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Release of clients papers with unpaid fees

Release of clients papers with unpaid fees

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I took on a new client April 2008 and found that he had not submitted tax returns previously even though he had dividend income for the past three years of approx £85K pa! I calculated the tax due and let him know verbally at a subsequent meeting. He said he was'nt surprised as his brother had been in a similar situation.
I completed the tax returns and sent them for agreement, he didn't return them until Jan 09 when I submitted them immediately.
He has now received a tax demand for £23K which I had previously advised at the meeting and says he wants all his papers back and that he is going to go to another accountant to get my work verified. I have no problem with having my work verified as I know it is correct but he owes me money for this work. Do I have to release his paperwork or am I within my rights to withhold it until my fees are paid?
Any advise would be greatly appreciated.
Thanks
Diane Ackroyd

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By thomas34
18th Mar 2009 11:28

Lien
Diane

I don't disagree with the other posters but common law or possessory liens (which is what your looking at) seem a great way of getting your money but in practice are sometimes difficult to enforce. For example an official receiver or liquidator is entitled to override such a lien. Likewise, if a client challenged the accuracy of your work (and you seem to be half way there), a Court might order the release of the documents so the client's new representatives could pass judgement on the resulting tax returns.

I recall from my days in the ICAEW that the members' handbook inferred as much.

By all means try it, but I'm a great believer in County Court procedures to collect debts.

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By tobri
17th Mar 2009 20:14

Unpaid fees
I think this problem underlines the importance of having a good LETTER OF ENGAGEMENT in place and agreed with new clients before any work is undertaken. Then the client knows what his part of the contract is, what the accountant is going to do for him and the fee to be charged. He cannot then slink away later if he doesn't like the outcome.

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By AnonymousUser
17th Mar 2009 16:54

In reply
I have read the postings with interest.

I would handover NOTHING until your account is settled in full in cleared funds. Place a lien on them; tell him what you’ve done and why.

If you do handover the information without being paid you will NEVER get paid.

As accountants we are always the last the get paid and the first to get blamed.

Since his wife is such an expert Im shocked she isnt doing the accounts and returns herself.


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By AnonymousUser
17th Mar 2009 12:14

Money Lanudering
I presume as he has been witholding tax from HMRC you would alos need to report him for money laundering?

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By topjockey10
17th Mar 2009 11:55

Ask for the accountants name
Suggest to your client that you liase with the new accountant perhaps in his presence and agree the returns that way. Then he cannot dispute the quality of your work and he has no further reason with withold payment. Otherwise threaten him with small claims court and definitely retain his papers. Too often accountants played off against each other.

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By Accounting WEB
16th Mar 2009 11:03

Thanks for that guys!
Thanks for that. It is worth digging my heels in for.
Also, I think part of the problem is his wife! Don't think he told her about this in the past and then she's found the tax demand for £23k and of course it's all the accountant's fault!
They were both quite happy to spend all the 'untaxed' income for prior years without wondering why they paid so little tax. There is clear indication in his paperwork that he had been advised previously to submit tax returns but chose to ignore it too.
Thanks again.

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By thomas.peterson
16th Mar 2009 10:28

Exactly!
As soon as I read that he owed you money and wants his papers I thought lien, though that might be because I am reading about them at the mo for my studies :)

It does sound like it applies though, you got them through normal means, they relate to the same work as the bill, you are owed monies...

So you are entitled to do it, but it's whether you want the hassle digging in your heels will bring. I assume it is a decent fee and worth the struggle?

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By Anonymous
15th Mar 2009 17:55

Hold on
The word lien comes to mind here. The papers are specifically related to the work done and as such you can keep them until the account is paid.
Whether the client WILL pay without the work being audited is a different matter.

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