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Leaving Fees

New Client charged leaving fee by previous accountant

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We have just taken on a client that was with an online firm. As well as charging what I consider very high fees and giving a very poor tax advice, they charged her a leaving fee. They also threatened that if the leaving fee was not paid within 30 days they would cut off access to the portal and she would have no access to her records. Have others come across these charges and threats and are they permitted by the professional bodies?

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By mrme89
10th Oct 2019 11:37

What does the contract between the firm and the client state regarding leaving fees?

If there is a leaving fee in the contract, then it's tough. They'll have to pay it.

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By Maslins
10th Oct 2019 11:41

Unfortunately there seems to be a trend in accounting firms, drifting away from professional businesses guided by ethics, towards cut-throat businesses guided only by profit.

One thing I don't get is why the worst of these firms don't have more negative online reviews for this kind of behaviour. It may not help the individual with their current predicament, but if a lot of those stung start leaving genuine, honest, negative reviews, hopefully the worst offenders will lose out in the long run, encouraging them to change their ways.

Are the firm in question even regulated by one of the main institutes? Many of the big players aren't. Even if they are, I think institutes are generally of the view they don't get involved in fee disputes.

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Replying to Maslins:
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By Davidw25
10th Oct 2019 12:53

Yes - they are ACCA members

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Replying to Davidw25:
By mrme89
10th Oct 2019 12:58

Single man, reveal yourself.

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By ImmanuelLieber
10th Oct 2019 11:46

Access the portal and download or print off a copy of her records.

If these people claim to be qualified they cannot charge a "leaving fee" and I'm pretty sure that even if they are not qualified a court would only support them charging a justifiable fee for work involved in accomodating the client's decision to leave such as the actual cost of returning papers to her (postage and £5 for someone's time putting it in an envelope).

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Replying to ImmanuelLieber:
Psycho
By Wilson Philips
10th Oct 2019 11:59

Quote:

If these people claim to be qualified they cannot charge a "leaving fee"


They can if the client has signed up to it.
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Replying to ImmanuelLieber:
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By Matrix
10th Oct 2019 13:53

I reserve the right to charge an admin fee in my terms and conditions and would charge it if a cost arose due to the client leaving.

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Bramble
By Chris.Mann
10th Oct 2019 11:48

It all comes back to what the client and the (now former) agent had agreed.

And regretfully, the rest is only your opinion.

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Replying to Chris.Mann:
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By ImmanuelLieber
10th Oct 2019 14:10

Whatever is agreed if it breaches the professional ethics of their Institute then they cannot do it without risking being expelled.

My "opinion" is that the "unfair terms in consumer contracts regulations" may also be applicable.

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RLI
By lionofludesch
10th Oct 2019 11:58

Another request on an accountancy forum for legal advice.

It's like asking the doctor to mend your boiler.

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Replying to lionofludesch:
Psycho
By Wilson Philips
10th Oct 2019 12:01

Instinctively, I would agree.

But the question was

"Have others come across these charges and threats and are they permitted by the professional bodies?"

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By Mr_awol
10th Oct 2019 13:27

Is it actually a leaving fee/penalty/etc, or an invoice for unbilled WIP, or request for payment of the balance left where POAs are below the invoices raised?

As Maslins says, there is a drift away from professionalism in the accountancy sector. I've had my say numerous times (and will so again at some point) on monthly fees, g/s/b packages, etc so I wont rehash all of that now. But add into that the general contempt for clients so often displayed on these forums where anyone who doesn't want to pay before submission, queries a bill, or refuses to bend over backwards for their accountant is labelled a PITA and users are more interested in what the letter of engagement says than what is fair and reasonable.

Perhaps the problem is that so many places go that way people feel the only way is to compete on their level. Personally- unless there are exceptional circumstances - I will continue to file before payment, bill on completion of work (POAs may be collected by SO) and refuse point blank to entertain the implementation of subscription pricing. It wont make me any richer or poorer in the grand scheme of things (in the last ten years i think I've written off around £5k in bad debts which is a tiny percentage of turnover) but at least I'll get that warm fuzzy feeling of having treated my clients with respect in a professional manner.

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By Mike Bath
10th Oct 2019 14:11

Slightly aside from the question on leaving fees, does anyone have a view on the legality of an implied threat to deny the directors of a company access to its accounting records?

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Replying to Mike Bath:
RLI
By lionofludesch
10th Oct 2019 14:34

Yes, I do.

I consider it indefensible.

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Replying to lionofludesch:
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By Mr_awol
10th Oct 2019 15:25

Quote:

Yes, I do.

I consider it indefensible.

I was going to agree - with the slight exception that if I was left paying a subscription and the (ex) client refused to take it on, I would cancel it.

If the OPs case refers to access to the (former) accountant's own portal, then I think they would have no right to restrict access to it on the basis that they are threatening to.

I would also consider any obligations to delete personal data relating to ex-clients from my computer systems and if the client had been given ample opportunity to collect a copy (and several warnings of my intention/obligation) then I may well delete data from my servers which could have the effect of destroying records. To be honest it's never really come up and I'd certainly want to check my position if it did.

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Replying to Mr_awol:
RLI
By lionofludesch
10th Oct 2019 15:58

Quote:

Quote:

Yes, I do.

I consider it indefensible.

I was going to agree - with the slight exception that if I was left paying a subscription and the (ex) client refused to take it on, I would cancel it.

Fair comment. But the whole process of transferring records needs looking at.
Particularly whether it's a restrictive trade practice. HMRC have a clear interest in this. They want traders to keep digital records. They probably don't want predatory software companies and dodgy accountants to delete them.

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Replying to lionofludesch:
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By ImmanuelLieber
10th Oct 2019 16:17

How hard and what cost is involved in simply making a copy of records and handing it / emailing it to the (ex) client. This smacks of toys out of the pram because a client has left rather than a genuine charge.
I would archive the records but certainly never delete them because who knows what could happen if 5 years down the line the client claims you didn't declare something and tries to claim against you.

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Replying to ImmanuelLieber:
RLI
By lionofludesch
10th Oct 2019 16:22

Quote:

How hard and what cost is involved in simply making a copy of records and handing it / emailing it to the (ex) client. This smacks of toys out of the pram because a client has left rather than a genuine charge.

Exactly. It's a restrictive practice. Designed to deter you from leaving.

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Replying to ImmanuelLieber:
RLI
By lionofludesch
10th Oct 2019 16:22

Quote:

How hard and what cost is involved in simply making a copy of records and handing it / emailing it to the (ex) client. This smacks of toys out of the pram because a client has left rather than a genuine charge.

Exactly. It's a restrictive practice. Designed to deter you from leaving.

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Replying to Mike Bath:
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By SXGuy
10th Oct 2019 14:35

Oh there will be plenty of views on that.

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By Matrix
10th Oct 2019 20:19

Despite numerous email reminders an ex-client didn’t pay us or transfer Xero to their name so we stopped paying their subs. They couldn’t get in and the bank feed stopped.

I don’t really care what my institute or the contributors of this thread think about denying a client their records, Xero don’t give them access unless they pay and nor do we.

If I incur a cost then I pass it to the client under our T&Cs but I would not charge a leaving fee per se unless there was a very time consuming request for handover information.

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Replying to Matrix:
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By ImmanuelLieber
10th Oct 2019 23:58

You should have obtained a copy of their records first either electronic or paper print out before allowing the account to be locked.
While acting for them you were paid to maintain their records and when a client leaves they are entitled to all their records, anything less is unprofessional in my opinion.

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Replying to ImmanuelLieber:
Psycho
By Wilson Philips
11th Oct 2019 07:50

No, what they should have done is advise client that unless fees were paid subscription to online accounting would be stopped, advise of the consequences and advise to take a copy of what is after all the client’s own records

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Replying to Wilson Philips:
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By atleastisoundknowledgable...
11th Oct 2019 08:50

Quote:

No, what they should have done is advise client that unless fees were paid subscription to online accounting would be stopped, advise of the consequences and advise to take a copy of what is after all the client’s own records

When a client leaves me, I ask them to give me an email address to transfer the subscription to. If they haven’t a week later, I unsubscribe & tell them that I have done so & in 1 month they will lose access - they will need to give me an email to transfer the subscription, download everything, or lose it.

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Replying to atleastisoundknowledgable...:
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By Matrix
11th Oct 2019 09:14

Yes but they then have to click on the email and set up the subscription.

There is only so much we can do for clients, they have to help themselves a bit.

As for the other replies, I didn’t say anything about not downloading records. I am surprised that you would all pay your ex clients’ subs though.

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Replying to Matrix:
7om
By Tom 7000
15th Oct 2019 11:19

Why are you paying their xero fees?
To mark it up?
If they find out that creates bad will. get them to pay it themselves.. no problems

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Replying to Tom 7000:
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By Matrix
15th Oct 2019 15:14

Funnily enough all my Xero clients pay their own fees and engage directly now.

If I remember for this client, they asked us to set them up on Xero (it was our only ever foray into bookkeeping, not to be repeated) and the business failed so we transferred Xero back to them but they did not set up the transfer so it lapsed.

However I think all the millionaire Xero accountants pay their clients’ fees as part of a package so what do they do when the monthly DD is cancelled?

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By SouthCoastAcc
10th Oct 2019 20:33

We dont, but have seen plenty of other accountants who do.

Burns a lot of bridges.

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By mail.taxperfect.co.uk
15th Oct 2019 10:46

Maybe look at it from a different angle. Why would the outgoing accountant deliberately be awkward? Maybe this is one of those PITA clients who he/she is actually glad to be rid of? Maybe the new accountant should be just a little bit wary? I have only ever once charged an ex-client a fee for handing over papers, etc. to the new accountant. In that case, it was because this client had, for years, been a PITA client - squeezing as much free time as possible, late night/weekend calls, always paying fees late, etc., etc....you know the type - and there was no way I was going to give her more 'free time'. Hence the final invoice.

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By brumsub
15th Oct 2019 11:12

Is the client complaining or is it you?

If the client feels aggrieved, she needs to refer to her Letter of Engagement to see whether the fee applies. If she feels she has received poor advice, and I assume she may only know this from you, then she needs to go through the complaints procedure in the LOE in the first instance. If no joy, then she needs to complain to the ACCA and inform the previous accountant.

I assume access to her records has been blocked? If there is a deadline to meet then I do not think withholding important information is allowed by the ACCA if it would lead to penalties and/or interest by the taxpayer. They should supply normal carry over information.

Also, I do not think that if a leaving fee is mentioned on its website that this is acceptable unless it is in the LOE. If there is no LOE, well…

We did charge a fee on an occasion for a company taken over because a lot of information, over and above normal carry over information, was requested.

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7om
By Tom 7000
15th Oct 2019 11:16

I saw someone try to charge £30 a year for 6 years to store their files for 6 years on leaving....

That amused me

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By Anthony G Thorne
15th Oct 2019 12:54

The ACCA fact sheet on rights of access are:

"Documents belonging to clients must be given to clients (or their agents if authorised to do so) promptly on request, or on ceasing to act for the client, except in those cases where members are able to exercise a right of lien. For documents belonging to members, the decision whether to allow clients (or their agents) to inspect them rests with the members. Clients have no rights to demand access. Where clients ask members to disclose documents to a third party and those documents belong to clients, members must disclose the documents unless they are exercising a right of lien. Where documents belong to members they are not obliged to comply with the request."

I would suggest that they need to provide the clients records as it is client property.

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All Paul Accountants in Leeds
By paulinleeds
15th Oct 2019 14:54

Isn’t the word ‘professional’ so nice.

You take on a client, spend hours with them and giving them great tax advice and service, hold their hands on so many things and then write detailed letters and emails to them including copies of their Tax Returns, Financial Statements etc.

Then suddenly, they find a cheaper accountant or somebody [possibly unqualified and cheaper than you] who disagrees with your professional advice. That does not mean that I have done anything wrong. I have met clients who simply want to change because a friend of theirs has said that they can do something different and slightly cheaper. The client is a very happy with my services but decides to leave.

I then get a detailed list of information and records that they want. It will take me at least an hour to find everything, extract any information that is not relevant and forward it, possibly once again, to the client. If I have only been spending around the 6 or 7 hours a year on this client and making a charge on that basis then why should I throw away 15% of my time when they decide to leave for no good reason.

I have even sent emails to clients telling them the exact date that I sent them half of the information. They then miraculously find everything in their inbox. I am therefore not required to spend that hour in communication.

How often do you send clients reference numbers for various taxes and they lose them. I maintain a detailed, safe and secure database. I love giving all my hard work away to people who have done nothing to look after their own records.

Why should I spend additional time providing information to a client or their new accountant when often they have already received it themselves?

I do not consider it unreasonable to make a modest charge to extract and re-providing information to the client leaving me or provide it directly to their accountant. Often, it is a lazy client or lazy new accountant, which simply writes to the outgoing accountant asking them to provide everything. Quite often the client already has this information or has not kept it.

If I make a charge does that mean that there is a drift away from professionalism in the accountancy sector?

In my own firm’s terms and conditions I reserve the right to charge an admin fee and would charge it if a cost arose due to the client leaving.

Does somebody really believe that it only costs £5 for someone's time to put things in an envelope and paying the postage!

I would estimate that I would spend at least an hour drafting a reply to a new accountant and providing all the information requested. Generally I would not post anything to anybody. It is slow and insecure. I would use secure electronic communication. I therefore would not go to the post box and if somebody wants me to run to the post box and post a letter then they need to pay for it.

I recently lost a client because he wanted his payslips and my invoice posting to him every month. I had already told him that I only have provided an electronic payroll service and that my invoices would be sent electronically. This was all clearly set out in my terms and conditions and my engagement letter.

It would probably take me a couple of minutes to run the payroll for two staff and e-mail them payslips. If I have to start printing off, putting things into an envelope and walking to the local post box as well as paying postage then I could estimate that would take me around 30 minutes round trip.

I get really annoyed when people think I have nothing better to do with my time than send information. I am a qualified professional accountant. If somebody decides to leave my firm where there is nothing wrong with my services then why should they not pay for my time to provide them with information that they either already know or have not kept.

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Replying to paulinleeds:
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By Matrix
15th Oct 2019 15:18

I am with you Paul.

When you reply to a professional clearance letter then do you not provide info you have already provided to the client?

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Replying to paulinleeds:
By SteLacca
15th Oct 2019 16:10

Quote:

Then suddenly, they find a cheaper accountant or somebody [possibly unqualified and cheaper than you] who disagrees with your professional advice.

I was with you apart from this insinuation. Whilst I work in an ICAEW regulated practice, I am personally QBE. I have personally disagreed with qualified's professional advice (including advice that came out of PWC), and I have frequently been shown to be correct.

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