Outsourcing, AML and KYC, agent authorisation

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Hi everyone,

My friend runs a company offering admin support for businesses. He now wants to have an add on service of bookkeeping and accounting (including submissions). I told him there are AML checks involved, KYC, PII, third party agreements, HMRC and CH registrations, supervision body etc. and he offered me to pay a fixed fee for bookkeeping, payroll and accounts submission (he would charge them more). He would deal with them personally, not me and I would have an outsourcing agreement with his company. I offered him a fee or monthly commission, but he really wants to 'expand' and offer all-in-one service for businesses. Now I'm thinking if I should agree... 

1) He wants to register for AML supervision with HMRC. If HMRC accepts his registration, do I still need to do KYC and AML checks on his clients or just have a confirmation from him that he did it?

2) I would be doing all accounting and submissions. I assume all correspondence would go through him and then to the client. How do you deal with passing all of documents to sign to directors, requesting missing documents, submitting RTI, CT600, VAT from own agent accounts, when in fact there is no client agreement but with the middle man? Who signs the accounting report? I believe it's me but it seems wrong not to have an end client agreement in place... On the other hand, I know there are many accountants outsourcing accounts submission to others. How do they deal with submissions when there's no agreement between them and company directors? 

I did outsource some work but it was just bookkeeping. All checks and submissions were done by me. It's confusing when I try to figure it out the other way round. 

Replies (8)

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By WinterDragon
03rd Feb 2024 00:11

Is your friend an accountant; and if he claims to be, does he have experience of being in practice.

By the wording of your question, it sounds like he isn't/doesn't if he had no idea about registering as an Agent with HMRC, PII, AML etc etc.
If he has clients that engage him for accountancy services, he will no doubt receive questions from clients that he will not be able to answer or worse, he may give the wrong answer. Would this relationship be clearly communicated to clients and if they are fully informed, why would they choose this model over engaging directly with an accountant? There doesn't seem to be a cost saving element for the client if there's a middle man getting a cut.

I could go on and continue to poke holes but if my assumptions are correct, I'd rethink the scheme entirely as it sounds like you'd both build a monster that would soon become a nightmare.

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Replying to WinterDragon:
By madlindel
03rd Feb 2024 00:43

He worked in audit for some time but didn't get any qualification, that's why he wanted to outsource.

For me it all is too complicated and I'd rather just pay him a commission or agreed fee. He said the only reason is that the clients trust him and he wants to expand the business but I guess he's only focused on getting the money and if my prices go up, he would be missing out. I can't think of any other reason why he wouldn't want to pass them to my practice.

My first thought was a no but he's very certain that he can run the business like that once his registration is approved. If I don't agree he will probably outsource somewhere else. That's when my FOMO comes in..

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Replying to madlindel:
By WinterDragon
03rd Feb 2024 01:17

I hadn't realised you had your own practice, if I'd have read your OP properly I'd have noticed you mentioned you'd already suggested to him contracting directly with the client and paying an agreed fee. This seems to be a sensible model but if he's not willing to budge then I'd say pass.

If he's a one man band and doesn't have any employees then it sounds like he's trying to do too much and offer more and more services to his clients. FC is right and this will end up with nervous breakdowns a plenty. If you value your friendship then let him dig his own grave and enjoy every second of telling him "I told you so."

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By FactChecker
03rd Feb 2024 00:15

"You better stop, look around,
Here it comes, here it comes, here it comes, here it comes,
Here comes your nineteenth nervous breakdown"
(c) Jagger, Richards

[aka - I can see nothing good coming from this, unless you enjoy being used.]

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Replying to FactChecker:
By I'msorryIhaven'taclue
03rd Feb 2024 09:54

Well nothing I do don't seem to work
It only seems to make matters worse, oh please

OP, you're going to have to carry out your own AML checks and KYC procedures.

IMHO you'd be better off contracting directly with end-user clients, and regarding your pal as their bookkeeper. We've picked up a few jobs recently from bookkeepers, and always sign-up and thereby contract directly with the client. That way we (rightly or wrongly) duck checking out the the bookkeeper's providence. I somehow doubt many of them are properly supervised, but hey-ho this is Dorset where 14 year olds drive tractors on public roads and every LandRover has a loose collie in the passsenger seat (I'd like to think to keep an eye on the driver when he's on his phone or chomping on his pastie).

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By Leywood
03rd Feb 2024 08:58

Wide berth
Barge pole
Think all of those sorts of sayings.

I’ve no doubt he could get AML sign up via HMRC. He doesn’t need to be able to show any kind of competence as a bookkeeper or accountant.

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By Kaylee100
04th Feb 2024 11:37

If he has little skin in the game, you will probably be landed with poorly costed work and the inevitable extra questions, and find you are working your backside off for poor return.

Every single client I had for these services paid different amounts for this service. And my fee arrangements had to be flexible so that if their provision of information deteriorated, because fixed fees didn't motivate them to do it, I could revise my fee.

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By Dogracer
06th Feb 2024 17:56

Why not turn this on its head.

He makes referrals to you. You have direct control with the client and you pay him a consultancy or referral fee?

The current arrangement sounds like a licence to lose money with all the risk and little reward

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