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Should I help the Client

Client still not paid me. Moral Dilemma

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I have a ex-client (Ltd) that has not paid me.  Ex-Client has cancer (do not know how serious it is) so not sure if I will get payment.  I have for this reason withheld any legal action for the time being.

I provided professional clearance to his new accountants a year back and they had filed the accounts.  Now HMRC are carrying out a compliance check on the client and his accountants have requested more information on some of the balance sheet items espeecially regarding the opening balances like Director Loan account detailed breakup.  Looks like the compliance check is for the year that new accountant has filed    

 I would provide the information free of charge as long as he settles the debt or even make an offer as this has just been dragging.  

My isssue is that while I like to withhold the information until i get paid but my accountancy body seems to think I have the onus to provide the information even though we are owed money as there are two seperate issues

 

 

 

Replies (39)

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By sarahg
20th Jul 2021 13:28

Time to send a reminder about the fees and say if not paid within 7 days you will start recovery proceedings

Wait the 7 days and then release the information, but just the bare minimum, assuming it wasn't part of the original handover

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By tom123
20th Jul 2021 14:02

I have no hesitation putting anyone on stop - if it causes them inconvenience so much the better - that tends to elicidate a payment.

However, I am in the brutal world of commerce rather than refined practice..

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By lesley.barnes
20th Jul 2021 14:16

"his accountants have requested more information on some of the balance sheet items especially regarding the opening balances like Director Loan account detailed breakup. Looks like the compliance check is for the year that new accountant has filed"

Did you provide the opening balance information when you did the handover? If not is it something you could do easily? If you accountancy body have said you should provide the information then I don't think you have a choice. Presumably when they advised you they knew the client hadn't paid your fees? I would chase the fees as you would with any other client, I know you've said the client isn't well but I can't imagine the current accountants are dealing with the compliance check for free.

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By Winnie Wiggleroom
20th Jul 2021 14:52

how long will it take you to provide the information?

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Replying to Winnie Wiggleroom:
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By sanjay100
20th Jul 2021 14:58

Around 1- 1/2 hours. Its not straight forward and its been while since I filed the previous accounts

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By Winnie Wiggleroom
20th Jul 2021 15:02

Go back to the new accountants and say, "we quote x amount for this work, can you confirm who the bill should be made out to"

You never know the client might be covered by enquiry insurance which will cover your fees anyway

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Replying to Winnie Wiggleroom:
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By sanjay100
20th Jul 2021 15:36

If I start down the charging route. I know client will throw his toys out of the pram.

The only hold we have on this client is refusing to do anything until we get paid. for the old debts. Its a case if he calls my bluff.

There is also the added complication that maybe not all of the information listed needs be given anyway. I may just provide the basic information if I am required to do so.

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Replying to sanjay100:
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By Winnie Wiggleroom
20th Jul 2021 15:43

sanjay100 wrote:

If I start down the charging route. I know client will throw his toys out of the pram.

and do what?

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Replying to Winnie Wiggleroom:
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By tom123
20th Jul 2021 15:46

He is your ex client now, and has been for a while.
What are your concerns?
Do you think, on revision, some of your past work may have been a little 'hasty'?

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Replying to tom123:
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By sanjay100
20th Jul 2021 22:43

Yes it was a extremely difficult engagement and while we took care in the circumstances back of my mind that the client with the accountant will be analysing everything with a fine tooth comb. We had made some assumptions putting the accounts together as the client could not provide answers.

He may go to may complain to my accountancy body and maybe his accountant could tell HMRC that they are unable to provide the information due to the previous accountant withholding the information

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Replying to Winnie Wiggleroom:
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By Leywood
20th Jul 2021 18:28

Exactly. Sanjay, when he does, throw yours out as well.

What would you do if he didnt have cancer?

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Replying to Leywood:
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By sanjay100
20th Jul 2021 22:46

I do have a lot of ammunition to throw back. One good thing is that he has to now come to the table and hope we can settle on the debt owed for one and for all.

If he didn't have cancer I would push for payment and maybe pass this to debt collectors or small claims court.

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Replying to sanjay100:
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By bernard michael
21st Jul 2021 09:31

sanjay100 wrote:

I do have a lot of ammunition to throw back. One good thing is that he has to now come to the table and hope we can settle on the debt owed for one and for all.

If he didn't have cancer I would push for payment and maybe pass this to debt collectors or small claims court.

He may have cancer but is still capable of running his company and no doubt earning from it. Why should you be denied your fee ???

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Replying to bernard michael:
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By Leywood
21st Jul 2021 11:06

Exactly! Besides if the guy is capable of making such waves, he is capable of sticking his hand in his pocket. Stand firm Sanjay. He may be at the table now, but has he brough his credit card?!!

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By lesley.barnes
20th Jul 2021 17:10

Is this the client who back in March wouldn't pay you and said his new accountant had found a number of errors in your work?

www.accountingweb.co.uk/any-answers/client-accusations

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Replying to lesley.barnes:
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By sanjay100
20th Jul 2021 22:50

Yes, I have been patience and tolerated his antics just not to antagonise this volatile and unpredictable individual hence why I have not pushed this.

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By Calculatorboy
20th Jul 2021 21:59

You have to provide information that is legally required to be held at the company's office any lien wont work

Another reason to regulate the profession

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By Matrix
21st Jul 2021 07:53

I would separate the issues.

1) The Debt: There is plenty of advice on the other thread about being paid. You have chosen to ignore it which may mean people are less inclined to help in the future.

2) The Compliance Check: If the company is under investigation then I would spend the 1-1.5 hours getting my ducks in a row.

No point acting all holier than thou until you know you can substantiate the submissions signed by your client.

I would expect that compliance checks are unusual, so there must have been a trigger.

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Replying to Matrix:
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By sanjay100
21st Jul 2021 10:15

Like I mentioned just before instigating action - I found out he had cancer. I am not totally heartless !

My issue is trying to determine of how much information do I really need to provide from the list sent (if any). Some of the questions the client can answer.

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By Matrix
21st Jul 2021 10:51

Appreciate that and it is unfortunate but I expect he is still paying his rent, his mobile phone and his Sky and Netflix.

I didn’t say provide any of it. I would check that you are in a position to do so first.

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Replying to Matrix:
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By sanjay100
21st Jul 2021 13:38

He is always pleading poverty.

I agree with you have to spend time just going through my working papers and check if is correct.

I guess HMRC cannot force us to provide the information ?

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By Matrix
21st Jul 2021 16:50

What have they asked for? Have your seen a copy of the request?

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Replying to Matrix:
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By Leywood
21st Jul 2021 18:50

I wonder if there is indeed an enquiry or if its just ex client/new Accountants trying to get what they wanted in the first place.

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Replying to Matrix:
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By sanjay100
22nd Jul 2021 15:13

I had provided the breakup of the various loans (which were many) and client had signed this off which made up the creditors more than one year and creditors less than one year. I had provided to the accountants a loan schedule which the client signed off (luckily I did that) but they want me to provide the documentation and explanations which is silly since I received some from the client via email and some I returned the paper copy. There are further questions on the loans but the client should be able to answer them. Though the client gets confused easily hence why we are being requested.

I summarised the director loan account as there are so many entries and they want the detail behind it.

There is a few more points and some of it I cannot work out how they got their figures as doesn't tie up with the accounts filed.

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Replying to sanjay100:
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By Leywood
21st Jul 2021 18:54

Some of my clients try to plead poverty. They forget we know more about them than most of their pals in many respects. Plus usually they are the ones with the big Tvs on the wall and all the current mod cons, tell them to sell something to pay his debts. Does he do work for free through his business? Ask him and when he says dont be ridiculous tell him you are not a charity neither. Be firmer.

Must say though, not sure now why you are having to check your working papers. Either they were right at the time and therefore are now.

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By Winnie Wiggleroom
21st Jul 2021 11:08

So, to sum up
1. You completed the job in the best way you felt right for the client, but (as we have all done) you cut corners and therefore do not have complete working papers
2. Client refused to pay and left
3. Client gets tax enquiry and now wants those workings papers that should have been completed in the first place

I learned this lesson about 20 years ago when we had a very lengthy tax enquiry for a client, and when I spoke to the client about fees for the enquiry they incorrectly asserted "why should we pay you, you must have done something wrong for us to get an enquiry". They didn't pay and went elsewhere .

Ever since then we have had fee protection insurance in place for all clients.

Have you checked to see if this ex client is covered with the new accountants?

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Replying to Winnie Wiggleroom:
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By sanjay100
21st Jul 2021 13:19

We did cut corners as client could not provide explanations to lot of our questions hence we made assumptions and they provided all the information at the last minute. However, our files are detailed and just means going through understanding what they want and ensure its in the proper format. Possibly based on our judgements we may have got it wrong hence I have to be careful what I provide and the detail as the client may use this not to pay us.

I am sure his accountant will contact us hopefully on the phone chasing for the information and perhaps we can then sort this out amicably.

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By Roland195
21st Jul 2021 13:59

In the circumstances you outline here, you should not view it as helping the client but rather helping yourself as you seem to be implying you feel you have done something wrong in which case an hour of so now will be far better spent than dealing with the consequences thereafter.

That said, if the enquiry is into the year filed by the new accountants (if there even is one) then what can you provide of relevance anyway - they already know the opening balances so anything else is in their files, not yours.

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Replying to Roland195:
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By lesley.barnes
21st Jul 2021 14:51

I think what Sanjay is saying is that the incoming accountant is asking for breakdowns of the figures that Sanjay produced in the prior year accounts such as Director Loan account. These are the figures that may or may not be incorrect because Sanjay had to make assumptions.
Sanjay - is it not be quicker to actually do the figures rather than keep posting reasons why you shouldn't. You need to face it this client isn't going to pay you even if you produce the information the incoming accountant has requested. You were asking in March how you could get him to pay, he hasn't paid you either write the debt off or pursue him.
If you don't provide the information you've been asked for you could find yourself in trouble. Your accountancy body have already told you that you need to provide it irrespective of whether the client has paid you or not. If the ex client or his accountant complain to your accountancy body you could could end up explaining to them why you've ignored their advice. Worse case scenerio HMRC could come calling - you don't know what HMRC are investigating with regard to your ex client.

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Replying to lesley.barnes:
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By sanjay100
22nd Jul 2021 15:27

Some of the information can be easily provided the detail (which has many transactions) behind capital expenditure and Director loan account which may open me to further accusations or client denying these figures were correct. I don't want to open myself further having to justify to the client who is totally irrational.

Some of the questions - Client should be aware and be able to answer them but he is clueless. If I have to find the answers or documentation then this will take time.

I am happy to provide some of the information and if the client paid me in full then maybe out of the goodness of my heart help him on some of the other queries where the client should know the answers. I shouldn't have to provide information or documentation where the client has already has this.

I have two choices either provide full information or provide the bare minimum but it will depend on the client attitude which been sullen at times and if he starts paying.

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By gphemy
22nd Jul 2021 18:45

Permit me to but in, Sanjay. Lesley has provided sage advice, but I can distill it to this:

1) - You are on notice from your regulator to provide the information;
2) - You do *not* know that HMRC's questions do *not* relate to what you did for your client;
3) - for all you know, failure to engage on 1) could make 2) into a certainty.

It seems to me that your reluctance to respond (for entirely understandable commercial reasons) to one adversary, could land you with two rather more significant adversaries. You are not "helping the client" by responding, you would be helping yourself.

PS In my book, the fourth word in the first line should have two "t" - Sift does not agree!

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Replying to gphemy:
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By sanjay100
23rd Jul 2021 10:39

Yes like I said above I can be very helpful or just provide the very basic information required as some of the information client has already. There is also question of my time which I may or may not charge for.

The main point is trying get them into a dialogue where I can at least try to get some money or work out a formal payment plan

Will HMRC follow up with myself for the information ?

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@enanen
By enanen
23rd Jul 2021 10:18

Cash First.

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Replying to enanen:
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By sanjay100
23rd Jul 2021 10:41

Hoping it will be a win win for both parties where we get our money and the client gets the information.

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By john hextall
23rd Jul 2021 10:52

You keep asking this question but only you have the answer. Bite the bullet and either chase the debt or write it off.

On the other hand, your professional body has asked you to do something and this you have no choice over, if you want to stay in business.

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Replying to john hextall:
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By sanjay100
23rd Jul 2021 11:27

It was the technical helpline of the accountancy body so more from advisory and didn't go into detail with them what was being requested.

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By Husbandofstinky
23rd Jul 2021 13:17

Time spent dealing with it - 1 and a 1/2 hours

Time spent posting on AW - 1 and a 1/2 hours.......

Lesley's advice is spot on and would concur wholeheartedly on that one.

Personally I fear there may be skeleton's lying within those opening balances and if so, I just hope HMRC don't open those up too. Just a hunch.

As per Matrix - be prepared and get your ducks lined up in anticipation.

Bad debts - a fact of life with practice and you won't come across anyone with plenty of years behind them who hasn't been had by them at some point. All a case of living and learning and following your nose.

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By Silver Birch Accts
23rd Jul 2021 17:14

Sanjay, just provide the information requested. View it as protecting your firm and forget the debt. Sometimes, you have just got to let it go and bite the bullet. In a few months time you will look back on this and think why did I get so het up. Life is to short.

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Replying to Silver Birch Accts:
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By sanjay100
26th Jul 2021 17:31

Yes I will provide the information but not the information the client has and knows about it but who think its easier for me to dig and find the information.

If it does get messy then I will need the write off option later. What I am keen to do at least get them to contact via phone to sort the matter out amicably in regard to the debt

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