I've had a new client who wants to sign up but I've noticed there's a PSC discrepancy nothing that I would call troubling but I guess I should grass them up immediately and tell them to go forth and multiply?
I wouldn’t really feel comfortable reporting it and accepting the appointment, which is a shame as it was a very lucrative fee and this industry is tough enough as it is. Hmmm.
It's not uncommon to find errors in the psc, what do you do?
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Have you asked them about it. Give them a chance to correct?
You don’t say the nature of it, only hint it’s not major, perhaps expand as currently it reads as could be a genuine mistake?
I often tell newbies that the companies house record is visible to HMRC
Hence the wife dividend could be added to hubbies tax liability
Focuses the mind.
So basically they haven't filed their annual statement declaring psc yet? Is it due yet? Did they do it and leave her out? Sounds to me like something simple being blown out of proportion.
You only have 14 days to register a change. It should not be left until the annual statement.
But I agree that getting it resolved quickly and then carry on would be the pragmatic approach.
Pragmatic or not, we still have to comply with our obligations, and obliged entities must make a report if they find a discrepancy when setting up a new business relationship with a customer.
It doesn't prevent the setting up of the relationship nor the (subsequent) correction to the register.
And if you don't make the report but do file the correction, there's a clear, permanent record of an identifiable failure to meet your own obligations.
Technically correct but I reckon if the CCAB are prepared to publish guidance, even if not rubber stamped by the Treasury, then following it is unlikely to cause you any problems.
I think it's important to set out the technically correct position. Though I recognise the OP asked about what people do... :-)
What's the question? Surely not about reporting (you're obviously obliged to) so is it whether you can then also act - but you say you're not comfortable with that, so I'm confused.
Isn't this a stupid piece of bureaucracy?
It should be on a similar basis to a SAR, investigate if it's an intentional discrepancy, assist the client to correct, and only report if there's intent to mislead and / or the client refuses to correct.
It's up there with FATCA et al, yes. CoHo obviously expects to be inundated too, as the rule is no bundling of your multiple reports. (And am I right that you could be getting client to correct even as you file your report? There's no like tipping off equivalent? So by the time what you send gets looked at, there'll be nothing to... I think the word is 'investigate'.)
"It's not uncommon to find errors in the psc, what do you do?"
Correct it
Always amazed to find 2 or 3 people all have the power to remove and appoint directors all on their own
Although it is, I believe, still subject to Treasury approval, I adopt the CCAB guidance. i.e. Give the client 30 days to sort out the PSC and reports should be within 30 days of initial discovery.
Edit: To be clear, a report would only be made if the error was not resolved satisfactorily.
Agreed.
Not what the law says, but a pragmatic way of dealing with it and also achieve what the (badly drafted) amendment to the law was setting out to do.
What has the client said? Sounds like it might just be a simple error that you can correct
Just correct it unless you have some reason to believe there was a deliberate attempt to mislead. If they refuse to correct it then take steps and don't engage. 99% of errors on PSC registers will be mistakes, I'm sure.
I would advise correction prior to your appointment and not beat yourself up about it.
if you feel the need to make a report, and I am not sure i would if it was right, then what are CH going to do if its corrected by the time they look at it? sigh and move on I imagine.
Where would you draw the line on reporting a case such as this and/or refusing the engagement?
Suppose the PSC had been amended, but outside of the 14 days allowed?
Suppose the PSC had been amended within 14 days, but the company failed to record the resolution or issue a share certificate to the wife?
Suppose the company failed to maintain its register of members (or, come to that, another register such as, for example, its fixed asset register)?
Well the CCAB Guidance at para 5.6.11 says
"If a business [the accountant] identifies a discrepancy on the PSC register or TRS and the client corrects the discrepancy within a reasonable period, which would usually be 30 days of the business identifying the discrepancy, the business does not need to make a report to Companies House or HMRC if they are satisfied that the PSC register or TRS is now correct."
So the best approach if you find a discrepancy in the PSC information at Companies House is to assist the new client to file a correction. Then, once the information is correct, there is no discrepancy to report & everybody wins!
If the potential new client has made an accidental error - or has failed to understand the requirements relating to this information - I absolutely would not see this as a reason not to take them on, but I would work with them to put it right.
David
David,
Out of interest, do you know if the CCAB Guidance has received treasury approval yet? I could only find the guidance with the "yet to be approved" caveat (not that that would stop me following it).
Paul
I'm not sure they need to. As far as I can see the law is silent about timescales for making a report. CH says asap, CCAB says let's interpret that as 30 days. I doubt very much that the CCAB would have published that guidance withut a nod and a wink from the Treasury even if formal approval is awaited.
Does the law lift the obligation to report if the discrepancy has disappeared before the report is made?
There may actually be a logic to the regulators collecting data at take-on, as it might point to failure by the previous accountant. If the same accountant keeps failing, maybe they could be given a little nudge to improve.
This is of course pure speculation on my part. (And your nod-and-wink observation kind of refutes my thought. So if I hadn't already written it and cbb to delete it, I wouldn't now post something so stupid.)
Not necessarily as randomly speculative as you may think.
The so-called 'nudge unit' (when it was part of the Cabinet Office) was very keen to find a way to categorise the reliability of Accountants acting as Agents. They wanted to be able to determine what, for want of a better phrase, might be termed Platinum / Gold / Silver / Bronze status (and continuously review this) for Agents ... using this to filter the levels of service allowed to be provided by Agents, and the levels of access to data provided to them after it had been submitted.
In order to do this at low cost, based predominantly on automated algorithms, it was planned to collect exactly the type of data that you mention as 'indicators'!
And the moral is ... whatever you think is a (bad) dream has often already been thought of by someone else - and, if you're lucky, discarded as unworkable.
It's too easy and cheap to form a limited company, badly. Most new clients will have done it themselves before appointing me, and they've usually made a hash of it. Lack of PSC is the least of the problems because it is easy to fix. It's when they've only issued one class of shares that's a headache. Most DIYers have no conception of PSC. They don't realise they've done anything wrong. I tell them and they ask me to fix it. Dealing with the share classes is more of a hassle.