"No more returns"

System

Background:
I have a client that I completed the 2005 tax return for; he is a subcontract in the building industry (plasterer).

I completed the accounts and tax work - he kindly changed address and never paid my bill.

The 2005 return has not been filed due to my fee outstanding. I have the records for his 2006 return but no work has been started and that too is late being filed.

I have just received a copy of a letter the Revenue have sent to him saying "we have looked at your last Tax Return and do not propose to send you returns in the future"...... :?

I called the Revenue, and by all accounts he has been to a local office and "given them information, which is why this letter was issued". They also informed me that the two returns were still outstanding.

To file these returns he has to come back to me, but if he can get new blank returns, the information on them will be none-sense!

What do you think the correct approach should be?

Regards

Dean

System

Re:"No more returns"

If you have been contacted by the Tax Office, then surely you will have to tell them about the information you have.

System

Re:"No more returns"

TC wrote:

If you have been contacted by the Tax Office, then surely you will have to tell them about the information you have.

I haven't been contacted by the Revenue. I have received a copy of the correspondence the Revenue have sent to my client.

The chap I spoke to at the Revenue didn't seem to bothered that my client may have been telling them a few porkies either! All he said was "if you feel you need to put something in writing then do so - we'll have it on file then".

In the meantime, I'm carrying out more work for a client that I know won't pay!

I suppose the question should be; If the Revenue aren't bothered - should I be?!

Regards

Dean

System

Re:"No more returns"

Dean that sounds like someone i'd be acting for - glad to hear that you've got these type of problems too

Personally I'd write to the client saying something along the lines of 'Please find enclosed a copy of your 2005 accounts & TR and my bill. If they are not returned to me, signed and with a cheque for my bill within 14 days, I will inform HMRC that you have provided them with false information and I will terminate our contract'

and then do so if you don't get a response.

System

Re:"No more returns"

Tempting though it is, I'd be very wary about making such threats to a client. Aside from not being very professional, it may leave you open to legal action for breach of trust.

In this situation I find phoning the client to be most effective. Be frank about wanting your bill paid before any further work is to be done. If doing so does not procure payment then I would suggest following the usually debt collection proceedings, including court action if necessary, before ditching the client and putting it down to experience.

I never take on subbies (not wishing to generalise of course!) and 95% of my clients pay in advance by monthly standing order. The few that don't already waste enough of my time sending reminder letters. I would quit practice if I didn't have most of them on standing orders. It just wouldn't be worth the effort!

System

Re:"No more returns"

I have already done this, well except court action!

My last efforts were along the lines of until payment is received I will be unable to finalise your return etc. Told him I had cease to act.

I've written the bill off and bad and had put it down to experience.

I just find myself in a situation wereby he has obviously told the Revenue and different story - i'm still out of pocket and Revenue will no longer be issuing Tax Returns! :?

Think I will be writing to the Revenue one final time, stating I have ceased to act and the position regarding his final returns.

Regards

Dean

System

Re:"No more returns"

Tempting though it is, I'd be very wary about making such threats to a client. Aside from not being very professional, it may leave you open to legal action for breach of trust.

Am I not right in thinking that if you cease acting for a client with the knowledge that information provided to HMRC is incorrect that, as professionals, we have an obligation to inform HMRC that we have reason to believe that they should not rely on the info they hold being correct?

My approach would be to warn the client that this is the case, and give him a final opportunity to put the situation right before doing what I'm obliged to do.

Obviously if it was my client I'd word the letter politely and tactfully but would still make sure that I got that point accross.

System

Re:"No more returns"

Have I got the wrong end of the stick here? I've re-read it and am wondering whether when HMRC say

we have looked at your last Tax Return and do not propose to send you returns in the future

do they really mean 'as you are now employed as opposed to being a suncontractor, we do not propose to send you tax returns in the future'?
In which case HMRC don't have any false information so I would just inform HMRC & the client that I'm no longer acting for him, and leave it at that.

System

Re:"No more returns"

There are a few issues here Jodie, and I am far from fully-versed in all the legal aspects, but I had a discussion about this some time ago with a Money Laundering specialist.

He advised me that the only time you are legally allowed to volunteer any information you hold, or have obtained, through being a professional adviser to a client is when making a money laundering report to SOCA.

If you do not make a report when it is required then that is an offence, as is 'tipping-off' a client that you have done so or intend to do so.

Notifying HMRC would be a breach of trust.

Oh, and I think you are right in your last post - they have probably just jacked in self-employment and got a job!

System

Re:"No more returns"

Oh, and Dean..

Why not file a small claims court action online?

Easy process, minimal cost, you do not even have to attend court.

System

Re:"No more returns"

Dean S, I'm honestly not 'on my high horse' about this, but this is an extract from the AAT's ethical guidelines which I think does contradict what you've just said (although I don't think that it goes as far as being relevant to Dean's situation like I originally thought)...

3.6.12 In the case of a self-employed member whose client refuses to make disclosure of an error or omission to
the Revenue, the member should cease to act for the client, informing the client, in writing, to that effect:
(i) Where the member has acted in relation to the error or omission, he or she should also inform the
Revenue that they have ceased to act, adding, if it is the case, that the member has received
information indicating that accounts and statements, etc. should not be relied upon;
(ii) However, where the member has not acted in relation to the error or omission, although the member
should cease to act, his or her communication with the Revenue should be restricted to a bare
notification to that effect.

What do you think? I understand that to mean that if you find an error with somthing submitted to HMRC where you've made the error and the client refuses to authorise you to amend it, you have an obligation to notify HMRC not to rely on the information they hold. Would that be a breach of trust?

Sorry Dean for highjacking your post, but I'd quite like to get this issue cleared up in case i encounter it in the future!

System

Re:"No more returns"

No problem Jodie - open discussion is always good!

I agree with the guidelines. I believe this refers to a situation whereby we prepare accounts, and put our name to them, on the basis of the information given to us. We then later find out that the client omitted income and as such we do not want HMRC to associate our name with those accounts (thus lending weight to them). Hence we write to say that we no longer act and no reliance can be placed on those accounts.

It's a bit different to telling the client 'You pay my bill or I will tell Hector that you is a big fat liar!'

System

Re:"No more returns"

point taken

System

Re:"No more returns"

I have been following this discussion with interest, it's caused quite a lot of comment and wonder in the office too. Good job that professional ethics will be my next paper!

My thoughts are as of Dean's in that informing the Revenue of the actual situation is a breach of trust and should be avoided, but I can see how the AAT guidelines can be misinterpreted. It's so difficult balancing money laundering with confidentiality.

Annette

System

Re:"No more returns"

Many thanks for all the response.

Regards

Dean

System

Re:"No more returns"

Just thought I'd add my "two penneth".

Annette and Dean Shepherd are spot on about the potential consequences about informing HMRC of incorrect tax returns. It is down to HMRC via their inquiry processes to identify when a client has mis-informed them - we should not have the onus placed on us tell the Revenue there has been an erroenous return submitted (intentional or otherwise). Client confidentiality, as much as it pains some accountants to adhere to in certain circumstances, has to be obliged. Though nowadays, in light of the money laundering regulations, suspicion (not speculation) of fraud no matter how negligible has to be reported to SOCA.

As far as the "tipping off" rules are concerned - the new money laundering regulations are quite clear on the circumstances that can give rise to "tipping off" which I won't go into as all MIPs (in fact all accountants) should be familiar with them.

I am not a MIP and I have not therefore seen the AAT's guidelines. However, I would imagine guidelines written by a professional institute would be written (not so much vaguely) but in a way that one could potentially be misguided.

In the situation Dean is in - I would do what he has done if he doesn't feel the claim is worth pursuing in the small claims court - admit defeat, put it down to life's experience and come to the conclusion that throughout your working life this is bound to happen again in some form or another, no matter how hard you plan to avoid it!

Best regards all
Steve

System

Re:"No more returns"

Two returns now filed! :roll:

Why do we even bother!

Regards

Dean