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Professional Clearance not sought by accountant

An Ex Client has requested information be sent to him and not to his new accountant.

I received a text message from an ex sole trade client asking me to send opening balance information to him.  From the terminology he has used I know he has been told to ask for this by an accountant.  I text the client back saying I would need his new accountant to write to me requesting professional clearance and that he would also need to write to me authorising me to release the information to the new accountant.

The ex client has now written to me requesting me to forward the information direct to him.  Should I do this to get rid of what was always an awkward client or should I insist the new accountant has to write to me first?

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13th Nov 2017 09:51

Are you sure he has a new accountant?

Thanks (1)
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13th Nov 2017 09:53

He is, of course, under no obligation to use an accountant.

I would just supply him with the same information you would supply a new accountant - surely it will take you the same time.

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By Sue01
to stephenkendrew
13th Nov 2017 10:02

Yes but I was not sure whether I would not be following compliance to send the information direct to the client. It seems from what you are saying there is no reason for me not to do so.

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By Sue01
13th Nov 2017 09:55

He has not actually said he has a new accountant but with the wording for the information he has requested I am making an assumption he does because he would not have used this terminology otherwise.

Should I not make this assumption and just send the information to him?

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13th Nov 2017 10:00

It is not for you to police the professional conduct of the new accountant, whose very existence is mere speculation by you. If there is a new accountant whether he wants or needs professional clearance is none of your business unless and until you receive a request to provide it.

It’s also very odd that you have requested your former client’s authority to provide information to a new accountant when you have received no request to provide anything to anyone other than your former client himself.

Thanks (5)
13th Nov 2017 10:01

If he is awkward, be awkward back.

Reiterate that the new accountant will, assuming they are working to normal professional standards, write to you, and that you will respond to them in due course, and there is no need for them to act as an intermediary.

And then you can point out to the new one you (presumably) fired them. Its part of the fun of getting rid of bad clients.

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By Sue01
13th Nov 2017 10:08

We have had a discussion with regards to him moving to a new accountant as I was not prepared to claim all the expenses he was trying to insist were business, he told me that he had spoken to another accountant who was prepared to do so, so I said I would be happy for him to move to this accountant.

It seems that the majority feel it is acceptable for me to forward the information to the client so I will do so as it will be a relief to have no further dealings with him.

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By Chris Mann
to Sue01
13th Nov 2017 10:11

and, of course, equally importantly, formally disengage.

With that confirmation, there is then no question that your responsibilities have come to a close.

Thanks (3)
By mrme89
to Sue01
13th Nov 2017 10:18

You may need to consider your MLR obligations to report this client.

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By mumpin
to mrme89
13th Nov 2017 10:21

Why would she need to do that?

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By mrme89
to mumpin
13th Nov 2017 10:33

Because there is suspicion that the client wants to evade tax.

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to mrme89
13th Nov 2017 11:04

Surely suspicion that he 'wants' to evade tax is not enough though?

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By DJKL
to Wanderer
13th Nov 2017 11:14

Wanderer wrote:

Surely suspicion that he 'wants' to evade tax is not enough though?

What word/words would you need to replace "wants" with before making a report, would "is attempting" be enough?

Of course this presupposes the OP honestly believes that the expenses the client wishes to claim are not claimable and that the client is moving accountants in order to facilitate an accountant submitting returns with said expenses claimed, the need for a SAR being squarely with the OP based on the conversations/ similar he/she had with the client.

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to DJKL
13th Nov 2017 12:17

DJKL wrote:

What word/words would you need to replace "wants" with before making a report, would "is attempting" be enough?


I'll leave it to David Winch to clarify however fairly sure based on his previous advice that we would need the words attempting or maybe even 'has evaded'.
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By mrme89
to Wanderer
13th Nov 2017 11:15

From the horses mouth:
'We have had a discussion with regards to him moving to a new accountant as I was not prepared to claim all the expenses he was trying to insist were business, he told me that he had spoken to another accountant who was prepared to do so'

You only need suspicion of an offence to report. The name of the report is quite helpful in this respect; Suspicious Activity Report.

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to mrme89
13th Nov 2017 12:39

Suspicion agreed, but has an offence actually occurred yet? This is what David Winch has said before:-

"On the other hand if your suspicion is only that a FUTURE tax 'saving' may be made as a result of incorrect figures being supplied to HMRC, or if your suspicion is that the plumber did NOT know that he was obtaining a tax 'saving' by submitting incorrect figures, then you do NOT have a reportable suspicion."

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By Sue01
to Wanderer
13th Nov 2017 12:34

No offence has been occured during previous years and of course I will not know what happens for the latest year as I will have no involvement.

Thanks (1)
13th Nov 2017 10:24

Presumably the client has lied about the nature of the expenses to the new accountant in order for them to agree they are OK, hencing wanting to cut you out of ther loop.

Personally i would (very politely) dig in.

O and if he is bailing mid return, get them to pay in full for any workings you are sending.

Assuming you are a member fo a professional body,then seek guidance. The ICAEW's ethics helpline is really useful for example so you balance your duties to the client and those to the wider profession.

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to ireallyshouldknowthisbut
13th Nov 2017 10:59

But it is still speculation that he is using another accountant. Send him the information and should a new accountant ask for clearance and documentation tell him the client has them. However I bet he'll lose/destroy them

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By DJKL
to bernard michael
13th Nov 2017 11:07

So, send information together with disengagement letter to former client and advise in covering letter that his/her file will now be placed in storage and accordingly any further request in the future for the same data will incur an administration charge, to process, of £XXX

If £XXX is a meaningful figure vis a vis the client it may sharpen his/her mind re the value of the information received , and he/she may accordingly take care of it a little better.

Thanks (3)
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13th Nov 2017 11:03

Just a side issue. If you have sent copies to the client can you then destroy any originals as you have complied with clearance so that when a new accountant pops up you can say I have nothing to give you - see the client

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By DJKL
to bernard michael
13th Nov 2017 11:20

bernard michael wrote:

Just a side issue. If you have sent copies to the client can you then destroy any originals as you have complied with clearance so that when a new accountant pops up you can say I have nothing to give you - see the client

I would have thought a somewhat dangerous approach in case the former client subsequently raises a claim against your firm, harder to defend when the file is part destroyed.

When I was full time in practice we kept ex client files in storage for 6-7 years, only then were they despatched to the shredder.

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By Sue01
13th Nov 2017 11:07

Thanks all for your advice.

I will send the information the client has requested along with a disengagement letter.

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13th Nov 2017 11:24

i d find we are a little too eager to jump to conclusions without any substantive proof or detail whatsoever.

Since when has 'not providing client with information for which the accountant has been paid for' formed part of the our professional conduct...

And whilst I am sure that our profession agree on 99.9% of things (completely tongue in cheek) - in the absence of any other information are we really making the jump from 'questionable' expense to 'evasion' just because one accountant may take a different view to another....

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13th Nov 2017 13:09

Just get rid.

I'd be chuffed to have this R Sole off my hands.

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to lionofludesch
13th Nov 2017 13:35

what makes him an 'r sole'....so he finds an accountant who provides better advice/knows the are within which he works better?....what next client is an 'r sole' because he has found an accountant offering a better service etc...

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to justsotax
13th Nov 2017 13:43

The OP makes it clear that she's had issues with him about overclaiming expenses.

If it were simply changing his accountant, I'd agree with you. But it isn't.

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to lionofludesch
13th Nov 2017 14:03

Yes but, with the greatest respect intended, the OP did find it necessary to ask this question.

It seems possible, to me, that they may be someone that encounters a higher number of awkward people than the man on the Clapham omnibus.

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By Sue01
to Portia Nina Levin
13th Nov 2017 14:14

Just to clarify. As well as wanting me to claim expenses which I did not believe were for business use. The client did not want me to declare on his tax return that he was receiving rental income.

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to Sue01
13th Nov 2017 15:06

Sue01 wrote:

Just to clarify. As well as wanting me to claim expenses which I did not believe were for business use. The client did not want me to declare on his tax return that he was receiving rental income.

I rest my case, m'lud.

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By Sue01
to Portia Nina Levin
13th Nov 2017 14:13

Not sure I understand your comment.

I would assume we all have some awkward clients.

I have never had the need to ask this sort of question before otherwise I would have known the answer so don't understand why you feel I am the sort of person who encounters a higher number of awkward people than anyone else.

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to Sue01
13th Nov 2017 14:14

Well, I've been wrong before and not apologised.

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By Sue01
to Portia Nina Levin
13th Nov 2017 14:24

I was not saying you are wrong I am grateful for all the advise I have received today just wondering why I came across as someone who had lots of awkward clients just because I prefer my clients to be honest.

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to Sue01
13th Nov 2017 16:47

@Sue, don't worry about PNL.

Great tax knowledge zero tact, and actively enjoys not having any.

Thanks (4)
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By Sue01
to ireallyshouldknowthisbut
13th Nov 2017 16:53

Thanks for your support.

I have had some really helpful advise from people today and am really grateful. Just seems to be a couple of people who seem to have an issue with me for some reason.

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By Sue01
to justsotax
13th Nov 2017 16:58

I'm not saying he has not moved to a client offering a better service as I don't know, the reason I don't know is because the accountant has not had the courtesy to contact me asking for professional clearance. In my mind an accountant that does not even show courtesy to his fellow accountants is not offering a better service.

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13th Nov 2017 16:24

....I guess we got their in the end....but I have to say missing off the part where your client has directly asked you to defraud the Revenue was kinda important....

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By Sue01
to justsotax
13th Nov 2017 16:40

I didn't supply that information initially as it did not relate to my original question which was whether I should send the information direct to the client or wait for an accountant to ask for professional clearance but because the subject went in a different track it then became relevant.

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14th Nov 2017 10:26

Suspicious activity report seems likely in view of the knowledge of non-disclosure of rental income. I suspect the new accountant wont be told about the rental income.

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14th Nov 2017 11:13

First distinguish between stuff you may exercise an accountant's lien on, and stuff which under professional rules you act only as agent, so belongs to the client.
Parcel up the stuff which under rules you must return. Send it to him, by Special Delivery -not recorded post (which is a waste of time) include a covering letter with a "Return" copy, and a bill for urecovered time. Your letter ought to clearly state :
On receipt of the fees, and a signed approved copy of the letter, you will send him any stuff over which you have a lien.
That he acknowledges he has no claim upon you.
That any further work will be charged at appropriate rates.
That if it comes to your knowledge that he is using an accountant you reserve the right to take any action needed to protect your professional status.
You should advise HMRC that you are no longer acting, but be very careful your note to HMRC must be simple and neutral. It must not in any form imply criticism of the client.

Thanks (2)
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14th Nov 2017 11:13

First distinguish between stuff you may exercise an accountant's lien on, and stuff which under professional rules you act only as agent, so belongs to the client.
Parcel up the stuff which under rules you must return. Send it to him, by Special Delivery -not recorded post (which is a waste of time) include a covering letter with a "Return" copy, and a bill for urecovered time. Your letter ought to clearly state :
On receipt of the fees, and a signed approved copy of the letter, you will send him any stuff over which you have a lien.
That he acknowledges he has no claim upon you.
That any further work will be charged at appropriate rates.
That if it comes to your knowledge that he is using an accountant you reserve the right to take any action needed to protect your professional status.
You should advise HMRC that you are no longer acting, but be very careful your note to HMRC must be simple and neutral. It must not in any form imply criticism of the client.

Thanks (1)
to David Gordon FCCA
15th Nov 2017 07:25

In terms of HMRC simply deleting the client from the appropriate lists should suffice. It often surprises me that I still have ex clients on these lists which can only mean that new agents have not applied for agent status. I don't lose many but when after say 6 months I spot one I simply delete as under information rules I don't need access to their information.

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to David Gordon FCCA
15th Nov 2017 07:25

In terms of HMRC simply deleting the client from the appropriate lists should suffice. It often surprises me that I still have ex clients on these lists which can only mean that new agents have not applied for agent status. I don't lose many but when after say 6 months I spot one I simply delete as under information rules I don't need access to their information.

Thanks (1)
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15th Nov 2017 13:59

I think the queryist may have been a bit awkward from the start, really. Personally, I'd only withhold this sort of information, if, say, the client still had an unsettled accountancy bill to pay - or a portion thereof.

Some may disagree, but I'd suppose a client has an absolute right to request an opening TB - or, let's say a breakdown of the figures appearing on the balance sheet - even annually, if the client so wishes - perhaps just out of interest...

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