I have 5 new clients who have asked me to carry out partnership returns this week. The deadline is 31st January 2016 which is 9 days away.
I want to carry out the work but cant seem to get info from them.(first problem)
They are all based abroad, and LLP is UK based.
Only recently traded so return will be zero.
I've advised they'll need self assessment, partnership self assessment and companies house submission.
I've been asked a few questions which id like to clarify.
One of the partnerships is owned by 2 limited companies , both based outside the uk. Therefore they don't think they have to carry out a self assessment. I've not had much experience with foreign based clients so wanted to double check. Plus if they do, id assume the limited company would only carry out self assessment based on the partnership income/ expenses etc ? is this a separate form?
Last one is there anything I am missing, I've researched as much as possible about foreign partners but I'm struggling to find consistent advice.
I did ask this question on accounting web but I think I got insulted. :(
Hi Nicola I've just seen your article on aweb and have to say......nope you were not insulted, not in the way catman can really go to town on peeps at any rate.
The chap who answered you is prolific on there and from what I can gather, highly thought of, so to be honest I would suggest his answer to you would be the correct one. Your suggestion of a quick call to HMRC this morning is a good idea at any rate.
One thing my cynical head and frankly ex corporate banking head (seen all the tricks!) is screaming at me is in terms of money laundering or let's just say something that needs a little more checking out. I only think this for a number of reasons which when placed together makes it sound a wee bit of an issue.....timing of their approach to you / the fact that they are all foreign nationals set up in uk ( maybe expecting you to rush rather than cover off all the usual bases) and why have they chosen you, with only a few days to do.. Not an insult to you, I assure you. Eg were they recommended, are they in close proximity as a business rather than as individuals? Hope you get what I mean. So.....have you completely done your due diligence in terms of money laundering, including on the owners of the limited companies? If not, dump and run perhaps. Or at the very least/ or if you have already sorted that, then (as you indicate on aweb but slightly less on here), don't worry about the timescales.......this is their problem not yours. We aren't miracle workers.
-- Edited by Cheshire on Saturday 23rd of January 2016 09:47:29 AM
__________________
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
hugely complex area where worldwide income may need to be declared.
a few bits from your post :
One of the partnerships (LLP's)... There are multiples!
LLPs owned by foreign incorporated entities
Clients not giving you information (I know that feeling!)
To me this screams that there is something wrong and Joanne hits the nail on the head when her first inclination is money laundering.
Of course, thats not necessarily true, everything could be above board but in this business we need to approach every new client with an air of professional scepticism
The thing that makes me feel that above all else is why did an entity that has obviously be very cleverly constructed seek out your services? Why have they not gone to someone who specialises in international entities like KPMG that is more geared up towards complex scenarios. And if their arguement is that they are not making enough money to afford KPMG why then have they started their business with a complex model.
Could you defend these people to HMRC? I can pretty much guarantee that you will need to when HMRC realise that the entity has a non standard divested ownership foreign owned structure.
You know why they came to you? Because they think that small practices will either miss something or the practices objectivity may be comprosised by the need for clients so will be less prone to asking the difficult questions.
Another point that Joanne makes is about due dilligence. How can you know the source of a clients world wide earnings if you do not have representation in the countries concerned.
I am sure that you are absolutely brilliant at what you do Nicola but at first reading this scenario stinks like a bucket of month old herring inards and I think that ill may have been ill advised to have taken on a client with a complex structure like this.
Various options here may be partnering with a large firm, giving them all of the work and all of the money... But I would imagine that for that option you may have to not so much raise your fee's as multiply them (and we're possibly not talking about a single figures multiplier).
Alternatively tell the client that you are not equiped to work with foreign clients using complex corporate structures and walk away from the engagement (assuming that your signed engagement letter permits this without risk of being sued).
I've sought out the answer on Aweb and I think that Peter was very kind and professional in his response. There are some over there who would go straight for the jugular on that question as like Jo and myself (spot the ex bankers!) they can see straight through the scenario to the issues potentially sitting behind it which are screaming out that regardless of the level of the clients turnover this scenario needs to be handled by a large firm.
Absolutely no insult or offence is intended in this reply. Like many others here I have the greatest respect for your skills and I appreciate that you are in a tricky situation with the client but I am reminded of a quote from dirty harry
"Man's gotta know his limitations".
__________________
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 think you both may be right .
I don't want to put the whole details on an open forum but I was approached by an international business . They have gave me 8 clients , I've had letter of engagements back from 2 of these which are both llps . U.K.
I've tried to call my AAT regulatory this morning but it's closed .
I may reject the work with the client . Advising that maybe the foreign complexity s may be more suited to a larger practice .
(I'm not sure how they found me , I assumed online or through my website ) should never really make assumptions I suppose xx
As soon as I'm home I'll message you Cheshire .
What is the risk of me being sued for handing back to work ?
All I have received at the moment is 2 letter of engagements , ID etc .
I've not received any information , income , etc
hugely complex area where worldwide income may need to be declared.
a few bits from your post :
One of the partnerships (LLP's)... There are multiples!
LLPs owned by foreign incorporated entities
Clients not giving you information (I know that feeling!)
To me this screams that there is something wrong and Joanne hits the nail on the head when her first inclination is money laundering.
Of course, thats not necessarily true, everything could be above board but in this business we need to approach every new client with an air of professional scepticism I once had a client, whilst I was in Corporate that had about 35 companies in the chain, was all ok and above board but took a good while to check it out and was made much easier with the weight of NatWest systems behind me! Hence my issues with this one and the timeframes.
The thing that makes me feel that above all else is why did an entity that has obviously be very cleverly constructed seek out your services? Why have they not gone to someone who specialises in international entities like KPMG that is more geared up towards complex scenarios. And if their arguement is that they are not making enough money to afford KPMG why then have they started their business with a complex model.
Could you defend these people to HMRC? I can pretty much guarantee that you will need to when HMRC realise that the entity has a non standard divested ownership foreign owned structure.
You know why they came to you? Because they think that small practices will either miss something or the practices objectivity may be comprosised by the need for clients so will be less prone to asking the difficult questions.
Another point that Joanne makes is about due dilligence. How can you know the source of a clients world wide earnings if you do not have representation in the countries concerned.
I am sure that you are absolutely brilliant at what you do Nicola but at first reading this scenario stinks like a bucket of month old herring inards and I think that ill may have been ill advised to have taken on a client with a complex structure like this.
Various options here may be partnering with a large firm, giving them all of the work and all of the money... But I would imagine that for that option you may have to not so much raise your fee's as multiply them (and we're possibly not talking about a single figures multiplier).
Alternatively tell the client that you are not equiped to work with foreign clients using complex corporate structures and walk away from the engagement (assuming that your signed engagement letter permits this without risk of being sued).
I've sought out the answer on Aweb and I think that Peter was very kind and professional in his response. There are some over there who would go straight for the jugular on that question as like Jo and myself (spot the ex bankers!) they can see straight through the scenario to the issues potentially sitting behind it which are screaming out that regardless of the level of the clients turnover this scenario needs to be handled by a large firm.
Absolutely no insult or offence is intended in this reply. Like many others here I have the greatest respect for your skills and I appreciate that you are in a tricky situation with the client but I am reminded of a quote from dirty harry
"Man's gotta know his limitations".
Good points there bud
__________________
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
As soon as I'm home I'll message you Cheshire . What is the risk of me being sued for handing back to work ? All I have received at the moment is 2 letter of engagements , ID etc . I've not received any information , income , etc
No probs, am out later so may be a while before I respond.
Re being sued - does completely depend on what you have put in your engagement letter. Have you independently obtained their ID? I mean has it come to you direct from them or via a third party who has verified it for you - solicitor or some such. If they have not provided it in line with your engagement this MIGHT be a get out.
I would suggest no more chasing for paperwork, perhaps an email to say they have missed the deadline for the tax returns which also then includes managing their expectations, but maybe send on Monday (a work day!) after speaking to the AAT? Perhaps Shaun can comment on this suggestion.
__________________
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
my suggestion would be the action that Nicola is already attempting to take in that she should with some urgency speak with her professional bodies legal department for advice as to how to back away from a part started engagement.
This is one of those times where being part of a professional body really helps as they do (generally) keep professional legal council on payroll.
The angle that I would go with is saying that the engagement that had been agreed to became more complex as the facts unfolded to the point that the true nature of the engagement was outside of the knowledge and experience comfort zone and it is now felt that contract extraction assistance is required.
That phone call alone could be worth more than a years membership and practice certificate fees of a professional body.
__________________
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.
Hi Shaun
I was just thinking the same (whilst getting ready to go out - the only time I get free brain time at the mo!) about getting the AAT involved and exactly why such a scenario is a good idea to have a professional body behind one.
An even better idea especially if you have used the AAT's own engagement letter Nicola.
Interestingly our views on this side of the issue are now being reflected on aweb!
__________________
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
I've wrote to them saying I can no longer represent them, the work is a lot more complex than originally appeared, and too short notice to carry out proper due diligence etc.
I stated in my terms:
Agreement of terms
Once agreed this letter will remain effective from the date of signature until it is replaced. Either party may vary or terminate our authority to act on your behalf at any time without penalty. Notice of termination must be given in writing.
I used a template from a colleague who is also AAT qualified but ACCA also, where as I am AAT and part CIMA.
My colleague advised me that he wouldn't take on the work , especially with less than 2 weeks notice to carry out all checks etc where I was unsure, and I agree.
I spoke to HMRC, who said ultimately it is my decision but if I feel my instincts are telling me to walk away to do it.
Thank you to both of you for your advice, think ill need a wine later to recover from the stress I have felt this week.
No problem Nicola. I think not taking this one on is exactly the right decision as I think it wouldve just led to a whole pile of pants further down the line. Probably wouldve been costly than lucrative. Go enjoy your wine, once you have taken that further step back I think you will double glad you havent bothered with it.
__________________
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
I've wrote to them saying I can no longer represent them, the work is a lot more complex than originally appeared, and too short notice to carry out proper due diligence etc.
I stated in my terms:
Agreement of terms
Once agreed this letter will remain effective from the date of signature until it is replaced. Either party may vary or terminate our authority to act on your behalf at any time without penalty. Notice of termination must be given in writing.
Hi Nicola
Highlighted is your get out clause imo. I can't see you getting sued for this (I am not a lawyer)
Glad that you were able to walk away and congrats to Joanne and Shaun for helping. Terrific use of the forum.
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
I've wrote to them saying I can no longer represent them, the work is a lot more complex than originally appeared, and too short notice to carry out proper due diligence etc.
I stated in my terms:
Agreement of terms
Once agreed this letter will remain effective from the date of signature until it is replaced. Either party may vary or terminate our authority to act on your behalf at any time without penalty. Notice of termination must be given in writing.
Hi Nicola
Highlighted is your get out clause imo. I can't see you getting sued for this (I am not a lawyer)
Glad that you were able to walk away and congrats to Joanne and Shaun for helping. Terrific use of the forum.
Was an interesting one John. Hope Nicola is breathing a sigh of relief and hasnt got a hangover today!
__________________
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
No I didn't have a wine last night haha was up early this morning and had to drive ! Xx
Yes huge sigh of relief , the broker has still not responded so I'm sure he'll call me tommorrow but I said it in a way where i was giving the work back so they could approach some one more experienced with foreign entity's and more suited to their needs .
I really am thankful for all the advice I received yesterday , HMRC where brilliant when I spoke to them , and at least I know going forward what work to take on what to steer clear off .
Steep learning curve , the problem with being in industry for 10 years is I feel I've been there and seen it all , but my 1 year of working in practice is opening my eyes to a whole world of intricacies.
I'm sticking to :
Bookkeeping , vat , payroll and CIS , management accounts and limited companies.
At least I know this work inside out .
Xx
Bookkeeping , vat , payroll and CIS , management accounts and limited companies. At least I know this work inside out
Wish I did!
Every time that I think that I really know a subject I either prove myself wrong or the Government come along and change it!
Well done on unravelling yourself from this one Nicola
__________________
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.
So now another spanner in works . They have responded saying although they understand would I carry on and draw up accounts and they would take ownership and submit them selves .
Basically as if I was a junior person doing the bookkeeping etc
He asked if I can get everything in a format which he will chase up then he'll submit to companies house etc
My heads whirling today
Bookkeeping , vat , payroll and CIS , management accounts and limited companies. At least I know this work inside out
Wish I did!
Wish I did too. Maybe its just my client base but am constantly having new stuff thrown at me, mostly affecting VAT and CT when dealing with a myriad of foreign countries and importing/exporting or the blitherin withholding tax issues. Actually I would be bored without some of the stuff I get!
__________________
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
So now another spanner in works . They have responded saying although they understand would I carry on and draw up accounts and they would take ownership and submit them selves . Basically as if I was a junior person doing the bookkeeping etc He asked if I can get everything in a format which he will chase up then he'll submit to companies house etc My heads whirling today
Not sure what you mean by '' junior person doing the bookkeeping '' ??
Have you not sent a disengagement letter? Plus have they not yet taken ownership by not sending you what you need.
To be honest - I would just go back to them and say that you cannot verify them to your satisfaction, blur blur blur, and that they would be better going with tax advisors given their complex structure, blur blur blur.
On the ID front, you would need to see originals and meet with ALL the relevant parties in person, or have their ID signed off by a notary public or some such - one that you can also verify independently as being kosher. I know you said that the investment company had confirmed something (?) to you - but how have you verified the investment company are kosher and regulated (and indeed regulated by the correct authorities) given the whole thing is offshore and in a country that you are not used to dealing with which is clearly known as a tax avoidance country, much the same as the Caymens and Delaware and a few others I could mention?
Youve walked away - keep going and dont look back! Despite how 'nice' they are and despite how much money is on offer, otherwise you are stirring up one big bag of rubbish.
__________________
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
Yes I will be responding in morning saying I've given it a great deal of thought and they need a specialist tax advisor .
I can't say to much on an open forum , but it was there words I was quoting "like a junior tax advisor " processing whilst all in there name .
I've not invoiced for anything I've done up to now , and will just cut my losses .
Thanks Cheshire X
