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Employment quandry

  • Associate
  • Practice Licence
  • 36 posts
  • # 93373

Hi everyone

I hope you can advise me. I have my Practice Licence and have set up my own business. I am not in a rush to get too many clients as want to gain as much experience as possible first. I am currently employed for a few hours as Bookkeeper to the CAB and am doing some voluntary bookkeeping for a charity. I have one client who I am doing a little work for.

I have now been asked by a friend to help with their accounts which are in a very chaotic state and they probably need to be VAT registered, but are not as yet. They need their accounts to be sorted out properly by a bookkeeper in order that their new Accountant can advise them properly. I have told them that I am bound by the Practice Licence to not carry out work for anyone who I feel is not abiding by the law (even if not deliberately). I would like to help them though as I know they are terribly concerned about the mess their accounts are in and cannot move forward until they are straight. They suggested that they take me on as an employee to help them until such time as their financial matters are sorted. 

My question is, would I be endangering my Practice Licence, by being employed by someone whose accounts are in such a mess or would this be completely separate to my own credibility. I would not consider this if I did not know the people well and know that they really need help.

Your advise would be greatly appreciated.

 

  • 117 posts
  • # 93375

Hi,

Sorry I'm not in a position to answer you professionally, but it sounds to me that this company is trying to sort out the mess they are in and can only do so if someone is willing to help them.


I know this does not help with your situation but if nobody gives this company the help they obviously want and need then their books are only going to get worse.  


I hope you get the professional response you need.

Sue  

  • 491 posts
  • # 93377

Hi Altna

It sounds like you've been professional and informed your friends of the potential consequences of them using you. My take on this would be that, as they are seeking the help of a trained book keeper, and the fact they have appointed a new accountant - despite being in a mess, they are attempting to get this sorted and to get themselves legal, so the HMRC would be 'kind of' sympathetic to that and you would not be putting yourself at risk.

If you make it clear to them that your first steps would be to carry out work necessary to clarify what their turnover has been for the last couple of years, so that you can accurately pinpoint at what stage in the rolling 12 months they may have hit the VAT threshold, then either the client, you, or the accountant will then have the obligation to report this to HMRC.

If the client are understanding of this and will go do what is necessary once the findings are clear, then all will be well. If, however, your findings were, for example, that they should have registered for VAT 6 months ago and your client still chooses to ignore this and not report this fact to HMRC, then you would be obliged to do so yourself. Providing you did this, it would not endanger your licence or reputation. It may damage the relationship between you and the client, but that's your friends fault and problem - if you get my meaning!

This type of work can be an enjoyable challenge, I've recently had a similar case myself. My client has 2 businesses and should have registered one in July 2012 and the other in September 2012. The VAT office have been very lienient with him up to now, despite his 'delaying' tactics. As I provided a letter on one of my letterheads, addressed to my client, with the findings in a clear spread sheet format, with the intention of him being able to send this to the VAT office (which he did), the VAT office have also copied me in on the result notifications too, which was useful in case your client isn't completely truthful with you.

Good Luck - Hope this helps
Carol  

  • Associate
  • Practice Licence
  • 36 posts
  • # 93383

Hi Sue and Carol

Thanks for your replies. I think, as you say, a letter on my headed paper outlining what I am prepared to do, knowing their circumstances, would be a good idea. I could say that I am prepared to produce a spreadsheet (they are very old school and anti accounts software at the moment) to provide the information their new accountant requires in order to legitimise their business situation. I could also say that I am prepared to continue to keep accurate records of this years accounts in readiness for transferring to a suitable accounts package once their accountant has provided me with the relevant information regarding the VAT position. 

This does still worry me though and wonder whether I would be 'safer' to work for them as an employee or whether I could still be in a difficult position doing that as regards my Practice Licence.

Any orher comments would be appreciated.

Thanks.

  • Associate PM.Dip
  • Practice Licence
  • 739 posts
  • # 93386

Hi Heather

If you are thinking of being the bookkeeper, employed or self employed, y not suggest a meeting with the accountant (if the accountant has already been appointed), to see exactly what the accountant wants and what computerised system would be best for them. If both you and the accountant are then happy, then whether you are self employed or employed shouldnt make any difference, except if you are employed and have the payroll exam you may be paying yourself as well as other employees. If you and the accountant work together from the start it makes it easier for both of you, and if you do have to tell your friend anything they dont want to hear, you have the accountants backing. If you friends against this and against setting up a computerised system, then you may be better to walk away. You dont want to risk working for hours for nothing. Ultimately only you can decide whats right for you, as you know your friends better than anyone, but best of luck whatever you do, but if they have an accountant, try and work with them to your advantage.

Very best wishes

Lainy xxx 

  • 153 posts
  • # 93396

It's fine to take on a client like this, although you may want to consider the extra risk as a reason to expect at least some payment up front and you need to be aware of the higher risk of money laundering.

If when the bookkeeping has been done, it becomes clear they must become VAT registered and they refuse to do that, then it's a very different situation but that hasn't happened yet, quite the opposite, as they are apparently wanting to become legit.
 

  • Associate
  • Practice Licence
  • 36 posts
  • # 93397

Thanks for all your input. I don't feel there will be an issue re my getting paid and I am completely sure there will be no money laundering issues. I am putting together a letter outlining all the issues and making clear that I am working on their accounts on the understanding that these will be presented to their new accountant in order for him to ensure all correct business practices are being followed. If this doesn't happen then I will terminate the arrangement. I have also said that I would like to work closely with the accountant once he is involved.

Thank you :)  

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