Hi
I have recently set up my own practice, I have managed to secure quite a few clients already. However I took on a new client a couple of weeks who had been with his previous bookkeeper for 3yrs. He works as a subcontractor on the roads. When I reviewed this years expense receipts I was quite shocked at what he was trying to put through for example gift cards for toy shops, clothes, take away receipts from the local take away even a receipt for a bracelet.
I did explain that the expenses had to relate solely to the business in which he told my they did, his previous accountant put everything through so he wants me to them through. I'm not happy with this, ethically it is wrong.
Has anyone else come across this with clients?
Thanks
There may be a possible claim for the evening meal if the client is working away from home.
Also work clothes required for his work, (Helmet, overalls, Boots) would be acceptable deductions.
Even though the previous accountant was allowing the other expenses, were they really?
If a limited company were they being put in the DLA and if self employed were additional payments being shown that were not withdrawn as salary? Sometimes clients are kept on the straight and narrow despite their best efforts to wander off it.
You are of course completely correct and the client is not allowed to claim for many of the things that they have been doing.
It might be a good idea to talk with the previous accountant if you can to clarify the situation in relation to these items being put through as expenses as I doubt if any qualified accountant would allow a client to do such... Or maybe that's why they are not a client anymore? (You didn't say who dumped who in the previous relationship).
Just wait until you start getting the phone calls about what their mate down the pub has told them that they can claim!
I had one who made his wife a director of his personal service company and took a four week holiday in the West Indies as their AGM... (And I said.... queue sound effect of the big X coming up on family fortunes).
kind regards,
Shaun.
__________________
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.
Have you had a chat with the old Accountant/bookkeeper? ask them what they did (client may be pulling a fast one!)
I have had the same, If i get any arguement from them i always direct them to the HMRC help sheet about allowable expenses. If they still argue their case then i say to themcould they explain the same to an HMRC Rep?? if they still are being funny about it then say they either accept it or you refuse to work on there files.
I use that line. It's a good one. The imagine that you are sitting across the desk from a tax inspector rather than your accountant and tell me that line again...
talk in a bit,
Shaun.
__________________
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 would ask the old accountant first before you drop them, it might well be that he put it all to Drawings and the client hasn't got a clue about it!!!!!
After all when the client signs off the accounts I don't expect he will go through them with a fine tooth comb as they probably don't know their arse from their elbow, which is why they need a bookkeeper and an accountant. If you are not happy with what the old accountant says then ditch them if you are still unhappy with the situation.
Edit:- Spelling mistakes as usual!
-- Edited by Amanda on Friday 7th of December 2012 10:20:37 PM
I have recently taken over the bookkeeping for a client and have a similar situation. The past bookkeeper just put the receipts they didn't allow into drawings. But shouldn't we tell the client what is and isn't being declared for their tax? When they say x and y comes out of the business, do they mean that it come out of the business bank or it is declared as expenses in the final accounts - do they even understand the difference? My dilemma is should I let my client have back all the receipts that haven't been put through as expenses or do what the previousbookkeeper did and just put them in an envelope. I was given 3 years worth of personal receipts! I will probably give them back even though I know that I am going to get "I've always put them though before" and other disagreements, to do otherwise feels wrong to me.
They will have no idea what you have done with them, so if they have been paid out of the business account, just stick them to DLA or drawings if they are personal receipts. Unless you think they might crasp the idea of what you have done I wouldn't bother explaining it to them.
I once explained everything to one client of mine and NEVER again!!! He is still none the wiser and probably doesn't care, so that taught me a lesson or two!
That is what I am concerned, about that I get into the endless discussions why this and that is not allowed. I can see how the stories of what different people claim start. I just feel uncomfortable about my clients not knowing what does and doesnt go through their accounts.
I have another client who will not except that the delivery charges she invoices her clients for, should appear in her accounts, she is really struggling to understand this.
I agree to an extent with yourself and to an extent with Amanda. The main reasons that people pay us are to lessen their accountancy fees and to protect them from the taxman by making sure they claim everything they can, but none of what they can't.
I will happily explain what I am doing to a client and the rules. If they disagree and can point to some legislation to backup what they say I'll consider it. We've seen it here many times when we each get different answers using the same rules and legislation so there is a degree of interpretation at times. However, if they disagree without reason or "a mate down the pub told me" they get a choice, they do it the right way, or get someone else to do it.
I wont get into long debates, I'll say it how it is and listen to the reply, but if we cant agree then I'm happy to walk. Most clients ask a question and accept the answer. Ultimately, I'm a bookkeeper not a teacher.
I would ask the old accountant first before you drop them, it might well be that he put it all to Drawings and the client hasn't got a clue about it!!!!!
After all when the client signs off the accounts I don't expect he will go through them with a fine tooth comb as they probably don't know their arse from their elbow, which is why they need a bookkeeper and an accountant. If you are not happy with what the old accountant says then ditch them if you are still unhappy with the situation.
Edit:- Spelling mistakes as usual!
-- Edited by Amanda on Friday 7th of December 2012 10:20:37 PM
