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What do you do?

What do you do?

I seem to have had a glut of new clients all on the VAT Flat rate scheme. Although these are very profitable businesses they don't want to pay any extra fees, so have self-registered, and have prepared their own VAT returns. I explained the basics of Flat Rate VAT, the discount, and the need to keep copies of the VAT submission and the working papers so we could verify the VAT.

Accounts are now coming in for preparation, and as you may already have guessed, no copy returns, no workings, and further discussion revealed that VAT was calculated on net sales, and even the wrong % used in a couple of cases!!!!!

I provided one with a spreadsheet template but then ended up answering loads of email queries about preparing VAT returns but they wouldn't come in (or pay) for 'proper training'.

What do you do with clients that want to 'DIY' but don't listen to you, and won't pay for training or spend time finding out how to do it properly?

I know I can get rid of the clients, or put up their fees, but I would like to stop this happening altogether, rather than just deal with it after the event.

Any ideas, or recommendations, would be appreciated.


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By SteveOH
01st May 2012 15:59

I operate an all inclusive fee

When I quote for work, my fee is all inclusive. So, as well as the accounts and income/corporation tax Returns, I include Vat, payroll, Company Secretarial. The only service for which I would ever quote extra would be bookkeeping or enquiry work.

I have sometimes been asked if I would consider reducing my fee if the client prepared their own Tax Return or Vat Return and I simply say; "no, the fee is all-inclusive so you may as well let me do it."

For the very reasons that you have mentioned, I would prefer to prepare and file the Vat Returns myself; it eliminates errors and saves time on year end accounts work.

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By dreamcatcher
02nd May 2012 09:09

What does your engagement letter say?

I'm guessing under their responsibilities it says something like 'you are responsible for ensuring that the company maintains proper accounting records'.  It doesn't sound to me like they have maintained proper accounting records.  Therefore assuming they have signed the engagement letter point this out along with the fact that a VAT visit wouldn't go too well if they are a little light on paperwork. Then charge them a premium for sorting out the mess.  

Then as the above post says think about all inclusive fees and insist on them having proper training from you on this.  If they refuse you have to decide if the fees are worth the hassle.


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01st May 2012 16:35


Have you thought about sending out a newsletter, specifically directed at your FRS VAT clients, explaining how to calculate etc, and list the current industry standard %ages to be used?

We use Mailchimp for our newsletters, and do a similar thing when we notice a few clients making the same mistakes. 

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01st May 2012 17:11


Hi Shirley, I know how you feel.

As a general rule I like to encourage clients to do as much they are capable of doing, but the key to this is 'capability'. I tell them how much they could save in accountancy fees if they DIY, but temper it with how much extra it could cost to fix things if they get it wrong, laced with an anecdote ot two.

More often than not they (or I) will suggest that they have a go with the first one and we will meet to go through it (for a modest fee). It can be an eye-opener for some when they realise they have no aptitude, but equally for others it can be heart-warming when it has clicked with them.

At least those who choose not to meet  - they might be over-confident  or just too busy to bother - are aware of the consequences of getting it wrong.

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01st May 2012 17:57

Thanks, everyone

Previously, all clients have agreed to us preparing the first return. We provide them with a copy of the return and all the workings so that they can use it as an example for future returns. Maybe I didn't stress the importance enough with these clients, or made it sound too simple!

Since posting this thread we have pulled guidance off the HMRC website to give them, and created a very basic spreadsheet for them to use for the workings. 

I always find this aspect very frustrating. I enjoy helping people and this can lead to me doing too much free work that was never part of our agreement. ;)

I always try to remind myself that by teaching them how to do something themselves (for no extra fees) I get the worst of both, ie. I bear the costs AND lose potential income!

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01st May 2012 23:07

This thread is really good
I haven't encountered this problem myself, with FRS, as we have always done as you said and charged a fee for training and preparing the first return and providing guidance on what to do. I did used to get a lot off issues with incorporation though - using wrong bank account, errors with CIS, not using the company name and details for invoicing etc! I created a checklist of things that are required when incorporating and this has led to higher fees for incorporation work, and almost zero complications.

I like the idea of sending a newsletter out to over common issues, and also the all in fixed fee approach, although I don't think it would apply to many of our clients now as we are targetting the £300k to £3m range and they tend to be able to do things themselves with a bit of guidance.

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02nd May 2012 08:26

I used the all-inclusive route when I started my practice

It didn't work for me. I found it difficult explaining to some clients that the all-inclusive fee doesn't include everything they may possibly want or need.

I prefer our current system, where the quotation (and the engagement letter) detail what is included, and also what isn't included. The problem is that some people see or hear what they want to see or hear, or maybe, they just like the 'challenge' of getting more services for no extra fees. Neither of these will help establish a good working relationship between us.



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09th May 2012 11:36

I just raised the fee

I had a client who didn't want to pay anything for VAT as they wanted to do it themselves so I tried to keep out of it per engagement letter.

The bookkeeping was good but they didn't understand the VAT bit properly. I ended up giving lots of free help to set up (crept up 5 minutes at a time), then a list of corrections that I spotted at year end (switched FRS rate, errors on VAT rate changes etc) and a detailed explanation of these corrections.

Needless to say their fee went up the following year but next time I will insist on doing the set up part and first quarter example as suggested.

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By cfield
09th May 2012 18:13

Also creates MLR issues

We had a new client who insisted on doing his own VAT returns and ended up getting in a terrible mess with it. Basically he was in the FRS but imported lots of stock from France and didn't account for VAT on the acquisitions.

Once you point out errors like that, you then have to report them if they fail to cough up on the next VAT return (or make a declaration if over £10k or 1% of Box 6).

Added to that, they are supposed to report any "careless errors" anyway, although at least we don't have to report them if they don't (as no loss of tax).

We spent more time trying to reconcile his VAT control account than we would have if we'd done the returns in the first place. This year I just told him to pay the shortfall and work out what it was himself if he wanted.

I don't think you can really charge very much for VAT returns these days if you want to avoid this problem. It's easier to charge a cheap rate (or include them in a fixed fee) and save yourself the hassle at the year end.

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09th May 2012 18:44

I do the minimum amount possible

Nowadays if client does their own VAT I just compile the accounts on the basis that the returns are 100% accurate.

If I think there are lots of errors I tell the client by letter (perhaps provide a couple of examples), and offer to carry out a full review for £XXX.

the only way to make money IMHO.


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