Is this bribery?

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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.

Replies (22)

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By Maslins
09th Jul 2018 15:44

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.

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Glenn Martin
By Glenn Martin
09th Jul 2018 15:57

Not bribery, just a commercial decision.

No different to software offering you a free month when you sign up to 12 month subscription.

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By marky74
09th Jul 2018 16:56

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!!

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Replying to marky74:
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By andy.partridge
09th Jul 2018 17:13

What else will you be doing for them that makes it worthwhile?

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By Absolom
09th Jul 2018 17:14

Well, I thought it was just a business decision; the main reason I ask is because I've always been told not to do things like this; I'm not interested in 'going after' the other accountant - it's just nice to know that I'm able to do this!

Your point is a bit different: you quoted what you considered a fair fee and won on price while still making yourself a profit. I do that all the time. This accountant has specifically told the client that he'll take a big loss on the non-recurring assignment IF he gets the recurring work.

If you read the Bribery Act there's a paragraph on providing a financial reward in order to gain an advantage over competition - thats what threw me. It's a minefield!

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Replying to marky74:
7om
By Tom 7000
13th Jul 2018 12:39

I hope you charged £200 for the CT return too?

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By andy.partridge
09th Jul 2018 17:05

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.

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Replying to andy.partridge:
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By Absolom
09th Jul 2018 17:16

Haha. I think that's actually blackmail, though.

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Replying to Absolom:
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By andy.partridge
09th Jul 2018 17:31

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.

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Replying to andy.partridge:
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By Absolom
09th Jul 2018 17:35

Spot on. That's exactly it, isn't it: the big difference is whether the financial reward was offered to the business as a whole (normal competition), or if it was offered to a key decision-maker (bribery).

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ALISK
By atleastisoundknowledgable...
09th Jul 2018 17:44

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.

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Replying to atleastisoundknowledgable...:
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By Absolom
09th Jul 2018 17:56

If the company usually pays for the director's SA return, then the business benefits from the financial reward - no bribery. If the financial reward is offered to a key decision maker, then strictly speaking I think that is indeed bribery. So, if the director normally foots the bill for his own SA and you offer to do it for free if he gives you the work for his company, that might be bribery. Crazy, isn't it?!

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David Winch
By David Winch
09th Jul 2018 17:46

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

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Replying to davidwinch:
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By Absolom
09th Jul 2018 18:04

You're example is correct, but it's not limited to improper performance of a task. Bribery extends to offering financial reward personally to key decision-makers in order to gain business from the company they represent. This is why sales reps have to be very careful these days - prior to the bribery act, they'd pay for director's holidays, expensive bottles of whisky, and so on in order to secure supply/service contracts.

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Flag of the Soviet Union
By thevaliant
09th Jul 2018 23:54

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.

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By 356B
10th Jul 2018 17:12

I wonder what their professional body would think of this as an approach to a new client.

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By Ammie
13th Jul 2018 11:34

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!

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Replying to Ammie:
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By Absolom
13th Jul 2018 11:59

No evidence, just what the client told me. However, it's a client I trust, and that fact of the matter is the the client told me this and said "this is why we're leaving". So it's definitely not a bargaining chip as they had already decided to leave.

It does feel like a bit of an immoral play, and it's the sort of thing our professional body frowns upon at the very least.

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By Jack the Lad
13th Jul 2018 13:08

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!

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Glenn Martin
By Glenn Martin
13th Jul 2018 13:17

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.

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By Janski
13th Jul 2018 13:44

Just commercial competition.

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By Mike18
22nd Jul 2018 15:12

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.

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