I must start by introducing myself.I recently graduated from University with a first class Hons degree in accounting. After applying to numerous jobs and not even getting an interview I decided with a friend to set up our own bookkeeping firm.After doing some research we found this website and I must say it has been really valuable and has provided some useful tips in helping our business start-up.
We have been recently been contacted by a potential client, our first one, who wants to meet up to discuss our firm in doing their books and self-assessments.This client was referred by a friend as she needed help doing her back-dated tax returns to be completed for periods 2008/2009 and 2010/2011. She has no receipts for these periods so I advised her to get bank statements for those years.So I come to my first question, am I correct in requesting the bank statements and is there anything else I could request to help us complete her self-assessments? Just to add, that business is no longer in operation and she cant remember when she ceased trading.
The same client is now operating a new a business and she wants our firm to look after her books.Now, our firm has received our agent code for HMRC and we will be sending away our details to HMRC to get our MLR. We will be also be sending away for our PII insurance.Am I correct in thinking, as we wait for our MLR and PII insurance, we can take this client on but not charge her for the work until we receive such items? Or do we really need to have our MLR and PII in place before we take anyone on?
My understanding of the MLR is that you cannot undertake any work, paid or unpaid until you have supervision in place. I would assume it's the same for PI Insurance.
Regarding your first question. I don't know is the simple answer. I would guess that if she has nothing else except bank statements then thats all you can ask for, but I'd imagine that she would also have had at least a few items which didn't go through the bank. Sounds like a moger of a first client if I'm honest.
I would agree with what Kris said on both points. If she really has nothing then bank statements are the best starting point. Lets hope she has kept a better idea of what's going on in her current business! Obviously you would need to ask her about additional forms of income before doing the tax returns; interest, property rental, divs etc.
You'll find the forum is a great source of help.
Jenny
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Jenny
Responses are my opinion based on the information provided. All information should be thoroughly checked before being relied on.
Right, I've never done accounts for that type of business, but doubt there are much in the way of expenses; dog food, leads, scooper....? I suppose most customers would pay by cash and in the absence of records, you would have to delve a little.... "how much for each session - how many sessions a week" etc to get at some idea of the annual income.
When you've assembled all sources as detailed above by Jenny, then you'll have an idea how significant the back taxes are. Being late puts her at some risk but the lower the income the less likely the Revenue are to devote resources to it. There will be penalties and interest and surcharges based on the liability(s).
Ask her for any P60's or P.45's or what she was doing between businesses. Do not hesitate to ask if you're in doubt about anything.
Without wishing to put a spanner in the works, do you think it is a bit risky taking on the work where you have not done self assessment returns in the past. Risk profiling is part of the money laundering process but you should also assess whether you are able to undertake the work in question.
Has she explained why there are no receipts? It may be that she is missing out on allowable expenses if you can't determine the true nature of what you have been purchasing.
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Phil Hendy, The Accountancy Mentor
Are you thinking of setting up your own practice or have you set up and need some help?
If so a mentor may be the way forward - feel free to get in touch and see how I can assist you.
You may find it helpful to join a professional body (like the IAB or the IFA) to get some professional support and backing from the body and other members.
What ever you do - put it in writing.
I spent nearly 20 years as a tax advisor without PII, becuase until I joined a professional body I was not actually liable for the work I did, which I used to point out on a regular basis to clients! PII now is a good idea, especially now, as the penalty system has changed quite a bit in recent years and so the possiblity of becoming liable for something you do, has increased substancially. Putting it in place before you start is always cheaper, as you have no past income, so you should base it on the lowest income level the PII company has. Of course the following years premium is then based on your first years turnover.
Why am I not surprised that HMRC don't check that anyone they issue a Agent code to is registered (with them or a professional body) for MLR first? Just goes to show they system has lots of holes in it.
