Ethical?? Advice needed.

jilt Registered Posts: 2,903
First of all a bit of background, I am not yet an MIP I still have an exam to sit before applying for membership and a licence. I have worked in accounts for 20+ years and have been completing self assessment tax returns for 3 years.

I work almost full time but also have 20 or so clients of my own, offering monthly bookkeeping and payroll, and annual accounts and self assessment tax return services. I have just started preparing accounts and tax returns for Ltd companies and pay a local chartered accountants to do a review before submitting to the client etc. This way I get the experience of Ltd company accounts to submit to the AAT in order to get a licence and am confident that the client is getting a fully professional service.

Mr X who has been trading as an accountant for several years and has no formal qualifications has recently been detained at her majesty's pleasure due to his involvement in a £5m mortgage fraud.

Mrs X worked for Mr X, she took care of the bookkeeping, payroll and CIS , while Mr X took care of the year end accounts and taxation side of things.
She has requested a meeting with me which is arranged for this evening to discuss how we may be able to 'help eachother'.

She is not interested and has no experience of year end accounts and taxation and from what I can gather is finding it hard to keep even the bookkeeping etc side of the business going. I have agreed to see her as maybe she could subcontract some work to me to help her keep going. She also mentioned pushing some Ltd co work my work.

I have several questions -

As an employee of the practice can she carry on trading (Mr X was a sole trader) and subcontract work to people like me? She has no plans to continue the marriage, he has been in prison for a few months twice before and is bankrupt! But, she wants to keep the practice going as she needs an income.

I had wondered if she was to put foward my company to the Ltd company clients, which she doesn't want but would like to help where she can although they are not her priority, could I pay her a referral fee for any clients that actually used my services, but then surely I would have to pay Mr X as it is/was his company.

Also there is the danger that I might be 'tarred with the same brush' so to speak which obviously I am very wary of as I am now trying to build up my practice and leave my full time job.

I am not sure whether any of these propsals are ethical and do not want to ring the AAT as I am not even a member. If anyone can offer any advice or warnings or just their veiws on this I would be very very grateful.


  • Timmne
    Timmne Registered Posts: 37 💫 🐯 💫
    I would just tell her that you will pay her for the clients as a normal referral or finder's fee, say a year's fee income spread over four with claw backs in the contract.

    I wouldn't work for or with this woman if my life depended on it. Unfortunately I think you're right in that he clients may see you in the same light so you need to make it clear that you're a different, totally unconnected business and are there to take over their accounting affairs if they'd like.

    I wouldn't even let her help you out with any of the transferred clients; there's too much history by the sounds of it even if she's not the bad egg.

    Don't let your bank account make this decision for you; offer to take the clients as a professional arrangement but nothing else!
  • jilt
    jilt Registered Posts: 2,903
    Timmne wrote: »
    I would just tell her that you will pay her for the clients as a normal referral or finder's fee, say a year's fee income spread over four with claw backs in the contract.

    Many thanks for your advice Timmne. First of all she cancelled last night's meeting saying she would call me today. Fortunately she hasn't as yet and if I'm honest I rather hope she doesn't.

    I have never paid a referral or finder's fee before, could you explain what you mean by 'say a year's fee income spread over four with claw backs in the contract' please?
  • PaulPSB
    PaulPSB Registered Posts: 55 💫 🐯 💫
    I think Timmne means that you offer to purchase a block of fees on a pound for pound basis. Ie you agree to purchase client's with recurring annual fees of £20,000 and pay £20,000 over 4 years at £5,000 per annum. You have a clawback arrangement in the contract so that purchase price reduces on a pound for pound basis if any of the purchased clients are not retained.

    Personally I would walk away from it in your position as there is too much potential for damage to your reputation even though you haven't been involved. If the Accountant is away for fraud what is lurking in all the accounts he's been preparing?

  • Timmne
    Timmne Registered Posts: 37 💫 🐯 💫
    That's exactly what I meant - thanks PaulPSB.
  • jilt
    jilt Registered Posts: 2,903
    Many thanks for your advice guys. I came across this woman when enquiring about offices to let, their office was available and funny isn't it, since I told her we weren't interested in taking on their premises she hasn't been back in touch.

    Think I'll stick good old honest advertising and word of mouth to build my practice.
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