Companies House Penalty and Pain in the a@! client

burg

Guys some of you may remember a while back that a client I had done some work for on his limited company accounts decided he wanted to finalise the accounts and file them himself days before the deadline. I raised an invoice for my work which he eventually paid and I released my working papers.

Shortly after (8 Aug) the CH deadline of 31 Jul he came to me saying could I file then as he couldn't do it. I was reluctant as I was due to go on holiday in 5 days time (13th Aug AM). I agreed for an increased fee, upfront, made him aware of my holiday and that info was needed ASAP if it was to be sorted in time. I got the info on 8th Aug as a list of totals which were heavily inflated on the previous year. I asked for breakdowns and proof. this was provided on the 11th. I got the accounts done that day and sent for signing via email.

Client responds with 'can I please reduce the tax it is too much!'. I say 'No' and we talk through the accounts and make adjustments to what he had described as a 'bad debt and unrecorded sale' that never was. Was happy with adjustment.

I finally get agreed accounts at 1pm on the 12th (Friday) I file that evening to CH and HMRC and go to bed and then on holiday until 29th Aug.

On 16 Sep he informs me CH are still requesting accounts and that they are not recorded as filed causing an increased penalty.

Finally I get to the issue!

The accounts template was definitely downloaded and filled out (well 99% sure). No receipt email was ever received suggesting it never hit CH servers. Upon re-attempt on the 16 Sep it failed again and I had to re-input my email address for it to work.

Client asked for me to appeal to CH which to no surprise came to nothing.

So how do I go forward?

I am disengaging the client anyway. I am definitely not settling the standard £150 fee as this was already due by the time I was asked to file. So do I settle any of the further £225? If so how much and why? If not why not?

My thoughts:-

1. Hindsight should have stuck to my guns and said no.

2. I argue it out as although there was an oversight on my part that it never reached CH he was fully aware of the situation (i.e. my holiday) and provided shoddy figures and unrealistically requested that I reduce the tax bill somehow causing delays.

3. I avoid the hassle of it all and offer something as a gesture of goodwill (maybe £112.50 being 50% of additional penalty) and avoid the problems of a potential complaint against me. Although I feel there is little I have done wrong is it worth the hassle for a few hundred quid?!

4. As per 3 but instead of a low offer which he may still decide to pursue I pay all or nearly all of the penalty and write it off as a lesson learned.

Either way the client is no longer a client and I have learned that with clients I know to be a bit of a pain not to accept work when so near deadlines and with holidays pending as things like this can happen.

Thoughts really appreciated and don't worry about hurting my feelings I can take it all! So be honest.

PS - do the AAT helplines (MIP or ethics or similar) help with this?

Monsoon

Its always the pain in the bum clients who end up going skwiffy, isnt it?

What does the engagement letter say? Mine says I won't be responsible for penalties if info is provided late, or words to that effect. I don't think the AAT helplines advise on this kind of thing.

I'm a stubborn moo and would probably argue it out and tell him tough luck. He put undue time pressure on you which is outside of your terms and conditions, and while you are very sorry for the error in filing, you can't be held responsible as had he gotten everything to you in reasonable time, you would not have been up against it, as these things can happen and this is why we request people bring their records in early.

Good luck!

reader

At the firm where I work sometimes we pay the CH fine but most of the time the client pays the CH fine- it depends whose fault it was.

It kills me to say this but I think in this situation my firm would pay out the amount above the £150 because our firm is obsessed with submission confirmations/receipts etc and would have ensured the accounts got accepted.

Although, I not sure my firm would pay if the client was going to leave.

It's a 50:50 thing- although if the client knows where I live I would be inclined to pay.

I'm more than happy for people to disagree with me, I'm not particularly happy with my comments either.

Bluewednesday

Although I sympathise with your situation I would be inclined to pay the fee incurred for non submission. They could have been filed that day and as far as the client was concerned they were. The non submission on that day was not the clients fault although everything leading up to it was (for which he has already paid an increased fee).

However as I'm overly sympathetic with clients you may wish to take no notice of me!!

burg

Thanks all for the responses. I've checked my Letter of Engagement and it states

A private company is required to file its accounts at Companies House within 9 months and 1
day of the year end. The company will be liable to a fine if it fails to do so. In order to avoid
this we will produce statutory accounts, suitable for filing, within the required period, provided
all your records are complete and presented to us within five months of the year end, and all subsequent queries are promptly and satisfactorily answered.

I think I'm going to argue this out as although I can see my contribution towards the penalty the client was a real pain.

@reader - Client is leaving as I have dis-engaged rather than them leaving. I dis-engaged as I didn't like the attitude towards deadlines, attitude towards tax law and it's not worth the money.

Will keep you posted as it may develop further as yet.

Dcollins

I totally agree with the points in your engagement letter, penalties are easy enough to avoid completely. I wouldn't want to pay it either, but I'd fret about the mishap (which could happen to all of us, I'm sure). I always think the Co Ho form submissions sneak through quietly - at least HMRC give us a nice big reference number on screen.

Consider your PII too - I would NEVER pay anything like this without checking with insurers. Paying part of the penalty might cause a problem if he makes a claim later.

Can't do any harm to call the helpline and ask them?

Best of luck.

burg

Thanks Dcollins:-

Advice from my PII providers. At the moment as there is no written claim, defend it on the basis of my Letter of Engagement. Should he still wish to claim then they will want to defend the position based on my letter of engagement. If I wish to make an offer of any settlement or not at all then they will help with what to include in a letter and how to proceed.

Monsoon

burg wrote: »

Advice from my PII providers. At the moment as there is no written claim, defend it on the basis of my Letter of Engagement. Should he still wish to claim then they will want to defend the position based on my letter of engagement. If I wish to make an offer of any settlement or not at all then they will help with what to include in a letter and how to proceed.

Great news. Keep us posted and good luck

Newbie

I have been caught by this too, the acceptance email never arrived and we never noticed, we decided to pay the fine as it was a local business and did not want the bad PR, I also appealed to companies house but its a waste of time, now im totally paranoid about online filing, however I avoid it if possible as the FRSSE accounting policies are not up to date.

qwerty

Is that your exact wording of your Engagement Letters?

For Companies House purposes, the filing deadline is nine months - the one day would result in a penalty. It is nine months and one day for payment of Corporation Tax below the main rate.

With regard to your circumstances, £150 is payable by the client for sure, you could not prevent that. The £225 is debatable, as although you have a clause in your LOE, you accepted to do the work after the deadline and were able to file them before the end of the month, but due to a glitch they weren't.

If this were an A grade client, they would probably understand and offer to pay the penalty themselves (although A grade client's do not give you their records late). However, PITA clients are always the ones who fight everything. You may find yourself just paying up to get rid of the guy. If he drags it out, the time spent could cost you more than you could earn doing work for other clients.

burg

If this was a client that I liked and wanted to keep I would most likely pay. The problem is I think he is just as much to blame and in hindsight I shouldn't have bothered to help him as he simply is not worth it.

That is directly from the LOE and is an adapted AAT one. This part was not changed apart from the length of time (i.e. 5 months) entered. I've updated now hopefully the AAT template one is. Others who use them may wish to check.

deanshepherd

Ian.

Let me call you.

I thought I had filed a set of accounts on 15th September and now client has received notice that no accounts were filed. I too received no confirmation email but am adamant I filed in the usual manner.

I was about to pay £150 fine for client and sod it but now it sounds like there is something afoot!

burg

May well be Dean.

Sent you an email.

Bluewednesday

Are you boys not able to file e accounts with Companies House via your accounts production software?

I've been doing it that way and it shows as filed on Co house webcheck within 5 mins.

burg

No my software does not file. You use PTP (well the now re-branded Iris) don't you?

Bluewednesday

I do, I must admit that now that I'm getting used to it - I quite like it and e filing to Companies House is one of the more useful features.