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Professional Clearance for nightmare client

What information do I need to give

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I have just had to deal with the terrible client who was unbelievaby disorganised and I had to charge her a little bit extra to deal with her property accounts.  What I charged was only half what I should have charged but thats another story as the accounting records were total mess -.  I sent the invoices with a covering note justifying the charges and she paid part of the fees then six weeks later throw a massive strop saying they were too high compared to other accountants (they weren't) and wanted a discount.  I decided to disengage and take legal action to recover the amounts due

She found an accountant and now have to give professional clearance which I have duty to give irrespective of the issue above.  Do I mention I have fees outstanding ?

Secondly, how much detail do I need to give to the new accountant as I doubt the new accountant will be able to work out the breakup of the Fixed Asssets and Director Loan Accounts.  

Thank you

Replies (22)

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By SteveHa
05th May 2020 13:33

Ignore the issues with the client, and handover as you would any other client.

Be professional, not a problem.

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Replying to SteveHa:
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By I'msorryIhaven'taclue
05th May 2020 13:48

Awww... maybe just a small parting shot along the lines of "For the avoidance of doubt, and in anticipation of the matter possibly being raised with you, we have made no charge to our outgoing client for the collation and forwarding of this information".

That should help convey "price-sensitive" and "challenging" to the new owner.

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By New To Accountancy
05th May 2020 13:41

See it as good riddance. Be professional regardless, they'll soon realise why she's no longer your client. When I send a professional clearance, I usually list what I'd like, I also ask if there is any reason professional or otherwise why I shouldn't take on this client, so in this instance I'd like to know - but unless they ask, I would not comment.

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Replying to New To Accountancy:
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By Southwestbeancounter
05th May 2020 14:08

Yes and if they don't ask, and you really want to get it off your chest, just say 'I'd be delighted to give you professional clearance to act for Mrs X!'

That usually does the trick!

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By ireallyshouldknowthisbut
05th May 2020 13:45

Just tell it how it is.

if there are uncertainties in your work, I would state those uncertainties as the new accountant will find 'em and blame you.

"We have been unable to verify XXXX"
"The information supplied by out client indicated that.............but item 72 on the Xth Nov indicated otherwise, we accepted our clients representation on this matter"

You can of course exert a lien over any work you have done unpaid for, but not of course the client's records, so if she has paid for 30% of your fee, send 30% of the stuff.

And of course do a "I wish you the best of luck with this matter" so the new accountant knows its a stinker.

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Replying to ireallyshouldknowthisbut:
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By sanjay100
05th May 2020 17:17

Yes there was a number of uncertainties due to the client being so disorganised. Could not believe how bad it really was. In hindsight should have walked. She was old and memory was poor but still it was complete chaos. I sorted it all out for her at the last minute and took me months then she turned around complaining I overcharged her which was never the case by a long long way. If anything I had undercharged her and she might have saved fees if the financial records weren't in total disarray.

The one concern is the fixed assets as the properties had total refurbishment and extensions. Separating capital and revenue costs wasn't easy. Do I have to give the breakdown of the fixed assets ? Trying to establish how much information should I give. Do I provide all the breakdown of the Balance Sheet Accounts.

I am also tempted to invoice for the countless hours of unbilled work.

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By ireallyshouldknowthisbut
05th May 2020 18:23

I would give what is asked for, but also explain as I say if you think the FA number is bunk, then see no reason not to say so. This is about risk reduction on your part

Unless you have a very good contract the chances of getting paid is low. Unless you can leverage on your handover (and its worth a punt), i'd write that down to experience and next time don't be such a mug as to file before getting paid.

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Replying to ireallyshouldknowthisbut:
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By sanjay100
05th May 2020 19:02

There were a number of areas where the clients could not provide satisfactory explanation. Often the answer was don't know or don't remember.

Normally professional clearance is just asking for filed documents and Trial Balance. No issues providing this and I will have to give these straight away.

I can foresee the new accountant asking for a lot more information when they file the future accounts since my lovely ex- client won't have a clue.

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By memyself-eye
05th May 2020 15:10

Send nothing until you get paid!

Tell them that.

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By SteveHa
05th May 2020 15:35

PB wouldn't be happy with that.

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By memyself-eye
05th May 2020 17:23

PB?
I wouldn't be happy about not being paid
I'm astonished at accountants who 'fret' over what to send to new accountants when they are owed money......
What do they think they are in business for?
No money - no co-operation. That's it.

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By Cheshire
05th May 2020 16:05

End you letter by wishing them good luck.

Should tell them all they need to know.

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By Matrix
05th May 2020 16:14

You have already lost the client so the action you should take is the one which will maximise your chances of being paid.

Sending coded messages to the new accountant may make you feel better but won’t settle the fee dispute.

And put it down to experience- either agree increased fees upfront or stop working when their budget is reached next time.

Have you already submitted the return?

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Replying to Matrix:
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By sanjay100
05th May 2020 18:52

Yes everything been completed and filed. Perhaps there is a moral responsibility to let the new accountant know by reading between the lines that this new client will test their patience to the maximum.

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By Matrix
06th May 2020 10:30

I would wait until you receive the request. I would ask for all capital expenditure for a property business but I don’t believe you have received the request yet.

How is the legal action going?

I would probably withhold the assets stuff as collateral. It is handover information and has nothing to do with professional clearance.

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Replying to Matrix:
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By sanjay100
06th May 2020 11:27

We have just contacted the solicitors so will take time. I imagine it will take a while to get to court with the crisis. I know she would not want to go to court as she seems to spend a lot of time in legal matters with other parties. She is saying she cannot afford to pay due to the crisis which maybe the case and have offered her to pay instalments over five months. Again she is not agreeing.

For the new accountant to do their job properly they would also need to know whats in the director loan account. Whenever we get professional clearance letters surprisingly we never get asked for this detailed information.

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By cbp99
06th May 2020 14:37

Solicitors? How complicated is it? Would it not be sorted via small claims?

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By bernard michael
06th May 2020 09:32

I recently sent a clearance letter and the recipient said to my client that they would not reply or send any information until their bill was paid ( this was an outrageous figure overcharging by about 200% in my opinion). They are an ICAEW firm but with the virus around there's no point in complaining to the Institute.

The client decided to pay to get rid of them and is now bad mouthing them around the area. Should be good for future business

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By pauljohnston
12th May 2020 10:29

Just make sure your dis-enagement letter to the client says "Any information requested after 3 months of the date of this letter will attract a fee of at least £150 plus VAT paid upfront as you are no longer a client"

If the new accountants are doppy it could take over three months for them to get her signed up and you dont want the closure drawn out.

In the meantime telephone them and advise them that there are outstanding fees and that you are delightedto give professional clearance but no data until you have been paid.

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By TheChief
12th May 2020 10:35

I received a professional clearance for one of my clients that owed money.. I sent an email to the accountants telling them that i would pass on all info once the outstanding account was paid. They just responded ok they would give the client a nudge... I find honesty the best policy.....

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By paddy55
12th May 2020 12:55

Are the fees information covered by a confidentiality agreement (express or implied)? It seems unlikely.
Is it libellous to mention the fees? I do not think so.
The new accountant must obtain the information you mention. He can obtain it from you or by commissioning another accountants to carry out the necessary work. If you are willing to do it a) obtain the previous client's permission and b) be sure to charge a fee for your services. Agree and obtain the fee before doing the work.

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By kevinringer
14th May 2020 12:58

You need the client's authority to disclose. I always ensure I get authority to disclose everything. I would then send in writing the information requested then out of courtesy I'd phone the new accountant to tell them straight because I'd want to know what I was letting myself in for if I was taking on a problem client.

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