I am a newly self-employed bookkeeper and have registration through my professional body for bookkeeping, VAT, payroll and management accounts. I have not had work experience in personal tax and am therefore not yet registered for that.
However, a member of my family is self employed and has asked me to complete his accounts and tax return this year. I am able to do so under the rules as I'm not charging for my service. I have all the qualifications just not the experience.
My query is two-fold. Firstly, is there a standard approach to this person's previous accountant and what would I expect them to fairly provide to me by means of a hand-over? They have been informed by email that I am taking on the accounts.
Secondly, the reason this family member can no longer afford his previous accountant's fees is that his normal trade died down massively in the year 2013/14 and subsequently in 2014/15 he didn't get any work offering training services and picked up work where he could as a handy man and has earned significantly less this year. My question (eventually, sorry for the waffle) is do I need to 'do' anything about the fact that his business is as a handyman now and not a trainer? I.E. should HMRC be informed officially?
Many thanks for your input
-- Edited by Mrs Robotham on Monday 7th of December 2015 04:07:30 PM
The previous accountants cannot speak to you until your client has given them written permission to do so.
Once they have then you can make contact with an ettiquette letter asking whether there is any reason that you should not accept this client and if not request the required information.
As for what to expect, at a minimum you should get.
- A copy of the last full set of accounts.
- The trial balance upon which those accounts were based.
You will also need the fixed asset register and the last tax return although there is no legal requirement to supply those they are considered good form to pass those over.
You have no right to the working papers, computer files or permanent file for your client. Those belong to the accountant.
When requesting information ask nicely and the likelihood is that you will get everything that you need (eventually).
On the second question your client has not stopped being a trainer, they just didn't make any money at it.
There are all sorts of considerations there such as is your client VAT registered? If so, are they on the fixed rate scheme?
I'm assuming that they are not in which case its a simple matter that in box 1 of the SA103S update the description of the business when filing the self assessment.
be careful though as there are considerations around brought forwards losses on a major change of business.
Has your client now gone back to the training?
One arguement is that the handman business was incidental income.
Another is that there may be an arguement to suggest that the handyman business is a seperate self employment to the training business if the businesses are to be run side by side going forwards. Of course, I assume that your client has been treating them as a single business so unravelling them to treat them as seperate busnesses may prove problematic.
Will the handman business be dropped once the training company takes off again?
Just as a quick aside, your client is dumping their accountant just before the tax return for 2014/15 so they may still be charged the full year regardless as to whether you do the accounts and tax return or not.
The accountant is unlikely to pass you anything at all until they have been paid (holding onto data / information as a Lien).
December is really not a good time to be telling one's accountant that you are leaving when they believed that they would be processing your clients accounts and self assessment and will have planned in staff time around that basis.
Also, a reasonable time to pass you the information would be within three months. Personally I would not hold onto things that long but an accountant is not going to get a slap on the wrist from their professional body for failing to pass accross information with too short a time frame.
Personally I would have advised the client to stick with their accountant rather than pay twice for the same accounts with yourself taking over after this tax season. I would not take on new clients at this time of year who already had representation as they are likely to be getting a surprise invoice for services up to April 2015 and possibly beyond. (note that the accountants fee's in the accounts are an accrual).
The above said, even if they have to pay the accountant for the work in this instance you are doing it free of charge as a loss leader so the client is not losing anything more than the fee's that they would have paid anyway.
Hope that the above helps or at least starts you asking the right questions to get you to where you need to be.
Welcome to the forum Claire,
kindest regards,
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.
Which professional body are you with? If you are not registered for personal tax (and perhaps producing accounts beyond TB?) would this leave you in breach of regs with that body and therefore liable to any kind of sanctions etc? Also - will your PII cover it?
Some great points there Shaun, especially on the timing.
Good luck with it Claire, good one to practice on even if you dont end up taking off the Accountant until next year....dummy run, see if you get close to the same answers?!
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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
Thank you Shaun and Joanne for your replies and your kind welcome.
Your detailed response has been most informative, Shaun. Thank you so much. I guess this has highlighted the pitfalls of inexperience as I hadn't considered the timing of the matter but can certainly understand the issue.
I need to take your comments on board and act appropriately.
