Hi, does anyone find that they have clients that pay you your fees via someone else?
I only have a few clients, and to be honest they haven't been the easiest. One has just dropped off a cheque for £35 (should have been £30) and the cheque is from someone I don't know. The signature on the cheque is in a different hand writing to the one used to fill the cheque out.
My suspicion (maybe I worry too much) is that the cheque is from one of his customers. He's had a blank signed cheque from them for some reason and decided to pay my fees from this cheque, even though its £5 more than it should be, which he is aware of as he said I owe it him back. Ive got no proof that this is correct, so am I being too paranoid? I just find it unusual to send me a cheque that isn't from his business account.
Do you think I should ask the customer, and if it turns out that I am correct should I decline his custom?
So this cheque is not going to appear on the bank statements of the client!
Your not being paranoid, this is well dodgy. What else is missing from this clients bank statements?
Also, if this was a cheque to them in payment for goods or services that they are actually using to pay you then there's a double whammy in that the receipt by the client probably hasn't been recorded.
I would not be at all happy with this arrangement.
However, then you have the problem in that if you do not accept this cheque will there actually be a replacement! But if you do accept it are you then being complicit with tax evasion by the client.
Personally I would definitely tell the client that this is not a professional approach and that a replacement cheque for the correct amount is expected.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Thanks Shamus, I've tried to contact the client but being weekend he's not replying. I have sent him an email to ask for a replacement cheque, so I will see what he comes up with.
He's one of my first clients but I want to protect my own business, so may have to think about letting him go. As you say, my fees won't be appearing on his bank statements (previously he paid cash), he files his own tax return, if I'm right in that this was a customers cheque then his income would be understated and I'm not sure how often this is happening. If his customer is not aware that he has made it out to pay my fees, surely this is fraudulent. If the cheque bounces I wouldn't be able to chase for the money, as don't know who the cheque is from.
It would be nice for things to go straight forward for a change!
My client has replied and admits that it is a customers cheque. He said that the customer gave permission.
This could be deemed fraudulent (I don't know if the customer agreed) and likes Shamus said would indicate tax avoidance. When I do his books his bankings and direct credits are treated as takings, and then he gives me his cash income. This cheque wouldnt get picked up through banking.
The client has offered to replace the cheque. Where would I stand with MLR? Should I politely terminate our relationship for professional reasons, or should I tell him not to do it again, and continue as normal?
I know the amount isn't huge, but in theory it could be a way of keeping turnover low (and below VAT threshold), or perhaps your fees for them aren't allowable?
I suspect that the business is a cash business and it's simply to avoid having to go to the bank to pay the cheque in, or they are having cash flow problems and avoids the need to wait for the cheque to clear.
But yes, agree with Shaun and wouldn't be very chuffed about it.
