What would you do ?

What would you do ?

Didn't find your answer?

Average client, average house, average lifestyle, and average profits, or so I thought.

HMRC decided to do a routine check on his books. Before sending them in I naturally ran through them again to make sure everything had a corresponding receipt and made sense. It was then that I noticed that a lot of purchases of materials seemed to be being paid for by credit cards that I had no record of. So I started digging deeper.

I've just discovered that he owns a property abroad, paid for with cash, and, that for years he has not been declaring cash income of, as far as I can ascertain, about  £20-£30k a year.  This seems to have been going on for a long time. (10+ years).

Obviously I want nothing more to do with this client.

First job of course is a money laundering report, but, would you advise also writing to the HMRC inspector carrying out the investigation drawing his attention to the fact that I no longer act for this client, and why.

Replies (9)

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David Winch
By David Winch
08th Mar 2012 20:03

First job . . .

I think your first job is to discuss your findings / suspicions with the client and encourage them to instruct you (or another accountant if you don't want the job) to make full disclosure on their behalf to HMRC.

Unless they come up with an explanation which removes your suspicion your second job is to make a suspicious activity report to SOCA.

If they do not want you to make disclosure to HMRC then resign and write to HMRC saying that you have resigned and that previous returns submitted by you can no longer be relied upon as accurate and complete (but say no more than that to HMRC).

Then bill up to date.

David

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By User deleted
08th Mar 2012 21:01

I agree with David - of course

If client refuses to disclose you should cease to act, advise HMRC that you are no longer acting but not tell them why.

But I think, to protect my own position, I would be filing a report to SOCA now - based on what you have said. You don't say how long you have acted, but you indicate that you have evidence that he has not been declaring cash income (I assume that you are satisfied that this is indeed the case and that the cash is not, for instance, from gambling etc?). Given the amounts involved, he must surely have been unaware of the non-declaration. In the event that there is a valid explanation, neither you nor the client have anything to worry about.

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By ShirleyM
08th Mar 2012 21:21

I assume you have already spoken to your client

You wouldn't know the overseas property had been purchased in cash otherwise. Personally, I wouldn't want to continue acting for someone who has consistently lied to me, but if he is willing to 'fess up' I would maybe get him through this mess and then dump him.

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By Steve McQueen
08th Mar 2012 22:43

Professional bodies

If you do make the mistake of telling HMRC the details of what has happened without obtaining permission in writing from your client, your professional bodies will squash you - as they did to my friend Albert Camus of this site.

 

Steve

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By Confused.Accountant
09th Mar 2012 00:06

Far more than suspicion

To pick up on a few points made.  I confronted the client with what I had found and his response was words to the effect "of course I work back pocket, doesn't everybody".  He made it very clear that he has no intention of making any disclosure to HMRC. 

During what turned into a fairly heated exchange I did ask him what he would do if HMRC discovered what I had discovered, and his response was to say that he would tell HMRC that he had given me everything (liar) and that it was my fault it had not been declared.

Quite obviously I feel that I must now protect myself, hence my thoughts of turning over everything I have discovered, to HMRC.

Certainly I am no longer acting for this very ex client.  Presumably I can cover myself by making a very detailed and specific suspicious activity report to SOCA., making it clear that this is far more than "suspicion", and supplying copies of the evidence with it.

Luckily I still have the last year's books so I will be copying them as proof that he did not "give me everything" at all.

 

 

 

 

 

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By User deleted
09th Mar 2012 07:18

SOCA report

All you need to do is report your suspicions, nad your obligations are fulfilled. There is no need to provide any documentary evidence.

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By uktaxpal
09th Mar 2012 08:22

Dont worry-man in the pub says its always the accountants fault LOL

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By ShirleyM
09th Mar 2012 09:21

You missed quite a bit of relevant information in the OP

If you had said from the start that he had no intention of correcting the situation our responses would have been different and more helpful!

Make a SOCA report and get shut! Do not contact HMRC except to inform them you are no longer his agent and definitely do not give them any records without the (ex) clients permission.

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Head of woman
By Rebecca Cave
09th Mar 2012 15:17

Contact your profession body members' support line

The ICAEW run confidential support lines for members I believe other bodies do as well. ICAEW also have a number of ethics helpsheets on the ICAEW website for members

 

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