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
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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
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..
"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.
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
If I start down the charging route. I know client will throw his toys out of the pram.
and do what?
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'?
Exactly. Sanjay, when he does, throw yours out as well.
What would you do if he didnt have cancer?
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 ???
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?!!
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?
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
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.
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.
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.
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.
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?
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.
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.
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!
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.
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.
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.