Annoying clients - The Book-keepers Forum (UK)

Sharon Eyre · Senior Member

Annoying clients

Shamus · Forum Moderator & Expert

Must be one of those days Sharon.

Just had another case of someone not able to understand that their garden shed may well be an office but its not going to be coming off their profit and it doesn't even get any capital allowances as an asset.

I've actually hit the old issue of his mates accountant let him put it through so obviously I must be wrong.... (ever notice how to clients the one who gives the advice that they want to hear must be the one that is in the right).

Good luck with your game of ping pong. Although, I can't help keep thinking of the old line "Never underestimate the power of very stupid people in large numbers"....

Sharon Eyre · Senior Member

Sean I must be having a season of them -why do people think they can put every receipt they own through from boyfriends clothing to perfume -and yes she said same -my friends all put everything through !!
Told her its against my ethics etc and she still is going on about it -saying she can't afford the tax -hello you should have done it in April then you would have known what you owed and could prepare !
Got another one with a profit of £4-5k every year who has purchased a house cash -no mortgage and is renting it out -mmmmm what would HMRC make of that one !

Big glass of wine and count to ten -or maybe a thousand !

TrevorD · Senior Member

Evening All

I have been following these debates on whats allowed and not allowed. I used to run a Guest House with my wife and we put in our receipts, bills, bank statements, credit card bills etc. We paid for personal expenses out of our salaries we took from the business.He produced our annual accounts - worked out our tax and submitted the partnership accounts and self certificate tax returns. I just signed them off and carried on running our very very business.

Since, we have have sold the business and moved on !! I have spent the last year training as a bookkeeper and have looked back over our old accounts and seen that he had been diss allowing expenses and putting them through as drawings. He never once said a thing to us !!!

SO do your customers immediately jump on this or do you tell them ?

Regards

Trevor

Shamus · Forum Moderator & Expert

I always tell them what I am doing but there are times when it feels that I might as well be talking to a brick wall.

I can understand the mentality of simply taking the easier route and protecting clients from themselves without involving them but I veer more towards the less risky approach of having a get out of jail free card (or email) where matters covered in a meeting are recorded.

Of course, if the client chooses not to read and not to listen then what more can we do.

Its worth noting of course that the accountant is not always right and conversely the client is not always wrong.... But considering the training involved the odds are stacked that way.

kind regards,

Shaun.

Sharon Eyre · Senior Member

I usually send an email to query any 'grey' area ones and also tell them what they can't claim for

RobH · Expert

Hi Trevor,
I must admit I do that all the time, when something is clearly not business related it goes against drawings/loan account. I take the view that the client employs my services to sort out the books and therefore the default position is to do it correctly. If this results in an overdrawn directors loan account then a discussion will follow. Usually the clients will accept the position but not always and of course if I have mistakenly put through all those meals out against dla and the client insists they are entertainment then I will move them. This won't reduce the company tax but can help with the dla. Like Sharon any 'grey' areas will be discussed and I take the view that it is not for me to consider the client is lying and I'll give the benefit of doubt if the explanation is somewhat plausible, however if they say 'put them through and let her deal with hmrc if she gets caught' as per Sharon's client then that is a no no and we have a responsibility to report this. Bottom line is we don't need those clients.

Don Tax · Expert

The thing with client's being investigated is that they're likely to turn to professional help when HMRC levy back taxes, interest and 100% penalties for taking the mickey with perfume and boyfriends clothes.

Just the suggestion that they take out tax investigation insurance might make the client think twice about the indifferent "i'll deal with HMRC" stance.

So why doesn't she get her friends to prepare her tax return if not her accounts?

Tim

Sharon Eyre · Senior Member

I said the same Tim- all these who get talking to mates in the pub etc and they say 'oh I put this through and that through'- so the clients come back with this argument to which I say well good luck to them if they get investigated and I will not risk my professional integrity by putting these things through

I clearly state what is claimable, part claimable or excluded when they query things and usually send them the HMRC guidelines to back it up so they dont think its just me being awkward

I have a feeling I wont be doing her accounts next year but then again I did have a half hearted attempt of an apology this morning after a few words were said last night!!

YLB-HO · Guru

I had a client who spent 40k, converting 2 (out of 4) bedrooms in his house to his private recording studio. I initially did not claim it against tax, to be honest because I was more worried about Capital Gains. The following year the client was "investigated" and during my discussions with the tax inspection I mentioned that I had not claimed it. He said he would have no problems with it, and I should claim Captial allowances for the "conversion". As capital allowances can be claimed in a later period than the original purchase, I did so when I did the next tax return. The Tax inspector also said would have been happy for my client to claim 100% of the cost of his cleaner, and not just the 50% apportionment that I had done. The client was also writing articles for a magazine, who would camp out and do photoshoots in his house! This was why my client originally needed a cleaner, and the tax inspector felt that personal use was incidental to the business use.

Before the client sold the house a couple of year ago, I did insist he pay a builder to convert the rooms back to bedrooms, as I pointed out that if he did not then he would have a Capital Gains tax bill on the property, as he would then be selling a house with a private recording studio and not just a house (!). The receipt from the building work was allowable as a trading expense but also provided the proof I needed to satify HMRC that there was no Capital Gains tax due on the property.

I used to love talking things through with tax inspectors, as they often gave me really good insights into what they considered reasonable etc., which more often than not, would benefit clients. Unfortunetly these oportunities don't seem to happen anymore.

-- Edited by YLB-HO on Sunday 26th of October 2014 01:19:46 PM

kjmcculloch83 · Expert

I often read these threads and think I must be doing something wrong. I never seem as harsh as you Shaun. Then I read something from Rob or Mark and breathe a sigh of relief.

I think the three of us must just be a bit more pragmatic. I tend to put things in a drawings account without really mentioning it to the client unless it is confusing what the purchase was. I also tend to believe clients are being honest rather than forcing them to prove everything. They are all aware that they could need to prove any of it to HMRC if they investigate, but I don't see my role (yet) as an unpaid tax collector for HMRC.

Kris

Energise Accounting · Member

I tend to tell them it is clearly not a tax expense, and the fact that i have spotted this a HMRC investigator will certinaly find it. if they still insist they want to put it through the books i make them sign a disclaimer saying they are going against my advice.

Like A few people have said they have talking to their mate down the pub.

MarkS · Expert

kjmcculloch83 wrote:
I often read these threads and think I must be doing something wrong. I never seem as harsh as you Shaun. Then I read something from Rob or Mark and breathe a sigh of relief.

I agree and sometimes think that Shaun seems to be working for HMRC rather than the client. Also wonder how he makes money on the jobs if he goes into each job in the detail he seems to do.

If someone claims some food and drink I dont disallow it. But if they were claiming their weekly shopping then obviously wouldnt allow that.

For instance had a client today who has a limited company and has £28k wages to employees. They werent able to produce a summary of who they have paid for the year. I could have summarised it from the monthly reports they gave me but rather than do this myself just asked the client to confirm the amount was reasonable as to what they have paid and they agreed it was, job done. If HMRC asks for details then will be up to client to give.

Shamus · Forum Moderator & Expert

MarkS wrote:
kjmcculloch83 wrote:
I often read these threads and think I must be doing something wrong. I never seem as harsh as you Shaun. Then I read something from Rob or Mark and breathe a sigh of relief.

I agree and sometimes think that Shaun seems to be working for HMRC rather than the client. Also wonder how he makes money on the jobs if he goes into each job in the detail he seems to do.

Is this another case that the comments refer to my other posts rather than the one's made in this thread?

Anyway, in response basically I work to the principle of do the job properly or not at all.

I don't work for HMRC but I try to view clients books as if I were HMRC in order to counter potential risk to the client.

Sharon Eyre · Senior Member

Mark I'm sorry but I'm with Sean in this -surely it is our job to check these receipts -if we just put everything through then they had an inspection it would reflect badly on us
So you are saying if they put a receipt through for say a Sunday lunch in their home town you would not question or disallow it? Or some if the items I mentioned in my post that are blatantly not business items ?

kjmcculloch83 · Expert

Shaun, just to clarify, I wasn't having a go. I just think we come from different places on some things. It's not about doing the job properly or not, but rather I seem to come from a place where I assume the clients are generally honest, and you from a different perspective.

Kris

Don Tax · Expert

This is our unenviable triangle. Far more than a manufacturer or a sweetshop we have to please two quite opposing parties, only one of whom is paying us and please ourselves at the same time.

I'm with the fair warning camp and I'll send a query list for doubtful items. Yes, wouldn't it be nice if you got the client reasoning back signed and in writing but they know they're on shaky ground. The telephone rings and they're talking rubbish but my back is covered and the client is signing the Return.

Outgoings may become more allowable over time. Some years ago a client took up motor racing but I wanted to protect him from himself. I reasoned with him that:

a) Any promotional value would be better spent elsewhere
b) His customer base won't see it
c) It was unrelated to his industry

He reluctantly agreed, but with him now having a pretty decent website, I am aware that local people will see it and it gives a good image. It's still mostly a hobby IMO but I won't now just consign it to DLA.

I'm not connected to this organisation but have sent this link out more than once.

www.fsb.org.uk/tax-protection

RobH · Expert

Good point Tim. We're all doing things correctly to the best of our ability and trying to give our clients the best advice we can. Some things are so obviously not allowable and you know that some clients just shove every receipt they own into a bag. I'm pretty sure the female hairdresser client I have would be horrified if she knew that the itemised receipt from Ann Summers was in her little bundle. I could have explained that these particular items were not allowable and given her the chance to say she has to handcuff her clients to the chair whilst massaging their scalp with a battery operated super deluxe XXXX 12 inch special. I decided that discretion was the order of the day and stuck them to drawings!

Shamus · Forum Moderator & Expert

kjmcculloch83 wrote:
Shaun, just to clarify, I wasn't having a go. I just think we come from different places on some things. It's not about doing the job properly or not, but rather I seem to come from a place where I assume the clients are generally honest, and you from a different perspective.

Kris

No worries Kris, your post was taken in the freindly manner that it was intended

there has always been the professional division on here between the two opposing camps.

You have the dot the i's, cross the t's people in one corner (the likes of Bill and myself).

And Robs "There or there abouts" (tm) approach in the other.

Neither is the wrong approach, both have advantages and it all comes down to the attitude of the bookkeeper / accountant to risk.

I think that coming from the banking operations background I have been programmed to be naturally risk averse and that carries over into everything that I do. Considering first what can go wrong and then ensuring that everything is done to ensure that such risk is minimised or erradicated.

That is not saying that there is anything wrong with the alternate firefighting approach of resolving issues as they occur as many of the issues that one forsee's may never actually occur so fixing them in advance may be considered a waste.

That said, I find that picking up on small things we reprogram (some) clients before small things become both habitual and larger in nature so in some ways it can be seen that in the long run ensuring that everything is done (as much as possible) to the book you are making your own life easier for later.

As I say, absolutely no offense was taken and your post was taken in the spirit of the normal professional discussion of the site.

kindest regards,

Shaun.

Shamus · Forum Moderator & Expert

lol. Are you sure that she's really a hairdresser Rob?

I've got clients where its not just what they buy but when they buy it.

A play therapist needs to buy toys... But if they buy the toys around Christmas time and the toy in question is a huge scalextric set one then wonders how HMRC might regard such expenditure as theraputic equipment.

... Then again, at least that one was a good try and far from the printer purchase that a client tried to put through accompanied by a toys r us receipt (again for a scalextric... Have these people not discovered video games yet?).

Don Tax · Expert

Rob, please record the phone call where the client says they are for the waiting area.

EPF_Solutions · Senior Member

Is this discussion about clients being annoying, or ways to annoy clients? biggrin

RobH · Expert

Tim, I want the cctv footage of the waiting area.

Shamus · Forum Moderator & Expert

EPF_Solutions wrote:
Is this discussion about clients being annoying, or ways to annoy clients?

Annoying clients forcing us to annoy them further by making them stay out of jail wink

Sharon Eyre · Senior Member

Ha Ha Rob I had a similar situation with a male client several years ago- he put some Anne Summer receipts through- I told him I couldn't accept them but he claimed they were for his hen party customers- he is a limo hire so couldn't really argue with him- cant remember the actual items but think they were 'acceptable toys'

RobH · Expert

You were brave Sharon, he may have retorted 'show me what you think they are for'!

Sharon Eyre · Senior Member

blankstare biggrin smile oh my ! the embarrassment !!!

Amanda · Expert

That is funny Rob!!!