We have a list which shows when clients Annual Returns are due for submitting. Alot of our clients do their own but for the rest we send out a reminder beforehand and say we are happy to submit the return on their behalf and for them to get back to us to let us know if they would like us to do this and if there have been any changes.
We don't make a profit on this, we just simply ask to be reimbursed for the filing fee.
One of our constantly rude, abrupt, threatening clients that has a large outstanding bill rang up yesterday saying they had received a nasty letter from companies house saying the annual return hadn't been filed. When he asked me why I told him that I had sent out a letter two months ago and hadn't received a reply. He said theres no point sending out letters because he hasn't got time to read them and why didn't I ring him to remind him. I told him that we send a standard letter out to all clients with a copy of their current company details which of course can't be done over the phone. Seeing as we don't make a profit from the annual returns and do them out of goodwill I am not going to sit there for a full day ringing clients to remind them either! Although I never said that bit.
My question is, seeing as annual returns aren't in thieir terms of engagement and we remind them because we know alot of them overlook the annual return, are we obliged to do this as part of accountancy or is it the clients responsibility?
I know some accountants charge extra and make a profit on annual returns in which case they would be obliged to do this if the client was paying. But with a client like this that hardly ever pays us, never replies to letters, never answers his phones, always speaks to us like rubbish, expects you to do everything what would you do in this situation?
I would really consider dropping them if possible. We used to charge £30 plus the filing fee to do this, so I think you are offering a really good service so I he cant complain.
As regards not reading the letter, he obviously read the one from companies house, he sounds like a right pain. ( I have rephrased this from what I was thinking about saying.)
Remember it is the directors responsibility to ensure everything is filed ok.
__________________
Nick
Nick Craggs FMAAT ACA AAT Distance Learning Manager
Thanks Nick! I wish the director would drop this one and a few others. It amazes me how people that open these businesses have no motivation whatsoever, no organisational skills, no people or customer service skills and don't open letters!
Filing of returns is the directors responsibility not the accountants.... However....
valid expectation may be born out of a pattern of past practice, published policies or a suitably specific statement.
You have not previously done this service without asking. Your engagement letter does not state that you will perform this service and nothing that you have said or done indicates that you will perform this task without specific instruction from the client.
The above said, it does seem an unusual scenario where one has an accountant but still files their returns themselves.
If such is deemed out of step with industry norms then you could still find yourselves responsible for the missed filing deadlines.
Case law for valid expectation would be Brogden vs Metropolitan railways. (I remember that one as I walked out of an employment with less than my contractual notice period when my department was sold to another company).
As for the profit motive. That part is a no never mind. If you provide a service it does matter if the fee charged is appropriate to the work. That a fee has been charged at all is deemed that the amount was sufficient for the work to be performed by sufficient staff with the correct skills.
For the amount of badwill this scenario is likely to generate with clients personally I would alsways file client returns and I would also always charge a reasonable fee that mitigates any risk in doing so.
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.
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.
You can always tell from the way that I word my answers when its the run up to exam season can't you! (just P7 this time).
I suppose that I was always guilty of this scenario myself in that my accountants filed my accounts and CT600 but I have always filed everything to do with Payroll, the Companies house returns and my self assessments.
My criteria is basically he who prepares also files.
__________________
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.
The way I see it, there are two separate agreements here: the on-going accountancy agreement, which apparently makes no mention of Annual Returns, and another which appears to be offered by Noola each year, whereby, upon acceptance, the Annual Return will be filed by her in return for a separate fee.
I cannot see how making an offer each year, which is open for acceptance or rejection each time, can establish a course of conduct that incorporates a duty to file the returns on a customer's behalf into the accountancy agreement. Bookkeeping and preparing financial statements are not the same thing as keeping the Registrar properly informed as to a company's address, directors and shareholders.
The law will look to see if the parties' conduct (or even normal commercial conduct) would impute an agreement, but I think it is clear that even if a practice of reminding customers to submit their returns had been established, no commitment was ever entered into without the customer's specific agreement, and then only for the year in question.
I might pause for further thought if Noola also provides her client with a registered office address, however, because Companies House sends reminders to submit Annual Returns to companies at their registered office, and Noola presumably then forwards them to her clients ...
This is not meant to be taken as advice ... just musings.
Except I contend that Brogden v Metropolitan Railway does not apply here because there was a written accountancy agreement in existence which did not refer to filing the Annual Return, and then there were separate letters which did. (In Brogden, the parties had agreed terms in outline and had started to implement them, but no contract was ever signed. Once a dispute arose, it had to be decided whether certain terms could be implied and it was held that, where an established course of conduct could be proved, they could.) Here no previous course of conduct can be established under the existing accountancy agreement because the annual dance of offer and acceptance took place outside that agreement and brought new contracts into being each year, quite distinct from the accountacy agreement, and each separate from the previous year's filing arrangement.
I believe Noola and her firm are quite safe in continuing to offer their service, and that there is no risk that liability can be attached to them if the offer is not accepted by the client each year. It would be prudent in future to include a clear warning that the service is not included in the accountancy agreement, and that the firm will not file the return if the terms of the letter are not accepted. It should remind clients that responsibility for submitting the returns remains with the directors.
Iain
PS - Thanks for your comments, Michelle. I'm highly flattered.
-- Edited by ilsm on Friday 17th of May 2013 01:34:45 AM
The way I see it, there are two separate agreements here: the on-going accountancy agreement, which apparently makes no mention of Annual Returns, and another which appears to be offered by Noola each year, whereby, upon acceptance, the Annual Return will be filed by her in return for a separate fee.
I cannot see how making an offer each year, which is open for acceptance or rejection each time, can establish a course of conduct that incorporates a duty to file the returns on a customer's behalf into the accountancy agreement. Bookkeeping and preparing financial statements are not the same thing as keeping the Registrar properly informed as to a company's address, directors and shareholders.
The law will look to see if the parties' conduct (or even normal commercial conduct) would impute an agreement, but I think it is clear that even if a practice of reminding customers to submit their returns had been established, no commitment was ever entered into without the customer's specific agreement, and then only for the year in question.
I might pause for further thought if Noola also provides her client with a registered office address, however, because Companies House sends reminders to submit Annual Returns to companies at their registered office, and Noola presumably then forwards them to her clients ...
This is not meant to be taken as advice ... just musings.
Iain
This is a kick ass muse... I wish I could articulate like this!
This is a kick ass muse... I wish I could articulate like this!
Hi Michelle,
If you like this sort of thing then ACCA paper F4 is the one for you. There are plenty of freee resources on Opentuition plus all of the old papers are available on the ACCA site.
Iain's reply was similar to my own in that contract is only created by words or deeds not by unfounded expectation. The main case law is Brogden vs Metropolitan railways (1877) where contract was formed by a pattern of past practice that created valid expectation even though no written contract existed.
__________________
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.
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.
He is just a classic snotty client and not worth worrying about. You could question why he read the companies house letter and not yours! But To be fair the Companies House letters are quite scary too for what they are really worth.
We send a couple of emails which tends to work well. We also sign us and the client up to e-reminders
In terms of charging we don't do it and it is always offered as an 'extra' i.e outside engagement terms. Often for the sake of ten minutes work it just adds that extra goodwill.
__________________
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.
2. Preparation and submission of Company Tax Return
3. All payroll for up to 2 monthly employees (additional employees extra)
4. Personal Tax return for up to 2 directors/employees
5. Prepare and Submit Annual Return to CH.
Price is dependent on turnover level and quality of records.
Bookkeeping work, VAT returns, additional employees, additional tax returns and tax return with more than the normal eg salary and dividend from company and a few other bank interest and dividends charged extra.
At the risk of labouring my point, and because Shaun was right to point out the risk of becoming committed to providing this service unwittingly, and also because I find this thread interesting, I would like to point out that the two messages above illustrate how one might find oneself contractually committed unintentionally.
It is clear that Mark's firm has fully embraced the responsibility for filing returns, as this is included in his package. If I, as a businessman took Mark on as my bookkeeping/accountancy service, and paid his fees, I would be entitled to expect him to prepare and submit the returns for me for no extra cost and without prompting. If I received a letter from CH saying the Annual Return was late and I was liable to be prosecuted, I would expect a detailed explanation from Mark why this had occurred.
On the other hand, if Phil was my bookkeeper/accountant, the position is less clear. By offering the service as an "extra", outwith the terms of the standard accountancy agreement, it would seem that there was no obligation. But here Phil does not need to wait for acceptance, because no payment is required, and he could go ahead merrily and prepare the return for signature each year as part of his normal routine. I would sign as director, and Phil would submit the form. (I'm a bit out of touch ... not sure what happens when you file online these days.)
Given that, in business, no-one does anything for nothing, I could argue that a course of conduct had been established between us under the original accountancy agreement, that I had come to rely upon, and I could therefore be justifiably aggrieved if, one year, Phil did not ask me to sign a return and file it for me.
Iain
-- Edited by ilsm on Sunday 19th of May 2013 04:07:26 PM
I would sign as director, and Phil would submit the form. (I'm a bit out of touch ... not sure what happens when you file online these days.)
Hi Iain,
more an aside here than adding to the debate.
As before one gets the director to sign the copies of the accounts.
They keep a full set and an abreviated. We file a full set with the clients permanent file as evidence that the client approved the accounts and only then do we file the accounts electronically.
The key is though that we retain physical evidence that the client has approved the accounts.
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.
If I received a letter from CH saying the Annual Return was late and I was liable to be prosecuted, I would expect a detailed explanation from Mark why this had occurred.
Probably because i hadnt received the reminder from CH as happened with a recent client who's return was late. But told client not to bother and then preapred and submitted it as never known any action to be taken against a director for an outstanding return (other than the company being struck off)
It's a puzzle, isn't it, why CH will issue a fine for late accounts, but can't fine for a late AR? Although I do believe a late AR starts the process for striking off.
Late submission doesn't look very professional, though.
I agree with quite a lot on this subject but - just to throw something into the mix - what if the company has had some changes during the year that they have 'forgotton' to tell you about? I dont think you can simply file an Annual Return without discussing it in some form (be it letter/email etc) with the company, which to me is the reason why you should never just do it, regardless of whether you have done it before or not. I am a Company Director and quite happily file my own Annual Return - lets face it I am the only one of two (the other being my co-Director) who really knows what has happened during the year, be-it a change to voting rights, addresses, Sic codes, late appointments/resignations etc etc.
Whilst the 'customer and practice'/legal piece can rear its ugly head there are clear ways round this. I am not an Accountant but if I take on such a task for others I also dont just write out to clients, I will, if needs be chase matters up by phone to make sure I am able to meet those deadlines. I keep documentary evidence of everything I do and will keep a log of phone calls made as part of my timesheets for billing. I also make it clear that I am charging for the extra time it takes to chase them (usually does the trick!) and if that deadline is getting ever closer with no action by them, then I also make it clear that I cannot do that piece of work for them/why and the consequences if they do not do it themselves. Maybe simplistic in a way, but its certainly not lost me a client (yet!). Indeed one of my clients did have a company struck off when her previous Accountant didnt file - SHE wont let that happen again! Mostly my clients just get plain old scared when they see ANYTHING official from/for HMRC and Companies House!!
Doesnt help so much though with clients who are that rude and when your boss doesnt back you to lose them or charge them for your time!
PS As a Director I am told by HMRC and Companies House that the responsibility remains MINE, regardless of who I have instructed!
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
If the Company "forgets," then it must face the consequences.
If a bookkeeper is submitting the AR on the Company's behalf, then the Company must face the consequences vis a vis CH, but would then interrogate the bookkeeper as to why he didn't make appropriate enquiries. Then the Company must ask itself why it relied upon the bookkeeper for to fulfil a Company Secretarial function.
