Really Strange sequence of events

Do I take this client on ?

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I was going through a process of giving professional clearance to an accountant last week.   The New accountant was very condescending, impatient and rude throughout the process including threats to report me to my accountancy body.

He mistakenly copied me on an email to my client saying my charges were too high as well as other accusations.   This really irriated me but kept my cool and did not respond to him as client couple days later out of the blue then pleaded with me to stay (not because of the email sent by this accountant).  I agreed and we came to an arrangement.  I had orginally initiated the departure of the client over a dispute over fees as when this client came to me the book-keeping was in total disarray and took days to get everything together so accounts could be produced.

Actually being 15 years in practice I have only given professional clearance three times and two of these clients decided to come back last week ! One had left 2 years ago after huge fallout and wanted me back.

I was thinking about this other day and hope I do not come across this accountant ever again.  Unbelievably, I have just received a call from a potential client (Limited) that want to leave same accountant for a number of reasons including false filing of his accounts. What are the chances of this happening when there are over 100 accountants where I am located and actually most of my new business comes from other sources.

This potiental client is decent and one I would like to take them on board.  However, I know getting professional clearance and documents (if I get to this stage) from this accountant maybe diffcult as he obviously doesn't like me.  I also want to report him for his unreasonable behaviour earlier to his accountancy body as accusations were unjustifed and whatever your thoughts about other accountants you just keep them to yourself.  I also think we will have to amend the clients previous accounts as something doesn't right seem from what the client has told me

 

 

 

 

 

 

 

Replies (34)

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By zebaa
24th Jun 2020 13:09

Sign Ltd up, but warn of problems getting hand over info. Ignore the rest (assuming no MLR / fraud requirements ).

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Replying to zebaa:
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By Paul Crowley
24th Jun 2020 14:29

Ditto

If client want to complain to professional body, that is clients choice
Do not recommend starting a war. Never worth wasting your time.
Having said that I would definietly keep a copy of the libelous email

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paddle steamer
By DJKL
24th Jun 2020 13:18

You will get more than average number of clients from him compared with the rest of the 100 as if he is useless his clients will leave him far more frequently than were he decent.

When I was full time in practice we tended to pick up clients across the board from other firms, and of course lost some the same way, but we did tend to pick up more than average from 2-3 particular firms .

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Replying to DJKL:
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By GlobalTax
24th Jun 2020 17:31

I wish this was the case but it isn't - simply my fees are higher than his plus I do things properly whereas he probably promises his client no tax and low fees which is a huge temptation for some.

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By SXGuy
24th Jun 2020 14:13

Just see what copies of past accounts they have, fill in the gaps with Co House submission, and carry on. Wouldn't waste my time sending clearence letter.

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Replying to SXGuy:
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By Mr_awol
24th Jun 2020 14:21

SXGuy wrote:

Just see what copies of past accounts they have, fill in the gaps with Co House submission, and carry on. Wouldn't waste my time sending clearence letter.

Depending on the OPs governing body they may be obligated to at least try and contact the outgoing accountant.

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Replying to Mr_awol:
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By Paul Crowley
24th Jun 2020 16:29

Always write or email
Keep it professional. He is the bad guy, not you

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Replying to SXGuy:
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By GlobalTax
24th Jun 2020 17:26

Yes, I might get this client to get all the documents for me. His Accountant had found filed his accounts without his approval and only last week got a copy of his accounts.

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By Mr_awol
24th Jun 2020 14:26

You should take it on just to put the boot in. Perhaps also research as many companies as you can find that use the other guy as Registered Office, google a trading address for them and direct market them gradually over the next year or so with the aim of poaching at least ten in that time.

Don't bother reporting them though. Let it go(ish)

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Replying to Mr_awol:
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By GlobalTax
24th Jun 2020 17:04

Good suggestion. Looking at this accountant company's accounts I was shocked to see his bank balance. What I gather the reason he is so popular is his fees are low and his clients up paying no tax just like his client that came to me so they are happy. They won't move - no reason to with low fees no tax. They blindly trust their accountant and think he is filing the accounts and corporation tax return correctly.

They then need a mortgage and suddenly realise they should be paying tax hence have some profit. I am wondering why this did not occur to this potential client earlier i.e no profit. He is in construction (one man) so definitely would have made a decent profit.

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Replying to GlobalTax:
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By Ben McLintock
24th Jun 2020 18:54

Sounds like you have some difficult conversations ahead and a potential ML problem if you're correct that he has been under paying tax.

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Replying to Ben McLintock:
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By GlobalTax
25th Jun 2020 10:24

What happens if accountant files the accounts and corporation tax return without the knowledge of client and client then realises that he has grossly unpaid tax for three years. Is ML still required or do we just rectify the position for the last three years.

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Replying to GlobalTax:
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By Wanderer
25th Jun 2020 10:36

No report if client was unaware of the underpayment. Only report if, after being informed, the client refuses to rectify.

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Replying to Wanderer:
David Winch
By David Winch
25th Jun 2020 11:07

Wanderer wrote:

No report if client was unaware of the underpayment. Only report if, after being informed, the client refuses to rectify.

Yes and no, if I may?
A report is required where there is a suspicion of money laundering (nothing else - apart from terrorism related stuff).
For there to be money laundering there first has to be a criminal offence committed from which a benefit (in money, assets, or evasion of liabilities) has occurred (theft, fraud, drug trafficking, tax evasion, etc).
Most of those 'predicate' offences (as they are called) involve dishonesty.
So no tax dishonesty by client = no criminal offence = no money laundering = no report about the client. This is the point that Wanderer correctly makes.
But what about the accountant? Has he been dishonestly engaged in defrauding his client and HMRC? If so, has he obtained a benefit from that criminal conduct (e.g. his fees)?
So the OP needs to ask himself whether he has a reportable suspicion of money laundering by the accountant. #justsaying
David

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Replying to davidwinch:
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By GlobalTax
26th Jun 2020 10:08

Thanks so it would be upto me to report this accountant is I found out this new client did not pay significant amount of tax due to the accountant entering some spurious costs which the client was not aware of ?

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Replying to GlobalTax:
David Winch
By David Winch
26th Jun 2020 10:49

GlobalTax wrote:

Thanks so it would be upto me to report this accountant is I found out this new client did not pay significant amount of tax due to the accountant entering some spurious costs which the client was not aware of ?

The question for you to ask yourself is, "Is this accountant being dishonest to earn fees, or is he merely incompetent?". If you suspect that he is earning fees by dishonesty, then you have a reportable suspicion. If you think he is simply a clueless idiot, then you don't.
It would be dishonest of him to get good results for his clients & potentially get new clients and / or retain existing ones by submitting tax returns which he knew to be false. In this context it is irrelevant whether or not the client knew the returns to be false, or what the clients did (or didn't do) if / when they found out.
David

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Replying to davidwinch:
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By GlobalTax
26th Jun 2020 13:16

I have met the client and I think its the former as a bricklayer earning £150K a year and no profit does not make sense. Looks like accountant had put dividends under cost of sales.

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Replying to GlobalTax:
Red Leader
By Red Leader
26th Jun 2020 13:21

GlobalTax wrote:

I have met the client and I think its the former as a bricklayer earning £150K a year and no profit does not make sense. Looks like accountant had put dividends under cost of sales.

Flipping heck! Can of worms doesn't begin to cover it. Massive bad news for your potential client who may as a result be insolvent as a result of the tax bill.
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Replying to Red Leader:
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By GlobalTax
26th Jun 2020 15:54

Yes looks like CIS and VAT issues too as the company isn't vat registered. Think I will pass on this one but report the dodgy accountant in due course.

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Replying to GlobalTax:
David Winch
By David Winch
26th Jun 2020 16:29

I don't know what others on here may feel, but I would in these circumstances write to the (non) client advising him to obtain professional advice from another accountant with experience of tax investigations as there appear to be serious tax irregularities concerning his company.
I think if you don't then it might be considered that you were negligent (even though you never take him on as a client).
My concern here is that I have dealt with cases of criminal prosecutions instigated by HMRC where a business has VAT and CIS irregularities (but I don't think you should mention prosecution specifically to him).
David

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Replying to davidwinch:
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By GlobalTax
26th Jun 2020 20:13

I can write to him but concerned he could forward this onto his accountant which then everything will blow up. I agree he needs someone experienced in tax investigations.

Is filing NCA in these circumstances mandatory or voluntary. This accountant seems very successful and must be helping hundred of clients to evade tax.

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Replying to GlobalTax:
David Winch
By David Winch
26th Jun 2020 22:17

Hi
Reporting suspicions to the NCA (or your firm's MLRO) is mandatory. The reporting requirements apply where you have a suspicion based on information which has come to you in the course of your work in the regulated sector. It is not limited to reporting suspicions about clients.
If you wrote to the (non) client you would have to word your letter carefully. I would suggest you refer to possible serious irregularities in the (non) client's company's tax affairs - but make no criticism of his current / previous accountant. There is no need even to mention the accountant. You are simply removing the possibility that he might later say, "I talked to Mr/Ms GlobalTax and they never said there was anything wrong, so I assumed they were happy with what they saw".
David

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Replying to davidwinch:
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By GlobalTax
27th Jun 2020 10:46

Thanks again. One last question do we mention this non client when reporting to the NCA or do we just say generically this particular accountant is intentionally filing incorrect accounts so clients can underpay tax ?

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Replying to GlobalTax:
David Winch
By David Winch
27th Jun 2020 14:22

GlobalTax wrote:

Thanks again. One last question do we mention this non client when reporting to the NCA or do we just say generically this particular accountant is intentionally filing incorrect accounts so clients can underpay tax ?

If you actually want someone to act upon it, be specific & provide supporting detail (and assume the reader has zero knowledge of tax, so spell out even things that seem obvious to you).
David

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Replying to GlobalTax:
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By Rgab1947
30th Jun 2020 10:13

COS = dividends. Had a client like that for a very short time. Did a MLR but nothing happenned to him (he is still active on social media and company is still trading putting in bogus financials). So was a waste of time.

He also paid his wife's dissolved company consultancy fees.

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Replying to davidwinch:
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By Paul Crowley
26th Jun 2020 10:38

Much appreciated
Your posts always edifying

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David Winch
By David Winch
26th Jun 2020 14:28

If you are submitting a suspicious activity report about the accountant you might want to use the glossary code XXPRFXX. That will flag up that you are suspecting money laundering by a professional person.
David

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Replying to davidwinch:
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By GlobalTax
26th Jun 2020 15:54

Thanks David. I can submit this anonymously about another accountant ?

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Replying to GlobalTax:
David Winch
By David Winch
26th Jun 2020 16:31

GlobalTax wrote:

Thanks David. I can submit this anonymously about another accountant ?

Your report is 'anonymous' in the sense that the NCA / HMRC should not divulge the source of their information. But if you file online with the NCA you will need to provide your details to them.
David

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By pauljohnston
30th Jun 2020 10:31

sorry to say having read what the great David Winch says you need to a report. If you dont and later on it was found you should have could be awful repercussions.

I have to say having made SARs in the past. I found that quite a relieving process. By doing so I told someone in authority that in my opinion another may have broken the law. In one of my SARs I submitted for a non-client I found out later on that HMRC were after this guy for large unpaid tax and that gave me a good feeling too. Non payment of tax means we all have to pay more.

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By MRsoton
30th Jun 2020 11:08

Its now called Professional Enquiry not clearance. I would suggest (politely of course) that you brush up on the change in professional appointment regs

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By Marlinman
30th Jun 2020 14:00

My experience of professional clearance letters is I've never had a response at the first request. Therefore I leave it a couple of weeks and then follow it ip with a reminder threatening to report them to their professional body. With qualified accountants its never failed yet and I've always received the information requested by return. If it's an unqualified accountant I just get on with the job with the information I have and don't waste any more time.

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By Marlinman
30th Jun 2020 14:01

My experience of professional clearance letters is I've never had a response at the first request. Therefore I leave it a couple of weeks and then follow it ip with a reminder threatening to report them to their professional body. With qualified accountants its never failed yet and I've always received the information requested by return. If it's an unqualified accountant I just get on with the job with the information I have and don't waste any more time.

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By Marlinman
30th Jun 2020 14:01

My experience of professional clearance letters is I've never had a response at the first request. Therefore I leave it a couple of weeks and then follow it ip with a reminder threatening to report them to their professional body. With qualified accountants its never failed yet and I've always received the information requested by return. If it's an unqualified accountant I just get on with the job with the information I have and don't waste any more time.

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