Share this content

Professional Clearance

Didn't find your answer?

I recently had a case where I prepared a 2020 Tax Return for a self-employed builder. He complained about the amount of tax he had to pay and I informed him that there were unidentified deposits to his business bank account totalling over £7,000, which I treated as business income as he wasn't able to provide any evidence that they were anything else.
Out of the blue I received a phone call from another accountant asking for professional clearance to "check my workings". I argued that:-
a) I hadn't filed the Return with HMRC and therefore, couldn't give professional clearance because of my concerns over undeclared income.
b) The client hadn't paid my bill as, in his words, he "wanted a second opinion".
Because it was close to the filing deadline I ended up begrudgingly providing my 2020 draft accounts and workings and wrote off my invoice. I'm annoyed that the other accountant took this case on knowing my concerns over the business records and unpaid invoice and wonder whether anyone else feels the same and that I should have witheld the 2020 information. The old chestnut of not being paid not being a reason to provide information is so unfair when work is done in good faith. It didn't help by the new accountant threatening to report me to my institute for not providing information. 
Does anyone think that the new accountant was in his right to act as he did or is it just sour grapes on my behalf? 

 

 

Replies (12)

Please login or register to join the discussion.

By ireallyshouldknowthisbut
01st Mar 2021 13:54

Its all happened, so I wouldn't dwell on it

You are not going to get the time back you spent on this so its largely irrelevant if you supplied your workings or not.

I personally would not have done if nothing was filed and nothing paid for, but I might have just to shut up the incoming if they are being annoying. No skin off my nose either way.

Thanks (1)
avatar
By Truthsayer
01st Mar 2021 14:16

ICAEW rules are that you have to respond to the professional enquiry if you have not been paid, but you don't have to provide handover information. They are different things, but often conflated in the mind of many accountants. Also, the other accountant should not be asking for 'professional clearance' over the phone. Whether 'professional clearance' even exists depends on which accountancy body they belong to. There is no such thing under ICAEW rules.

Thanks (0)
Replying to Truthsayer:
avatar
By GSWB1954
01st Mar 2021 17:36

He was a member of ICEAW and apparently received approval from them to accept appointment despite no professional clearance. Must be desperate for work.

Thanks (0)
Replying to GSWB1954:
RLI
By lionofludesch
01st Mar 2021 17:55

GSWB1954 wrote:

He was a member of ICEAW and apparently received approval from them to accept appointment despite no professional clearance. Must be desperate for work.

Wouldn't surprise me if he made that up. "Professional clearance" is an expression which officially disappeared fifty years ago (yet still in common use today).

Thanks (0)
avatar
By Paul Crowley
01st Mar 2021 14:29

The type of agent who makes such threats is also the type of agent who would not supply without being paid

Thanks (0)
avatar
By Mr_awol
01st Mar 2021 16:59

It depends what you mean that you took the £7k as being sales as he "couldnt provide evidence that they were anything else" and also the standard of his records usually and this year.

There are some clients who rarely have undeclared bankings and whose sales invoicing is pretty robust. With them, if i couldn't tie this up and they told me it was 'private' then id probably take their word for it and credit it to CPI - i wouldn't grill them for 'evidence' that it was an inheritance from dear old aunt Elsie.

If on the other hand they were blatantly sales and the client was being vague i might have to lead them towards putting them in sales.

Either way i wouldn't just 'decide' because their answers weren't good enough. Id agree a treatment with the client. Did yours ever agree to the income being reported as sales?

Thanks (0)
Replying to Mr_awol:
avatar
By GSWB1954
01st Mar 2021 17:48

His records were appalling so in situations like this, but not in this case, I ask the client “what would you say if you were sat in front of Mr Inspector of Taxes”? Amazing how many times they suddenly remember a sale with no invoice. Although it may seem as if I’m helping HMRC, I’m actually trying to protect the client. What treatment would you agree with a client who had unidentified deposits into a business bank account? I did ask him to sign a disclaimer but he said that he would be guided by my successor. By that time I’d had enough and told him to do what he wanted. Presumably the new accountant, a member of ICAEW, was more lax than me.

Thanks (0)
RLI
By lionofludesch
01st Mar 2021 17:40

I wouldn't have provided my working papers.

They belong to me, not the client.

Thanks (0)
Replying to lionofludesch:
avatar
By GSWB1954
01st Mar 2021 17:49

Good point. I only did it because it was near the filing deadline. Never again.

Thanks (0)
Replying to GSWB1954:
RLI
By lionofludesch
01st Mar 2021 17:52

GSWB1954 wrote:

Good point. I only did it because it was near the filing deadline. Never again.

The £100 penalty - which is not a fortune - is the price he pays for changing horses in the final furlong.

Thanks (0)
Stepurhan
By stepurhan
02nd Mar 2021 08:27

Until he has paid you, he has no right to any work you have done on his behalf. That is
even before noting that the working papers themselves are the property of the accountant that made them.

The correct answer would have been to return any client records you held and allow the new accountant to start from scratch with them.

Actually, if they really called you out of the blue, then the correct answer would have been to provide nothing (as you did not have your "client's" authority.)

Thanks (0)
avatar
By Calculatorboy
04th Mar 2021 17:27

why didn't you just reply, explaining your right of lien , and withhold your papers ?

Thanks (0)
Share this content