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Non paying client

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A client has partially paid a bill, they were paying by direct debit but the company is no longer trading and needs to be wound up.

Am I obliged to submit the accounts, tax returns and finish off the company close down if part of my fee is still outstanding?

Thanks in advance.

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By Duggimon
13th Aug 2021 10:33

I wouldn't do any more work for a client who has said they're not going to pay me.

Have they said they're not going to pay? The accounts, tax returns and other Companies House submissions are the responsibility of the director, they are free to engage someone to assist (you) and pay them to take care of it but if they have no intention of paying they'll need to do it themselves.

You have no obligation to carry on working for someone who has effectively disengaged, provided you have completed everything you have been paid for.

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By Craigbisby2
13th Aug 2021 11:15

They have paid me just over half the bill and I have prepared everything, just not yet submitted them to HMRC and Co House

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By Paul Crowley
13th Aug 2021 18:40

Adopt a normal pattern
Raise the invoice and client clears before accounts filed

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the sea otter
By memyself-eye
13th Aug 2021 10:35

Agreed - forget 'obligation'

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By SXGuy
13th Aug 2021 11:34

Do not submit anything till fully paid. Unless you like working for free.

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By ireallyshouldknowthisbut
13th Aug 2021 11:52

What does your engagement letter say?

Mine all say "no payment, no filing".

if yours don't- why not?

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Replying to ireallyshouldknowthisbut:
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By Craigbisby2
13th Aug 2021 12:30

No it doesn't but I'm just about to include for future.

Thank you

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By Leywood
13th Aug 2021 18:48

Horse bolted. so what are you going to do next then?

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By Moonbeam
13th Aug 2021 12:37

No matter what is or is not in your letter of engagement, no-one should get anything for free.
Email the director for funds to complete and point out that it's his responsibility to pay you.

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By Barry Adams
14th Aug 2021 13:33

You need to consider the details and take an ethical approach.

Why is the client going bust.

Have they been a good client for years and going bust through no fault of their own.

After all, if completed, submission is not going to take long and will probably make things easier for you in the longer term.

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By Paul Crowley
14th Aug 2021 14:02

I agree that consideration of circumstances is what I would do in reality and client history is a dominant factor.
But if company is insolvent and goung through liqidation then I would see no point in finishing of the company filings and would be looking to assist the director, subject to the relevant rules.
For all we know this could be a case of company had its bank account emptied by director and director is still earning £80K a year in new trade or employment.

If really insolvent, then It is insolvency practitioner to decide on actions
If not insolvent company can pay

Very little point in dealing with the company obligations if company will be liquidated or struck off

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By Rgab1947
17th Aug 2021 10:17

No

Slavery was abandoned years ago

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By David Gordon FCCA
17th Aug 2021 11:47

No-
In fact if a company is insolvent, the accountant has no right to any fees, Including any work that may have been done to help with preparing for the insolvency.
I paid for this lesson years ago when I was still young and starry eyed.
The accountant ranks as an unsecured creditor. Worse, if the accountant knew the client was insolvent he might not rank even as an unsecured.
2)
Cover this in your letter of engagement. Mine says that directors of private limited companies are jointly and severally personally liable for any outstanding fees.
it also sets out that where clients pay by installment, each installment covers any services rendered during the month of the installment and is not a payment in advance or arrears.

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By David Gordon FCCA
17th Aug 2021 12:26

To clarify
It , sadly, surprises me that so many of my colleagues seem not aware of the statutory position.
If a client/company has committed an act of insolvency, (Admitting inability to pay bills ) then if an accountant is paid for services rendered thereafter, any subsequent liquidator, whether appointed by the court or at a Meeting of Creditors, may treat this as preferring a creditor, and claim back that payment. This is not theoretical,it happens on a regular basis.
A liquidator or Receiver stands as director of the company. Any accountancy services
must be approved by the liquidator. Generally they will not approve if a) the work may be done by the liquidator and b) if there is no financial advantage for creditors.
So, it is not being hard-hearted, the erstwhile director(s) of the company may not in law have the right to instruct you, or even approve the accounts.

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By indomitable
17th Aug 2021 17:30

No

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By Seadog
21st Aug 2021 00:26

Chapter 8 https://www.google.com/url?sa=t&source=web&rct=j&url=https://www.att.org...

This practice guideline covers off ATT members obligations in this situation.

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