Is it Legal? - The Book-keepers Forum (UK)

gerry · Senior Member

Is it Legal?

Flex Accounting Services · Senior Member

I would definately make sure you complete your money laundering regulation paperwork before you do ANY work for this guy

gerry · Senior Member

Argghgh

Yes I agree with you BUT he has just offerred me the job and as I am in the process of setting up my business I do not have everything in place.

I have already told him that I need to see his passport and utility bill and he is fine with this but what else do I need to do?

My business is not yet registered and I have no paperwork in place, I didn't really expect to get the first client I went for and thought I would have this all in place before I started working!!

What else would I need to do in order to set up with him, I am starting tomorrow!!!

Please help, I don't want to turn him down because of paperwork and obviously I still need to know if the above is legal. He is happy for me to advise him on all matters so I am sure that I can do this providing I am comfortable with what is right myself.

Greatful for any further advice.

Alison · Senior Member

If both businesses are VAT registered believe they can be sole trader and Limited Company as long as the person is registered correctly as self employed and paying the different types of National Insurance the one which is around £10 a month and the ones on the self assessment form, think it is class 2 paid monthly and class 4 on self assessment and that Limited Company pays it's corporation tax, completes the CT600 and does all company house requirements.

If however if one VAT registered and one not think this can be classed as VAT avoidance by HM Customs and Excise.

Alison

Trevor · Member

As Flex says, assuming you have carried out your money laundering ID checks there's nothing to stop you from starting work for this guy. Having two businesses is not illegal in it self, but if one is VAT registered and one isn't and they both carry on the same trade (which it sounds like they do) then you do have a problem. The VAT registration would also apply to the non-registered business and if the client doesn't submit VAT returns or account for VAT on the transactions then this is money laundering and you would need to submit a report to SOCA.

It may be that he is not aware of the VAT rules in which case you will need to advise him accordingly.

As long as your client gives you receipts and invoices for all payments then I don't see a problem with him using his girlfriends bank account. The payments from the bank to the girlfriend would be treated as drawings and when the girlfriend pays expenses these would be treated as capital introduced (or directors loan account transactions if in the limited company).

Hope this helps?

BackOfficeGroup · Guru

There is nothing illegal in trading as a sole trader and having a ltd at the same time, although as mentioned if he is running the same business, trade and using the same name under both, it is not the done thing and will cause problems.

Another reason why he may not have a bank account for either is that he has been made bankrupt. I'd check this as he may not be allowed to trade?

Your first job is to advise him to change his ways and if he doesnt want to, then he is not a client worth having and would put you in a difficult position.

gerry · Senior Member

Thank you Thank you Thank you

This is wonderful advice and clarifies what I needed to know.

I am not sure if the sole trader business is VAT registered but will find out tomorrow and advise accordingly, one of my first jobs is to do the VAT returns so I know that one of them is and that he has had VAT inspections so I hope all is ok.

good thought about the bankruptcy, i'll check that out too.

He is happy for me to advise him and take over so I am guessing that IF he is doing anything wrong then its through ignorance and not intentional, either way, I will make sure it does not continue.

For future reference..........If, in this line of work you do find anything that is not legal but was in the past and all is okay now, are you still required to report this?

Many thanks again for your advice, I am constantly impressed by you guys.

Julie · Senior Member

Hi, sorry to throw a bit of doubt into all this - buy why have two businesses - same name - one sole the other limited ? one vat reg - the other not ? I assume his line of work is the same for both companies. It sounds odd to me !!

Have you checked his limited company status out on Companies House website - this can give you some useful info regarding when he was incorporated, if he is late in filing his accounts etc.,

On the question of VAT, be carefull he is not charging vat right across the board ie as sole trader & limited.

Just be very carefull, if he knows you are just starting out and that he is your first client he may very well appear to be a nice bloke, but he could be about to pull the wool over your eyes.

If you have any doubts whatsoever, ask yourself why, then go from there.

Sorry to throw a spanner in the works.

Be interested in what happens over this, so please post back.

Julie

gerry · Senior Member

Hi Julie

Thanks for this, please don't feel you are throwing a spanner in the works, this is exactly the advice that I need.

He may be my first client but I will take no nonsense and will make sure that everything is legal. I have many years with dealing with accounts in a limited company so I know what to expect but I have no experience with a sole trader, so this is new to me, hence I am very greatful for any advice, good or bad.

I will find out more tomorrow and will let you know the outcome.

Dustin57 · Senior Member

If you find something that is illlegal or results in underpaid tax/VAT that happened in the past, you will need to advise the client to correct for the error. If they won't then this will need to be reported.

gerry · Senior Member

Hello

Now having met the client again I hope I can throw some light on this subject.

He does have a sole trader businerss and a limited company with the same name BUT different business dealings for each one. The limited company is VAT registered and the other not. One business is marine related and the other not.

So, I guess this is fine, although the names are the same, the business is different, Is this ok?

He does have bank accounts for the businesses but does not like online banking as he doesn't trust it, I am working on him with this as I don't see how you can run a business effectively without it, he has never been bankrupt.

I have completed the money laundering checks and all appears to be in order.

Is there anything else I should be checking?

Many thanks for your input.

gerry · Senior Member

PS I read that you can do an online identity check, do you have to pay for this? Does anyone know the best website to use? Should this be part of your ML checks?

Any help on this greatfully received

Thank you

Gerry

Mary · Veteran Member

I've used http://www.veriphy.co.uk/ for a few money laundering checks and been pleased with them. The cost is nominal, but I would really only use an online firm if I didn't meet the client in person.

Re your client, as long as the two businesses have different trades then this should be ok. However I have heard of two businesses being caught where although the trades are different, they were classed as the same business because they operated from the same address and used the same resources.

-- Edited by Mary on Thursday 16th of July 2009 06:38:15 PM

gerry · Senior Member

Thank you for this, I will be meeting with the company accountant soon so I think this is something that I will discuss with him.

Thank you for the heads up

Gerry