Stopping work for a client - The Book-keepers Forum (UK)

Staffkat · Member

Stopping work for a client

Shamus · Forum Moderator & Expert

Hi Katie,

This reply is going to come across as quite negative so apologies in advance.

Did you perform due diligence on this client before starting work?

Money laundering / proceeds of crime also include tax avoidance and payment of staff in cash like this can be a general indication that something is amiss.

Didn't understand your statement about cheques for PAYE and VAT. Are you stating that these are in a file and have not been paid! To know this and do nothing is compliance with the crime and carries stiff penalties.

In the first instance I think that you need to confirm your situation with your supervisory body (ICB / IAB?).

I would also talk with your accountant about what is happening here. Is she also the accountant of the firm that you are having problems with? Does the firm have an accountant!!!! Why did the last bookkeeper leave?

On the what you should do next front, at the end of the day you are a business, not a charity. If there is no reasonable expectation of profit (i.e. getting paid) then walking away from this one is probably your best option. Maybe put it in you're clients hands by telling him that the next time a cheque bounces you're walking... You are charging him any bank charges that you're getting for this aren't you?

If you are going to walk just try and get the accountant on side first to ensure that you do not shoot yourself in the foot in relation to further work. (I am assuming here that your accountant is actually a properly qualified accountant? You would be surprised how many are not!).

Good luck,

Shaun.

Shamus · Forum Moderator & Expert

Sorry, I meant evasion, not avoidance. Avoidance is quite legal where evasion is not.

Staffkat · Member

Hi Shaun,

Thank you for your quick reply.

With regard to the due diligence checks. This was my first client and I was being trained up with a lengthly handover, I was a bit green with regard to what checks I should do as a bookkeeper, so I stupidly assumed that everything was okay, and that it was just struggling through the hard times. However now I have more experience and confidence, I realise that things are far from okay; I have only been going to them on my own for just over a month.

With regard to the PAYE and VAT, the revenue sent the bailiffs in last year (only found this out recently) and they agreed a payment plan. However they are behind on payments. The previous bookkeeper would write out the cheques to show that she had done her job and siad that then the responsibility was on the client to pay them.

The previous bookkeeper handed them over as she said she was too busy. However as I have got to know her more, I think she just got fed up with the bouncing cheques and the whole set up there. Howver she has been their bookkeeper for 8 years, so when I have discussed my concerns with her about the client, she attempts to talk me around as she doesnt want to have to take them back!

I am going to discuss all my concerns with the accountant on Monday, but I do not want to be involved with this kind of business - especially at this early stage of my career.

Many thanks for all your advice and guidance - this forum is great!

Katie

Amanda · Expert

Hi Kaite,

I would certainly walk away, I was in a similar situation and like you I was green. They were certainly not as bad as yours and paid me and staff every month. It was a worry every month especially towards the end when the money was drying up as to whether or not we were getting paid and staff pestering me asking me the same question, I had to lie to staff as was not allowed to tell them confidential information regarding the financial status, that was not nice!!! They also like yours owed loads to HMRC which was gradually being paid off, I was not impressed when I came up against a not very nice man from HMRC, who ripped into me about the company and the payments (or lack of), despite me telling him I was self-employed to them and really he should talk to a director, as I was only going to relay his message. As far as he was concerned it was me he was going to be very umpleasant too!

I left for numerous reasons, not all relating to the company, and had another client lined up to take their place. I have to say it was a relief to leave and I have never looked back.

Sometimes although we think these decisions are hard once made you will feel better, and at the end of the day we have our reputations to think about, and the beauty of being self-employed is to pick and choose where at all poss.
I have made another decision recently to let one of my Sole traders go, hes about to be told shortly, he once again is up to very dodgy things and I have taken professional advice from an accountant on this one, and have been told to steer clear.

So think of it as a New year and getting rid of old rubbish!!!
Sorry long winded hope it helps,

regards
A

-- Edited by Amanda on Sunday 10th of January 2010 11:37:59 AM

gerry · Senior Member

Hi katie

I understand where you are coming from. I am fairly new to this and recently had to turn down a potential dodgy client, I felt guilty as I knew he needed my help. the forum helped a lot but having turned him down it gave me confidence and I felt in more control of my business.

The fact that you are even asking this question means that you are not happy and what is being self employed if you can't be happy with your clients. The forum helped me a lot with my dilema and one response I got was "You are your clients" Are you happy to have the reputation that this client could give you or do you deserve better.

Don't worry about letting anyone down, it sounds like the other bookeeper couldn't wait to get rid of him, it has eased their conscience to get someone else in, hence all the handover. so, if they are not worried about letting him go after 8 years then why should you after a month.

Listen to your instinct, its there for a reason.

hope it works out ok for you

gerry

Staffkat · Member

Thank you all for your great advice, it really helps to discuss these things with other people.

I spoke to the accountant today, and he said he completely understands and that he shouldnt have introduced me to them, so I feel releived there. I also told their old bookkeeper who said she understood my reasons.

True to form though I couldnt get through to the client all afternoon, so hopefully I can tomorrow. I am reluctant to give them too long a notice period, as I know that he will not bother to find someone else if I am there (the last bookkeeper told him last January she was leaving and only handed it over to me recently!). What would you say is a reasonable notice period to give? Considering that I might not even get paid!

Many thanks again for all your help and advice

Katie

Amanda · Expert

Hi Katie,

If you have signed a contract with them then its a month/4 weeks whatever it says, if you have not signed and if you have only been there say a couple of months, normally there is a 3 month probabtion period, I would say give 1 weeks notice to be polite.

Don't be in a hurry to help out for too long as like you said if its unlikely you will get paid and you turn other work away that does pay, then the answer would have to be sooner rather than later.

There are plenty of none or slow payers but on the other hand there are the really good ones as well, fortunately all of mine except one are really good, and the one thats not, well he will be history soon! I expect the accountant will look to get rid of them soon. I was given some good advise by an accountant once about clients, there is always the odd one or two that are really bad and gradually you learn from it and get rid off them!

Hope that helps and good luck.

A

Shamus · Forum Moderator & Expert

Hi Amanda,

just a quick point on what you say about if you've signed a contract.

I appreciate that a little knowledge is a dangerous thing. I'm no solicitor and one would need to confirm the following with someone with far better understanding of contract and tort law than I, but, my general understanding is :

For any claim for breach of contract a contract must in fact exist. Failure to make payment for services rendered unless the money is being withheld due to an actual disagreement over work performed (or not), breaches the contract making it null and void so no contract exists and one can walk with no notice.

For situations where we are performing work on our own computers rather than the clients, one weapon that we do have in our armoury is a legal right of lien over the work performed (not the clients records but the work that we have done for them that has not been paid for). Accountants use this to retain clients books until the work that they have performed has been paid for. I'm sure that a bookkeeper has the same right to retain their work until payment is received.

quite happy to be told that my understanding of the law is completely wrong but if not then in situations like Katie's you should be able to walk away from a signed contract.

Of course, if there is reasonable expectation of payment (eventually) the easiest and cheapest route is still to serve out the contract.

Citizens advice is always a good source a legal advice by often newly qualified solicitors who really look forwards to getting a case that a bit out of the ordinary.

Open to the floor for a response there?

cheers,

Shaun.

Amanda · Expert

Hi Shaun,

Good point about your info, maybe I didn't word mine that well. I did have a contract and was wondering whether or not I may get the final payment ( I did no problem) but due to the the stress that was caused I phoned Acas, who said that if I didn't get paid I would have to go down the legal route. As it was it was not a problem. They said that because I was self-employed on their computer etc (went to their office), I would have to work what my contract listed as notice.
If after that I didn't get paid it would be classed as unlawful deductions of earnings and therefore would have to serve a CCJ on them. My friend is a solicitor and I sought advise from her and she said the same.

One thing Acas did say to me that if I walked away from my contract without given the notice required the company if they wanted to could take action against me as I had no real eveidence that they may not have paid at the end. Thankfully everything was OK but it was a worry. I had never been in that situation at all before and it was not nice

Lastly the situation the the accountant can hold on to accounts uintil they are paid, that is also the case with bookkeepers, I've found that one out as well, which I'm sure will be the case quite soon with me and a client. (Very slow payer and lots of other reasons as well, which is definatley another thread)! It is easier if you hold the paperwork as you have aminition but if you sub contract to an office or someones home office then in most cases they already hold the paperwork and have the lastest work that you have done so unfortunately you are at their peril.

It sounds as if Katie hasn't been there long in which case she owes them nothing and should walk away. I only suggested a week so to appear polite.
I did learn alot from my experience and the old saying once bitten twice shy!

A

-- Edited by Amanda on Monday 11th of January 2010 09:55:45 PM

-- Edited by Amanda on Monday 11th of January 2010 10:04:42 PM

gerry · Senior Member

Talking of contracts, I wonder why as a self employed bookkeeper we would need to sign a contract.

I give a letter of engagement which acts as my contract as this states that either party can withdraw at any time, with no notice required.

Should we legally have a signed contract as well, or is this sufficient? And if we do, who provides the contract, the client or us?

I do not see why one would want to sign a contract obligating them to the same rules as an employed person if we are self employed. And I certainly do not see why one would be obligated to stay for a notice period knowing that they might not get paid.

Please correct me if I am wrong, because if I am, then I have no contracts in place with any clients just the letter of engagement.

Starting to worry now.

Gerry

BackOfficeGroup · Guru

I agree with Gerry, I do not think you should have a contract, as this can affect your self employed status.

As a bookkeeper, you are not employed by the client but do work as required for the client, and as such, no notice is required but at the same time, be professional and don't leave them in the ...... if you do not want to do the work anymore, you are under no obligation to do it.

I would not worry about what they think, its business after all.

P

Shamus · Forum Moderator & Expert

I'm going to disagree with both Gerry and Phillip this time,

I quite frequently have contracts, often several running consecutively with different clients. Such is very common especially where working through an agent. A contract to supply services should not be confused with a contract of employment. Try working as a consultant with banks and pension companies without a contract!

As self employed bookkeepers it is not unusual to work at a client site for prolonged periods espeichally where they run complex computer systems that cannot be replicated from one's own computer or where the information is of a sensitive nature and cannot be taken from the clients system.

In such situations it is not unusual for a contract to exist as they are trying to ensure that (1) you will not simply wander off to do other clients work leaving them in the lurch, and (2) you give assurances as to confidentiality of information.

Where we are just looking after the clients books of smaller entities of course where a contract exists it is normally the other way around in that we supply the engagement letter clearly stating our responsibilities and those of the client.

The client should sign the engagement letter which you store in the clients permanent file and it is valid until the end of the client relationship (so does not need replacing each year unless changes are made to it).

The quality of our work is covered by the supply of goods and services act (1982) and past performance is an obligating event to future performance unless the arrangement is properly terminated so the statement that one is not obligated to do further work if one just decides that they no longer wish to do it is not completely correct.

Shaun.

Amanda · Expert

Hi,
They were adament I signed their contract which I did think was abit strange but they didn't want information leeked to other staff, not that I would anyway, but I suppose when you are abit green and want to gain experience in this field you play by their rules.

I did explain that their contract was not relevant to me what so ever, epecially the bit about time in lie and holiday arrangements as I only got paid for the hours that I did, I invoiced them accordingly. They even insisted I fill in their holiday form which as I pointed out to them was pointless as they didn't pay me when I was off.

You are right Shaun, its probably because they didn't want me to just dissappear to do someone elses work and just not turn up for a few days.

Anyway out of there now and very glad!!!
A

gerry · Senior Member

Hi

In your case, Amanda it sounds like an employment contract, had you still been there I think that this may have caused a problem with the IR and your self employed status. The IR are very hot on whether one is self employed or employed and we have to be very careful as bookkeepers that we are fulfilling the self employed status. I am sure that others will be able to expand on this but just thought that it might help you to know this for future reference. I think its just as well that you are getting out.

Shaun, I understand where you are coming from and I agree that a service contract may be necessary at times but I also understand that an engagement letter will suffice for the smaller client, I am doing this and therfore feel that I am covered, I was getting a bit concerned of all of the talk of contracts so thank you for your clarification.

Gerry

BackOfficeGroup · Guru

Shaun

I can understand all that you say and I worked under contracts as an FC but that was when I was working as a Ltd co in that capacity and not a bookkeeper, although I can see the similarities - an interesting subject to debate and really understand what is correct in the eyes of the law.

Surely if you do not want to do any work for a client, its your choice, regardless os whether you have done work for them in the past. I could understand if you have made an error in previous work and they wanted you to correct it, but for future work?

I also understand the confidentiality bit but surely as a professional, we would be duty bound to keep all info safe and secure at all times?

P

Shamus · Forum Moderator & Expert

Hi Phillip,

This is quite interesting stuff, been ages since I delved into my old ACCA books on contract law. Anyway, according to what I'm reading here for the old paper 2.2 corporate and business law. (wonder how many people don't realise that accountants have to know law as well).

For there to be a contract there must be offer, acceptance and consideration.

In our cases, whether there is a written contract or not the client has asked you to perform work (offer), by words, actions or inferred by conduct we have accepted the offer (acceptance), and receipt of payment (consideration) binds the contract.

So, unless our role was a specifically designed one off task then past performance and payment indicates that a contract for services exists whether it is written or not.

To cease performance of ongoing services without notice is a repudiatory breach of contract. Such breach is created by words or conduct that indicates that one party does not intend to honour its contractual obligations. That means that the injured party can seek damages resulting from the breach.

The rule of damages is that such is restricted to the amount needed to put the claimant in the position that he would have been in had the contract been performed.

The claimant is also restricted to the amount of loss reasonable had they taken all reasonable steps to mitigate the loss. Therefore, if one gives a client reasonable notice to find a replacement bookkeeper then not finding a replacement or finding an ineffective replacement makes the problem theirs rather than yours.

I think that the key to all this is (and I know that non of the usual people reading this would dream of doing such), you can't just stop working for a client without notice even though there is no written contract

Don't quote me, I'm not a lawyer but that's what the book says and I can see the logic behind it. The above paraphrases about 140 pages of the BPP study text and there's cases quoted for just about every eventuality that you can think of.... Actually, enjoyed that so much I might even go and buy the updated version (it's now paper F4 rather than 2.2). I can strongly recommend it.

Back to you Phillip.

Amanda · Expert

Hi Gerry,

I am very glad I am out of there now, (left long time ago), the reason I didn't want to be employed by them (I was offered) is I was also working for several other clients at the same time, which I wouldn't have been able to do if they had employed me, they made that very clear.
The majority being Sole traders who weren't very large and that work I was able to do at home. I thought that by working in an office a few hours also gave me additional experience, that I thought was essential at the time. I did learn alot from it but very glad to not be there now.

The thing is untill you go and work for a company and unrevel the paperwork, they can tell you what they like about how good they are (or not as the case maybe), I just think as bookkeepers, we can have a lucky escape as we have excess to the financial stuff, where as say other staff who could be in Sales (example), would not know the instability of the company its working for.

Maybe I've opened up a can of worms? (Hopefully not)

regards
A

Staffkat · Member

Hi Guys,

Thank you to everyone for their advice. I told the client yesterday I couldnt continue to work for him, he didnt seem that bothered. I'm going in there on Thursday to make sure everything is up to date for the next person. I said I could go in to handover at a later stage when he finds someone if he pays me cash upfront, but he didnt seem that fussed about it!

Philip, I dont think I am exposed with regards to this, as he cannot guarantee me payment. Please let me know if you think I might be.

Once again, thank you to everyone - I hope that soon I'll have the knowledge to be able to contribute in the same way on this forum!

Katie

-- Edited by Staffkat on Tuesday 12th of January 2010 09:05:15 PM

semsley · Guru

I don't have any contracts with the clients for whom I do self-employed work and one of them I've had for 25 years and for the last 10 they've been retiring in 2 years!!!!! I work both from home and on client's premises depending on what needs to be done, some I visit weekly, some monthly, some quarterly and some an annual box. I've dumped only one and mainly that was because it was a father and son firm and they disagreed with each other leaving me in the middle and I've only had one bad debt and that wasn't for book-keeping it was for training when the company went into liquidation owing me £700. All my current clients pay me within a week of issuing an invoice (three of them I pay myself).

What I would say is ensure you have terms on your invoices, it may seem obvious but it's amazing how many people don't.

BackOfficeGroup · Guru

I agree with the point of notice and as a professional I would expect to give a notice period - now what that period is of course is open to question!

When I said that you should just leave, I did really mean that you should give it up with some notice and not just not turn up, as this would also give the client an arguement not to pay you for the work completed! Sorry for the mis-communication! Doh!

I remember doing law....yawn, learnt alot about contract law though so it does come in handy every now and then.

P