We are a small non-chartered accountancy practice with two shareholders and 1 employee. We provide payroll services to a Dutch client for their 2 UK employees. Following Brexit the company has been notified that it's UK GBP bank accounts have been closed and it is therefore unable to pay its approx £500 monthly auto enrolment pension contributions by either of the methods (Direct Debit or Debit card) specified by the pension provider NEST (and any other AE pension provider I have been able to ask). Can anyone advise what regulations apply if we were to receive our client's autoenrolment pension contributions and forward them to NEST by Direct Debit from our bank account. Would we be required to open a client account? Our current bank will not allow us to open a client account because we are non-chartered. We are of course registered with ICO and regulated by HMRC for compliance with Money Laundering regulations. Any assistance you can provide would be welcome.
Many thanks
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If it helps, we have to hold clients moneys separately whenever it's held in trust. In practical terms, we'd distinguish between:
Client A: lodges an amount intended to be drawn-down as and when; perhaps a mixture of payments to third parties (eg third-party disbursements, other professionals' fees, HMRC liabilities, and even our own fees). In extreme cases such periodic draw-downs might be predominantly or, in extreme cases, solely our own fees drawn perhaps at predetermined milestones in our work.
So let's simplify that by imagining for client A that there are no third-party payments whatsoever.
Client B: lodges an advance payment that is clearly intended to be an advanced payment for our services. A deposit; a payment on account, if you will.
See the difference between the two?
A goes directly into our client bank account; B directly to our current account (regardless of whether or not we happen to have performed any commensurate value of work at that particular point). That's because the former is held in trust - on behalf of the client if you like. The latter is ours, so that even in the event that we go bosums'-up tomorrow the client will have kissed goodbye to his deposit / advance payment. I remain mildly amused that a bursar at one of the kids' schools once placed a whacking (Type B) deposit with an IT company who went bust soon afterwards; the money was of course lost. (I'm often easily amused by school bursars, especially by their attempts to address real-world matters. In that particular instance, due-diligence went out of the window in favour of an unbelievably crackingly-good deal).
I digress. If, as appears to be the case for you, the clients' funds are instantly / quickly passing through your bank account then you should be ok using your current account. In practice, clients' funds only become a problem if you sit on them for any length of time. And given that you're not subject to strict client account rules (such as eg solicitors' rules, ABTA, or for that matter those of any professional accountancy body) then I don't believe there's anything in general English Law to prevent you from paying clients' moneys in and out if that is carried out rapido. Normal money laundering rules apply, of course.
Is it just me or does
Following Brexit the company has been notified that it's UK GBP bank accounts have been closed
sound ridiculous (that is, if Brexit is proposed as the cause... post hoc ergo propter hoc and all that)?
Also, if that means the Dutch company "is therefore unable to pay" someone in the UK, then this is quickly going to get very expensive for your firm.
While I don't know the answers to your questions, they are not the first questions I would be asking myself in the situation you describe. Don't be someone else's fall guy.