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Letter re income

Client asking but won't give reason

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A client has asked me to provide a letter with salary and dividends but will not tell my why he needs this - ie where it is going and for what purpose.

I have refused, as I don't want to sign something without the info. I provided the SA 302 and tax overview.

Again, I am being asked again today though. Am I correct to refuse?

Replies (11)

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By David Ex
04th Oct 2021 13:47

I can understand your being cautious. By definition, it’s a matter concerning the client’s financial affairs so keeping it from you as his accountant is, at best, odd.

It would be easy to just give him a two line letter addressed to “to whom it may concern”, but that glosses over the wider trust issue.

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Replying to David Ex:
RLI
By lionofludesch
04th Oct 2021 14:33

David Ex wrote:

I can understand your being cautious. By definition, it’s a matter concerning the client’s financial affairs so keeping it from you as his accountant is, at best, odd.

It would be easy to just give him a two line letter addressed to “to whom it may concern”, but that glosses over the wider trust issue.

Just what I was thinking. Why won't he tell you ?

On the other hand, if you were confident enough to submit his tax return, you should be happy enough to tell him what was on it. I suppose you could caveat the backside off it by saying, inter alia, that it's for his use only, must not be passed or shown to a third party and confirming that he provided salary and dividend details which you entered on his return and thus you cannot confirm as being correct, merely as being what he told you.

But I'd still want to know why he won't tell you why he wants it.

A compromise might be to provide him with a copy of his tax return.

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By Paul Crowley
04th Oct 2021 13:55

I would expect to restrict the use of the letter to a specific recipient.
Unwise to to do a "to whom it concerns" letter
But nothing wrong it sending a client a letter with the tax calculation detailed out for a tax year eg ye 2021
Or even last month
But I would not send a letter saying your rate of pay is £x per month and your dividend is £x per month.
Dividends can only per paid from accumulated profits and each dividend payment needs consideration
I always have a concern if client unwilling to confirm why such a letter is wanted. Would it be for a loan that client cannot really afford, or acting as a Guarantor, or starting a 20 year lease?

I usually ask client if lender has requested a specific format, so forward the email so that I can see what requester is asking for

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By DKB-Sheffield
04th Oct 2021 14:11

You could refuse stating it is nit your policy to provide letters to an unknown recipient. You could issue a 'To Whom It May Concern' letter with significant disclaimers. You could do what the client is asking for (but probably isn't wanting) and provide a letter to them confirming the details.

Personally, in a situation like this, I would prefer to write the letter to the client (addressed to them directly) - with the relevant 3rd party use of information disclaimers - and simply confirm the details on record (or reference to an enclosed SA302).

I'm not a fan of blanket "To whom it may concern" letters* - particularly those with no address - as I (personally) feel it means '3rd party disclaimers' are pretty pointless (the letter being addressed to 'anyone it may concern' so who is actually an unintended recipient).

Clearly, the chances are that such a letter may not be accepted by whosoever the client needs to provide the information to. At that stage, the client would need to provide the reason and ultimate recipient of the letter (and pay an additional fee).

Perhaps tell your client what you are prepared to do and what the potential pitfalls may be. If a client realises they may be charged for 2 letters, they may well divulge the full reason and recipient details!

* Clearly, there are occassions where a TWIMC letters are appropriate (e.g. TWIMC @ Money Bank Plc, Pound Lane, Cashville, CA5 4XX) but, a complete 'shot in the dark' letter - I'd (personally) steer clear of!

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By Calculatorboy
04th Oct 2021 15:27

Just do letter and include for his personal use only and not to be disclosed to 3rd party without your written consent

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By fawltybasil2575
04th Oct 2021 17:16

@ murphy1 (OP).

You say that the client “has asked me to provide a letter with salary and dividends”.

Forgive me but can we assume that the client operates a company from which he receives “salary and dividends”; as opposed to a client whose income is not derived from his own company ?

Further, for what period(s) has he asked you for that information (eg one or more tax years, one or more accounting years) ?

Given the client’s being somewhat surreptitious, one would rightly be suspicious of his motive; and that would also rightly influence the nature of one’s response. Prima facie, a closing “qualifying” paragraph (the wording being dependent upon your answers to my above questions) appears appropriate, the letter to also be prominently headed “Private and Confidential”.

Basil.

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By philevo81
08th Oct 2021 09:53

Only send a To whom it may concern letter if the person at a known business is unknown. Never to an unknown recipient who may sue you if they rely on the information for a purpose that is unrealistic or if things go bad.

If you do send one, you need a very strong legal caveat.

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By johnjenkins
08th Oct 2021 10:15

If the letter is factual and to the person requesting the information, what is the problem?
I have a rapport with my clients that means they would automatically tell me, which leads me to believe there is more reading to be done between the lines.

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By Watson Associates
08th Oct 2021 10:38

What's the problem here?
Dear .....
You have asked me to confirm your reported earnings for the year ..../.....
It was made up of Salary £x & Dividends £x Total £xx
A copy of the SA302 is attached for your perusal.
Kind Regards........

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By indomitable
08th Oct 2021 12:14

I certainly would be suspicious. ICAEW guidance is to address any references to a specific person.

I always write something that you really cannot be pulled up on such as

We are the accountants that have acted for xxx since xxxx

The client declared the following in their tax return of xxxxx

But better to write to a specific person or organisation

With a disclaimer at the end

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Replying to indomitable:
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By johnjenkins
08th Oct 2021 12:27

It's not a reference. It looks like it's a factual statement.
I think you are wrong to refuse and refusal means you don't trust the client so get rid.

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