I'm just setting up my engagement letter, and I'm considering this subject. I'd rather avoid ever having someone else's money in a client account, but just wonder if there are any unavoidable issues?
Thanks
Abi
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Replies (19)
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Just don't bother. It's far too much aggro re your regulator (if you have one). For example reg 27(b) here:
https://www.icaew.com/-/media/corporate/files/members/practice-centre/cl...
Examples are here:
https://www.icaew.com/-/media/corporate/files/members/practice-centre/cl....
Hi Abi, you might want to change your username as your email address is visible to all at the moment.
As for client money, plus 1 to JB. It's never come up for us apart from a few CIS subbies asking for us to receive the rebate, deduct our fee and pass on to them. We politely decline and ask that they pay us and receive the refund themselves - it's never lost us a client.
+1 we don't hold client monies either, much simpler life/way too much regulation and for things to go wrong.
None that I can think of.
There are times when holding client money can potentially be beneficial. The usual example is people who get tax refunds regularly (e.g. CIS builders) who then take ages to pay your bill. Claiming the refund and deducting your fees before paying the balance is one solution. Not filing until they've paid is a better one that avoids the hassles of holding client money.
Just dont.
Its belongs to the "old days" of creaking leather chairs, type writers and cigar smoke
Or amongst shysters who take a % cut of tax refunds.
Quite frankly HMRC should stop doing it. Tax rebate fraud would drop like a stone.
The *only* time I would do it is if I run a CIS client outfit. But I would not do that type of work anyhow.
I've always had a client bank account. Never had any problems. Use it for CIS subbies, multiple Paye employments who are due refunds, non-residents' tax returns sometimes.
Had a client in NZ who had suffered a load of tax on a pension drawdown. Couldn't really have acted for her without my having a client bank account.
I guess some accountants are just skiddling about. Don't take their job seriously :-)
very very rarely.
on occasion if the client is historically a late payer and a repayment is due we ask them if they would sign the declaration for the tax repayment to come to us & then we take our fees from this, however if they won't sign the declaration then we can't do that.
the last twice that we have had the clients tax repayment in cheque form was because HMRC made a mistake in sending it to us.
I can think of no advantage in having a client account that is worth the enormous trouble and regulation involved, so don't get one. You won't miss it at all.
I filled in a form 20 years ago and that was it opened. There are no charges (Santander). The ACCA have never shown the slightest interest in it.
You are an alarmiststrokedramaqueen!
There are basically two types of regulated accountant in the UK. Those who don't have a client account because they know better and those that do because they don't.
There are basically two types of regulated accountant in the UK. Those who don't have a client account because they know better and those that do because they don't.
I agree with Justin.
See it happens once in a while.
ICAEW are not like that
It needs to be reported on every year and looked at on every visit.
And they love to find fault and penalise.
Mine holds nothing, it is just a clearance account for the few subbies that prefer it that way.
Had a client account in the last practice and the ACCA were extremely interested in it every year, so count yourself lucky. Since setting up the new practice in 2017 I've not had one and never needed to have one.
"I'd rather avoid ever having someone else's money in client account"
Surely this is the very reason that the Regulators insist on you having a Client Account......because it is "someone elses money" i.e. not yours.
As most Responders have confirmed, better NOT to ever take or accept any Client money, then the Client Account is not necessary.
The avoidable issue is having such an option as part of your services.
Aside of all the obvious dangers and costs (as mentioned by everyone else), like most things it needs to be something that you're doing with great regularity to compensate for the fixed costs of having it on tap.
Otherwise it's sort of like having a car that is never driven but is kept 'just in case'.
Professions where it is a popular option (conveyancing Solicitors being an obvious one) do so because it forms a core part of their offering - in that situation they are often the trusted 'independent' through which buyer and seller transact safe in the knowledge that the payment is protected.
So the question to ask yourself is WHY would you want to offer it (i.e. as part of what service)?
CIS has been mentioned, but it's not an intrinsic part of that service, so do you have any other reasons?
We have one, set up by my boss many moons ago. Up until recently it was used every week to pay out wages for one of our clients. Now it's just the odd tax payment that goes through there if people want to pay by cheque or prefer us to forward it on their behalf.
As others have said, should be easy enough to avoid if you set out from the start that you don't offer these services.
