /her of the deadline and then tell him/her why they arent getting the info (you can explain that it's clients fault etc etc - again professional courtesy but with no slagging off) = another suggestion from the solicitor. But only if there is an deadline impending.

And finally...we have all had similar clients. You're best without them. You will always get replacements if you are good.

After all that I'd pour yourself a drink from the bottle hidden in the bottom drawer of your desk and celebrate.

Thanks (2)
avatar
By SXGuy
17th Oct 2019 12:39

Anon, disengage now!!! Clearance letter is not something id be worrying about, what I would be doing, is outlining all the reasons for why I will not act for him any longer, in my disengagement letter of course. Late Returns, unable to meet deadlines, failure to provide info to accurately complete work etc etc. Keep it professional of course.

Thanks (0)
avatar
By JDBENJAMIN
17th Oct 2019 13:31

Just tell the truth. Tell the incoming accountant that the client is habitually late and chaotic in accounting matters, as that is certainly a factor that might be relevant in deciding whether to accept appointment. Clearance letters are covered by qualified privilege, so there is not the slightest danger of any comeback, as you are just saying what you believe to be true. Defamation in a clearance letter can only occur where there is a malicious or reckless falsehood in what you say, and there is clearly neither here.

Thanks (0)
avatar
By andrew55
17th Oct 2019 18:27

Personally I'd send a disengagement letter now. Then when I received the clearance letter I'd simply say we disengaged as the client no longer met our criteria.

Thanks (0)
Bramble
By Chris.Mann
17th Oct 2019 22:53

“There are no professional, or other reasons, why you should not accept this assignment”

And retreat to the nearest haven and laugh out loud!

Thanks (0)
Lone Wolf
By Lone_Wolf
18th Oct 2019 10:16

Why not have a closing line along the lines of: "We wish you luck in your engagement with Mr X."

Surely that will get across the idea that a PITA is coming on board.

Thanks (0)
avatar
By Andy Reeves
18th Oct 2019 10:29

Slip in a copy of your sales ledger record for the client so the new accountant can see how long he took to pay you.

That information ought to be in the client's own purchase ledger records anyway, so it isn't as if you would be divulging anything that wasn't already there, simply highlighting it.

Thanks (0)
avatar
By KH
18th Oct 2019 10:33

I've been here before, as has, I am sure, every other accountant ... I used to say that "I am most delighted that Mr/Ms/Mrs PITA has sought to appoint another accountant, and I know of no professional reasons that a new agent needs to consider before deciding on whether or not to act" (both "most delighted" and "professional" in bold).
I have had the occasional phone call back after such a clearance, but mostly the new accountant can see with eyes closed shut what I mean. For the last few years, though, I've only had one PITA and she moved to somebody who never sent me a clearance request... ................

Thanks (1)
avatar
By pauljohnston
18th Oct 2019 10:36

He may decide not to go then what?

Like others I suggest you issue disengagement letter along the lines..... I feel it is your and my best interests that you find a new accountant. I will be happy to provide your new accountants with the information so that they can help you with you tax affairs.

Thanks (0)
Morph
By kevinringer
18th Oct 2019 13:25

This client sounds similar to some of mine!

It is helpful to be warned about problem clients in advance. It doesn't necessarily mean I wouldn't take them on, it means I would manage them differently. I therefore appreciate it when the outgoing accountant tells me. When a problem client leaves me I send the usual formal letter and will phone the new accountant out of courtesy to say the letter is on the way and whilst I'm on the phone ......

Thanks (1)
Profile
By indomitable
18th Oct 2019 14:00

Clearance requests are solely for professional and ethical matters, any opinions about the the client should NOT be included in any clearance answer. Stick to the accounting, tax points and ethics issues. You need to look at your professional bodies guidance here

Thanks (0)
Share this content