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we have a new client on Xero - has been paid for by their outoign accountants and recharged to them

there is an issue on disputed work and fees and the outgoign firm is threatening to remove the clients xero access unless the o/s fees are paid

surely they cant do this and prevent the company using its own account?

I've asked xero but have yet to get a reply

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By Mr_awol
16th Jul 2019 14:46

Is it a limited company client?

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to Mr_awol
16th Jul 2019 14:52

it is indeed

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By Mr_awol
to busacrun
16th Jul 2019 17:56

Is the outgoing firm an ICAEW member? Lien over limited company accounting records is covered by Institute guidance as follows:

"A lien cannot be asserted over accounting records as defined in s.386 Companies Act 2006 (‘Accounting Records’) because such records are required8 to be kept as set out in the Companies Act 2006, and must be open to inspection in accordance with the provisions of that Act."

I'd say, in the modern era, Xero data constitutes the company's accounting records. As such the outgoing accountants shouldn't be withholding access completely. Thereon in, we are into grey areas over read-only access etc.

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By johnt27
16th Jul 2019 15:12

Simple answer is they can but you can escalate this at xero to facilitate the change. It's also ethically frowned on by ICAEW/ACCA so I'd report them if it limits the clients business activities.

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16th Jul 2019 16:44

They can speak to Xero about transferring the licence to them. Xero will email the accountant then ring them, offering to do the switch. One of my clients did it out of the blue, I transferred it to him, then the stupid twit ignored the email for so long it expired.

I don’t know if Xero can force the switch, it was all very woolly & nicely-nice when they spoke to me.

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16th Jul 2019 16:55

What did the engagement letter the guy signed say.

If he is paying a monthly retainer to the accountant for accounting services including access to Xero software as part of that arrangement I would think it is perfectly reasonable to withdraw the access to the software along with his support if the payment has stopped.

As I now have 4 grey hairs, with experience I usually find that 9/10 the client that is in dispute with his former accountant is a pain and the accountant is purely holding out for what he is owed.

I always tell new clients to pick up the phone agree an amount (most fees in dispute would take a discount for settlement) and move on.

The weasels approach would be that if the accountant has threatened to withdraw access then back up the Xero account using back up my books then restore it to a new Xero account that the client controls.

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By Mr_awol
to Glennzy
16th Jul 2019 17:58

Glennzy wrote:

What did the engagement letter the guy signed say.

If he is paying a monthly retainer to the accountant for accounting services including access to Xero software as part of that arrangement I would think it is perfectly reasonable to withdraw the access to the software along with his support if the payment has stopped.

Are these not accounting records as set out in S386 Companies Act, in which case it is certainly not reasonable to withdraw access?

And that's before we get into GDPR/Data access rights which aren't my department (fortunately) but which might also give the client a right to access the data.

Stopping processing, fine. Making it read-only, probably fine. Withdrawing access entirely, I'd say definitely not fine.

Making it read-only, disconnecting the bank feed, deleting all the bank rules and making it a pain in the arse[***] going forward? Possibly a bit vindictive but mistakes do happen.

Overall I'd just transfer over the subscription though.

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to Mr_awol
16th Jul 2019 20:43

I don’t think you are correct

If the client was paying Xero directly and he stopped paying the monthly fee after a few reminders they would block your access.

Presumably some of the fees that are outstanding relate to xero subs the accountant has to paid to Xero

If he is refusing to pay why would the accountant be expected to keep paying them on his behalf

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By Mr_awol
to Glennzy
17th Jul 2019 10:04

Glennzy wrote:

I don’t think you are correct

If the client was paying Xero directly and he stopped paying the monthly fee after a few reminders they would block your access.

Presumably some of the fees that are outstanding relate to xero subs the accountant has to paid to Xero

If he is refusing to pay why would the accountant be expected to keep paying them on his behalf

I don't think anyone is expecting the outgoing accountant to keep paying the Xero subs. The accountant is threatening to remove access unless their (disputed) fees are paid.

If the client stopped paying Xero then Xero may well terminate the subscription - but then again Xero aren't regulated by ICAEW and the client might have to take legal action to get a backup or reinstatement.

Certainly I wouldn't be removing the client's Xero access if I was the outgoing accountant - I'd be transferring it to read only or transferring the sub to the new accountant and taking legal action about my costs if appropriate.

The question is, do the Xero records form the company's accounting records under the companies act? If the answer is yes, then as an ICAEW firm we cant exercise a lien over those records - straight forward. It's likely that the reason for this isn't just ethical but also legal and as such it's questionable as to whether anyone else can, but that's for them to worry about.

Also let's not forget that some of these fees are disputed. It's another good reason to invoice people 'properly' and itemise the software/work/etc separately rather than charge a random 'subscription' or monthly retainer I guess.

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to Glennzy
16th Jul 2019 17:57

Backing up however doesn't provide access to the images of receipts and other files attached to the Xero account though.

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to BromleyBob
16th Jul 2019 20:45

It’s trade off position. The guy would have to weigh up the value of the fees he is trying to dodge against what he loses by starting it up from a back up

Simple answer is to agree a fee and move on, I would never encourage a client to not pay the outgoing accountant but that maybe just me

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By Matrix
to Glennzy
16th Jul 2019 22:41

Agreed and I hope the OP goes into this with their eyes open.

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17th Jul 2019 10:33

as above....surely the first question is 'why are you disputing the fees'

My guess would be its not the fact that the work hasn't been done....

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By Maslins
17th Jul 2019 14:29

I'd forget about the legal rights/wrongs and instead encourage the client to come to an amicable solution. Discuss with them what things you can easily pick up, and what it makes sense for the previous accountant to do. Then get them to go back to their previous accountant with an offer of £X for them to finish off certain tasks and hand over the data.

Otherwise, I imagine legally the data belongs to the client (not accountant), but if you try to fix this behind the previous accountant's backs, don't expect them to be helpful with anything else.

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