A client to whom we provide several different recurring services has asked us to undertake a significant one-off piece of work. We put a quote together for this piece of work for, let's say, £10,000. The client has spoken about this to another accountant who they know; that accountant has basically said "If they are quoting £10,000, I'll do it for £2,500, but only on the basis that you give me all of the recurring work going forward".
In our organisation, the bribery act makes us very nervous! My question is: is the above scenario an act of bribery? Or, is it just 'business'/bargaining/capitalism operating as it's supposed to?
The Bribery Act guidance is rather ambiguous, so your take on this is greatly apreciated.
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To me sounds like what all the big accountancy firms do with audits. Go low on the audit work to win the job, in the hope that the client will then use the same firm for any advisory stuff (ie a loss leader). However, I don't think they'd be so bold as to actually state that to the client.
It may be slightly dubious, but doesn't sound like bribery to me.
Not bribery, just a commercial decision.
No different to software offering you a free month when you sign up to 12 month subscription.
I would say not - its just business!
Ive just won a client from a large firm - they charged £1800 + vat for Micro Company Accounts, I quoted £395 + vat (before knowing the other accountants fees) and Im still making a decent profit!!
If the other accountant adds, 'If you don't agree to this I am going to tell your spouse about your dark web [***] subscription, your coke habit and your gambling debts' you are on to a winner.
True. I'm over-heated.
Anyway, aside from my pastimes, what I meant to say was that if the contact was personally offered a financial inducement to sign up, separate from the contractual terms with the employer, that would be a bribe.
Jumping on this, if I say to a potential ltd client “we throw the director’s SATR in for free”, is that bribery in the strictest term?
Do I need to start saying “the SATR is included”?
How does that work with having a director’s LoE saying “no charge”?
Doubt the answer will change anything I do, but it raises an interesting (in my eyes anyway) point.
In most circumstances a bribe is a payment connected to IMPROPER PERFORMANCE of a function.
So if I offer you a £1,000 bonus for getting my accounts done by Friday that's not a bribe (there is nothing improper about what I am asking you to do).
On the other hand, if I offer you a £1,000 bonus for getting the accounts to show no taxable profit (when ordinarily there would be) that is a bribe (because I am paying you to do something improper).
There is nothing improper about agreeing a low fee provided that there is no legal obligation (or, say, instruction from the company directors) to put the future work out to tender (or something like that).
Equally we are not talking here about a payment to an employee to improperly favour one supplier.
David
Recurring work can also not turn up however.
And loss leading can fail to work out.
We've had two clients who are both 'money money money'. Any lower quote, and they dump us like a sack of potatoes. Both have returned two years later when they realised that the fee was just a low fee to get them in before being ramped the following year.
I wonder what their professional body would think of this as an approach to a new client.
I don't think this is bribery, but certainly a naughty move, albeit genuine, or is it?
Although this type of deal goes on, have you seen evidence of this or are they just paving the way to pushing down your fees?
The cynic in me!
This is what is commonly known as "low balling", and used often by larger firms to get work. I would advise the client to look very carefully at the other firm's expertise regarding that particular one-off job, as well as the contract and quote for regarding future recurring work.
Similarly, many years ago, I had a client company whose turnover was projected to increase substantially. Their bank (HSBC) recommended that they move to one of the "Big Five" firms, which the client did. The clients never stopped moaning about them afterwards: only junior inexperienced staff available; very high fees; inadequate and unsatisfactory advice.
You may be better off without them!
Have you considered the £10k you quoted for the extra work may have been on the high side, which has led to your client looking for alternative pricing.
I think you are maybe reading too much into it.
I am currently doing a few jobs converting Sage desktop jobs to Xero. I sometime do the conversion free if the compliance fee is decent going forward.
I don't see it as shady or underhand its my investment in the client as once done will make it a lot easier for me going forward to do a better job.
It is bribery, but not in the legal sense that it would be defined as such or of an action for which a remedy would be enforceable in law. What was that quote from star trek about life? It's 'a bribe' Jim, but not as we know it.