I have been doing the books for a client for several months now and most things have been ok, with the odd hiccup of not getting receipts for things, not getting paperwork in time and not getting bank statements until nearly a month later.
Anyway, as part of my work for this client, I also run the payroll and check on wages for Students that this client employs. I discovered recently that some students had gone over the threshold for NI and so were liable and had been for a few weeks. Having checked this with HMRC, I set about a list of detailed instructions on how to calculate NI when the client pays cash wages to these students and how to recover some of the owing NI.
To my horror, I had a barrage of emails come back complaining about my professionalism and bad practice and that we could 'Hide cash payments'. I know there are a lot of people out there who tend to 'fiddle' things a little so that some things can be hidden, but I cannot accept this kind of ethic and will not do it. I pride myself on being above board and following the law as laid out. What worries me is that on several occassions I have been unable to account for chunks of money from the business account that my client has spent, and it has been rumoured that this client is thinking of creating or asking me to create dummy invoices to make the money seem like an expense!!
Can you please put my mind at rest that all this is utter cobblers and that we should take pride in our work and not do daft things like 'hide money' like this and that my best option is to bring the books up to date and remove this client from my books??!?!?
IMO put your mind at rest - it is utter cobblers and I for one wouldn't do it either. If it carries on I wouldn't even bring the books up to date - I'd be outta the door! As for the money from the business account you couldn't account for - directors loan account/drawings.
Hi, I would tell the client that you will continue to do things properly and above board.I would bring all such things like this to his attention so that he has been made aware of it as some try to say that they were never told certain pieces of information. The important thing is to do everything correctly to cover your back and if you still feel uncomfortable walk away. stephen
In all honesty I think the best course of action is to bring the books up to date for my own clear conscience and then run! This client is based in a fairly small market town and they have lived there almost all their lives and have made an awful lot of contacts with the local community.
It has come out through the grapevine that this client is very good at shrugging responsibility and I have been warned by several people to jump before they attempt to ruin my reputation! Teflon shoulders I think and with the people this client knows, I'll come worse off if I stick around.
As far as telling the client to keep things above board, that's exactly what I have done all the way through right from registering the correct info with HMRC to P38S forms for Students and work permits for younger staff. The client unfortunately likes to think that they can spend money left, right and centre and claim it as an expense for something else. I know the odd receipt does go missing, but to have loads missing and to be trying to put books together with only half the picture makes life very difficult. I did state to the client that NO RECEIPT = NO EXPENSE and therefore I would have to put it down to Personal Drawings. This only upset the client as they thought they could put it down as 'some other expense'!! Grrr, why do people think they can get away with murder and bring everyone down with them, sorry rant over.
Thanks for the advice peeps, it's nice to know we're trying to keep standards up.
I got rid of a client like that, although he dosen't sound as bad as yours, although it was bad enough for me to say no in the end.
They do think they can spend left, right and centre like you say, and when you say you can't they don't like it, I didn't bother telling him in the end just put it to drawings, including vets bills that he had put in there as well.
Ditch them and run, at least you will be able to sleep at night!
It's a shame to lose clients in this climate, but I would rather lose a client wanting to play dodgy games than lose my reputation and potentially my business altogether.
Thanks all, will let you know at somepoint what happens to this client.
To my horror, I had a barrage of emails come back complaining about my professionalism and bad practice and that we could 'Hide cash payments'. Thanks
RDL
Did the client tell you to hide cash on an email. They have mighty egos if that is the case.
Run before their mind games and making you feel guilty of not doing a good job because you dont want to do unethical practices gets to you.
Otherwise it may affect your relationship with your other clients because your mind is pre-occupied by this client's bullying.
In your resignation letter state why you will be unable to continue with this client. send it via email or via recorded delivery, so you have a record you have highlighted to them that this is the wrong practice.
If you have a governing body, call their ethics team helpline. Tell them you have resigned from a client because they were forcing you to do false accounting by changing salary to general expense, so they dont pay NI. Dont disclose the clients details; otherwise you may breech confidentiality rules- leave things at that.
I don't think you can just run and forget about it. If HMRC find out about it at a later date they may turn to you and ask why did you just leave it, why didn't you report it.
Make sure you keep copies of these emails, as the client may turn around and say they didn't know what they were doing, which is why they hired you, and therefore it is all your fault as the professional.
It has happend before, if you have copies, then your covered.
But 100% call your professional body/MLR supervisory body just to be safe.
I have unfortunately been stung before by people claiming to not know what they were doing and that they didn't send me an email saying this that or the other. After that date I promised myself it would never happen again, so I still have all my emails ever from 2004 onwards to date, and boy have I been greatful for that!!
I will draw things to a close, bring it to the client's attention of exactly what they are asking and if they still insist, then it will be reporting time and keep the emails for whatever I need to cover my back.
There's enough work around for me not to worry about this kind of client.
Thanks for all the advice, I do appreciate the help from this forum :D
