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Nasty one

Nasty one

Client Chip shop

Commenced Oct 2009

First accounts March 2010

First records brought in very late January 2011 and SAR completed just in time.

In February wrote to client advising that it would appear that they were very close to vat limit and advised them to monitor and register if necessary.

Records for March 2011 brought in 27th January 2012. I couldnt get return in so accounts completed last week in advance of increased filing penalties.

Turnover £72k so should have registered.

Sent accounts for approval with advce that the client should assess when he should have registered then make full disclosure to HM R&C and register. Also advised that if they were only trading at marginally above the limit they may consider reducing opening hours to get back below and deregister.

Client brought accounts back early this week despondent and kicking himself because he was looking at the limit from April 2011 £73k so he'd "got it wrong".

He asked if he could not "have made a mistake in his takings". I stopped him and told him this was out of the question. There followed a lot of silence and mutterings then he said he would have another look at the records and he had a friend who was an accountant and he may be able to help. He took everything away and said he would get back to me. He didnt.

I just rang him and he said "its ok its going in today".

Well what do I do? I've no proof of what has happened but it has a very bad smell.


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27th Apr 2012 15:04

Sounds very typical. I had a client of a similar ilk who was assesed eventually for £130000 covering 5 years

Good luck but be prepared to lose the client (hurrah I hear you say)


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28th Apr 2012 06:39

It's life
Alas it's life; you've done every you can, and advised properly from what you say, and sometimes the Slings and Arrows take over.

POCA suspicion may be a point?

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28th Apr 2012 10:45


You need to consider whether you are obliged to make a report under s330 PoCA 2002 / MLR 2007.

You will need to make a report if, as a result of information which has come to you in the course of your professional work, you suspect (or have reasonable grounds to suspect) a money laundering offence may have been committed by anyone.

You appear to suspect that your client has knowingly submitted to you false figures of takings with the intention of evading VAT.  Your suspicion appears to be that your client was, in truth, trading in excess of the VAT threshold and that he realised that to be the case and deliberately failed to register for VAT when he knew he should.  That, of course, would be a criminal offence.

It is also more than likely that the understatement of takings involves the knowing evasion of income tax.  Again that is a criminal offence.

Clearly the client will have obtained a benefit in terms of any taxes 'saved'.

The client's acquisition, possession or use etc of the monies 'saved' by criminal conduct amounts to a money laundering offence under sections 327 - 329 PoCA 2002,

So it seems pretty clear that you do have an obligation to report this because you have a suspicion that a money laundering offence has been committed.  As you put it, this has "a very bad smell".  It is not necessary for you to have more than a sensible suspicion before the obligation to report 'kicks in'.

Your report should be to your firm's Money Laundering Reporting Officer, but the likelihood is that you are yourself the MLRO.  The MLRO is then obliged to report to SOCA.

I normally suggest filing reports using the online system on the SOCA website.

On a separate point, obviously you cannot submit a self-assessment income tax return which you believe to be false.  You need to discuss this with the client and tell him either he tells you the truth (about his takings since the business commenced) and instructs you to do the best you can for him with regard to income tax and VAT penalties or you cease to be his accountant.

However you will need to file a report with SOCA whatever the client chooses to do.


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30th Apr 2012 16:25


A slight misunderstanding I think.

The client submitted records to me which showed a turnover which exceeded the (then) vat registration limit.

I prepared accounts and tax return based on  those records and sent for approval. In the letter enclosing the accounts for approval was a paragraph advising the client that the vat limit had been exceeded and that he needed to contact HMRC and make full disclosure. He came in and he hinted that he would like to amend the records. I told him clearly that this was not possible. He took the papers away. When he didn't contact me I contacted him and he has advised that he has submitted his return.

My "suspicion" is that the return and accounts figures have been reduced to below the vat limit. Otherwise why would he not let me submit the return? It was after all on my system ready to go.

I will never know of course.

Needless to say I will be disengaging and have no doubt I will not get paid.


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30th Apr 2012 16:33

I see . . .

 . . . of course you are still obliged to submit a Suspicious Activity Report to your MLRO / SOCA.


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