I'm in the process of taking on a new client and their circumstances are slightly complicated. The orginal owner of the business passed away in May 2011 and his sister is now trying to sort out his estate as she wants to carry on with the business by setting up a new company obviously. They were using someone local to carry out their accounting activities however due to various problems of which I won't go into and after several phone calls etc she eventually received the accounts to y/e October 2010 in June of this year and then finally the accounts from Nov to May in July. Having looked through the information she was not satisfied that the figures were correct and asked if I would take this over. Due to the situation the figures obviously needed to be spot on and there were some anomolies. The client informed them that she was transferring the accounts to a new company.
I wrote to them requesting professional clearance and all relevant documents required to take over the case however I have received a reply stating that they will not release any information until the fees owed to them have been paid. I understand that in most cases they are within their rights to do this however I was wondering under the circumstances if there was anything else I could do. As the estate for the owner has not been settled and cannot be completed until the figures are produced they will be listed as a creditor and therefore cannot be paid until that time. However I am unable to produce the complete accounts until I receive the information from them. Catch 22!
the accountants do have a legal right of lien over the books until the debt is settled.
Reading the scenario I think that it is best that you seek legal advice on this.
I suspect that the eventual outcome will be the solicitors holding the fee's to be released to the previous accountants until everything is resolved as that removes the previous accountants fears that if they release the records then they will not be paid.
Downside is that there are going to be further legal costs thrown into the melting pot.
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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.
I am assuming as you mentioned company, i have assumed it is a Ltd company
Hi Shaun, you may have to correct me on this.
I am not 100% sure of my facts on this but I understood that a lien cannot be applied to official documents of a Ltd company eg ones that are required to be kept at the registered office, or required for public inspection, or the prime records of a ltd company, otherwise they company will not comply with Companies Act, and therefore cannot be retained in lieu of a debt .
If it is a soletrader or partnership then there are no restriction on non official documents
you're right but it's one of those things where accountants work on the principle that clients don't know that so regardless as to the legitimacy of the situation it will end up involving solicitors anyway.
Of course an additional complication here may be if the client actually registers their business at the accountants office making the accountants office the registered address (I understand that happens quite a lot).
Shaun.
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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.
I had a Ltd Co a few years ago, and the accountant offered his office as the registered address (can't remember if it cost!). Thinking about it, it makes sense from their point of view (especially if they charge a fee for the privalige) but if they are the registered address, it gives them more protection.
I think it will also depend on whether the accountant is affiliated to any organisation, as I believe that they also insist in their regulations that under a lien such documents are not with held
But the client would usually be Director/ Shareholder therefore could change the registered office themseleves.
In terms of handover information, my understanding from an ACCA point of view is that you have to hand over certain information regardless of outstanding fees. This includes the trial balance and any records owned by the business (don't think company matters).
Age old debateof Ccab vs non Ccab firms .
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