Accountancy Advice

[Sharbtastic]

Don't post much on here but from reading posts I believe we have a few people who could help me.

I own two companies both involved in the betting industry, accounts for the bigger company are due for filing at the end of this month, the accountant who has done my books for the last three years has recently left the company I was using and started his own business. I only found this out by chance and decided I'd rather stick with him and give someone starting out in business some much needed work.

In hindsight this was probably a bad decision as the existing accountant is refusing to release any information he's requested in regards to previous year's accounts so he is suggesting we file for a three month extension with companies house.

My questions are:

1.) What effect does requesting an extension have on me and my company if any?
2.) What steps can I do to try and get the existing accountant to release the information requested.

[mdd2]

I always keep copies of the accounts submitted to HMRC by the accountants I have used over the years so there is no problem when I change accountants
Your business affairs may be far more complicated than mine as I am a sole trader’s

[Swizzlestick]

There have been inconclusive reports that extending an accounting filing deadline could adversely affect a company's credit score, but nothing concrete on that. It should still only be a last resort thing.

Why is he refusing to release the information?? Bit of a red flag. I'd ask why they are doing this first and if they continue to refuse, threaten to contact the regulator/your lawyer.

[HB Claret]

It might be that your new accountant cannot approach existing clients from his previous employer. I worked for a large firm of accountants and the partner that I worked for upped and left suddenly - she signed an agreement to say she wouldn’t approach existing clients however many of the clients contacted her direct as the business relationship was with her rather than the whole firm.

[dsr]

If you request a 3 month extension citing covid reasons, it will be accepted without question and I don't see why it would cause an issue unless someone wants to see your accounts right now. Once they're filed, all issues stop so far as I can see. Millions (literally) of companies have done it in the last couple of years.

If you haven't paid the previous accountant's bills or there is some other legal dispute, he has a reason for being obstreporous. If all is in order from your end, he's supposed to answer reasonable requests for information. If the old company is sulking because they've lost business to an ex-employee, that's unprofessional and you need to discuss with the new accountant what to do.

[Swizzlestick]

It might be that your new accountant cannot approach existing clients from his previous employer. I worked for a large firm of accountants and the partner that I worked for upped and left suddenly - she signed an agreement to say she wouldn’t approach existing clients however many of the clients contacted her direct as the business relationship was with her rather than the whole firm.

I still don't think this gives them the right to hold back information, though, particularly in relation to limited companies where there are certain directors' responsibilities that must be followed.

As an aside, as you're in the betting industry, are there not certain deadlines to meet in terms of the regulator, Gambling Commission e.g.? Companies House will accept three months extensions, no questions asked, if you request and select Covid as the reasoning, but there may be other requirements in your industry that may not be as flexible.

[Bosscat]

I always keep copies of the accounts submitted to HMRC by the accountants I have used over the years so there is no problem when I change accountants
Your business affairs may be far more complicated than mine as I am a sole trader’s

Exactly what I used to do (although I never changed Accountants throughout my trading years) as I was a sole trader too.

In fact all my old accounts are still boxed in the Attic, as I decided to keep them for 10 years after I ceased trading just in case HMRC needed anything. They never have so perhaps a bonfire is in order sometime soon

[Sharbtastic]

Thanks for the replies so far,

I have called the existing accountant and they are insisting that they are unable to pass any information to me or my new accountant as they have an ongoing legal case against them. The fact they won’t even give me the information basically leaves me in a situation where they are pressuring me into staying with them, missing filing deadlines or filing with missing information. All that just makes me want to leave even more.

For the couple of people that have replied about keeping records I can get these off HMRC if required, I think the new accountant more needs the paperwork for how these figures have been arrived at though as an example work could be carried out in the accounting period but invoiced in the next accounting period and you could claim in whichever period you wish. Obviously without the back up information I run the risk of something potentially being double accounted. However I’m not an expert in accountancy so I’m not sure if it’s possible to just go forward with the new accountant based on the information available.

[Sharbtastic]

All the regulatory returns to the Gambling Commission and other bodies I handle myself so there’s no issues there thankfully.

[Rileybobs]

I don’t work in accountancy, but surely that company is holding information which you’ve paid them for? Their beef is with the employee that has left, not you. I would say that what they’re doing is at best immoral and at worst illegal. Although people who work in the industry would be better placed to advise.

[Tall Paul]

A good accountant should be able to produce a set of accounts without the information from the previous accountant, although it would involve extra work so with the deadline fast approaching might not be possible to get them done in time.

[NewClaret]

I don’t work in accountancy, but surely that company is holding information which you’ve paid them for? Their beef is with the employee that has left, not you. I would say that what they’re doing is at best immoral and at worst illegal. Although people who work in the industry would be better placed to advise.

I think what he is saying is that the files that contain the calculations / workings are not being disclosed, which they are probably within their rights to retain as their IP given it was created by their employee whilst employed.

If it were personal data, I think you’d have a right to request it by a subject access request but I’m not sure where the law stands on corporate information and certainly not where that data has been obtained/created/processed lawfully under the normal course of business.

I’d say your options are to stay with them this year, get affairs straight and clean, move next year; agree some form of “termination fee” to provide the data and see if your new accountant will offer you a discount on services to compensate (they may not do this if it complicates a legal case - but may do if you’re clear you won’t be staying anyway); or move over anyway and hope his memory is good!

[Sharbtastic]

As weird as it sounds I think I have figured out a workable solution in my head.

I see no way of me getting the existing accountant to release the required information in time for my new accountant to be able to file a 100% accurate set of accounts before the deadline. Therefore begrudgingly I think my only choice is to allow the existing accountant to file for that company and then I can re assess in the new year.

Meanwhile my second company hasn’t filed any accounts yet, it’s first accounting period ended in November so i can pass this to the new accountant and allow him to produce the accounts then at least I have kept my side of the bargain here and allowed him to carry out some work.

Obviously would be a bit weird having two accountants for a short period of time but I don’t see any other way that doesn’t leave my company open to getting a set of accounts that may well be wrong filed.

[dsr]

If your old accountant is messing you about, then don't give them anything. You don't want to get into a business relationship with someone you can't trust. Their dispute with your new accountant is very likely about taking business off them, but if as you say it was you approached the new accountant and not the new accountant approaching you, then neither he (or she) nor you has done anything wrong. You don't have a long term contract with the old accountant.

Your old accountant can't legally stop you having a full set of accounts, because you've paid him for it. Most of the figures, though perhaps not in sufficient detail, will be on the accounts; best estimates can be used for the details such as accruals and depreciation. You should also have a copy of the tax return and supporting schedules sent to HMRC, because you have signed for the job lot; if you haven't, your old accountant can't deny you those either.

Then (if your old accountant has an institute or other regulatory body) you can get onto them and, giving details including name of old accountant, ask them what the procedure is. You might want to ring the old accountant first and ask for the name of their regulatory body so they know what you're planning to do, which might make them see sense.

[Cabbage]

Don't post much on here but from reading posts I believe we have a few people who could help me.

I own two companies both involved in the betting industry, accounts for the bigger company are due for filing at the end of this month, the accountant who has done my books for the last three years has recently left the company I was using and started his own business. I only found this out by chance and decided I'd rather stick with him and give someone starting out in business some much needed work.

In hindsight this was probably a bad decision as the existing accountant is refusing to release any information he's requested in regards to previous year's accounts so he is suggesting we file for a three month extension with companies house.

My questions are:

1.) What effect does requesting an extension have on me and my company if any?
2.) What steps can I do to try and get the existing accountant to release the information requested.

Are your existing accountants Chartered?
Ethically, with the ICAEW, the outgoing form cannot withhold information that would prevent you from fulfilling a statutory responsibility. Eg filing your accounts with companies house.
If there is an issue with the transition , if you’re a naughty boy, they would simply refuse to give clearance and refer the new accountants back to you.
If there are unpaid fees they can excercise a lien over the records they have worked on. But this does not prevent obtaining professional clearance.
As regards any restriction on the outgoing accountant and his previous employer that is an issue between them and not you.
If Chartered. I’d ring the Institute.
As regards the three month extension, my experience is it has no adverse effect, but if you have credit issues it may.

[IanMcL]

As it is all YOUR information, bought and paid for, ask for it all back.

[Paul Waine]

Don't post much on here but from reading posts I believe we have a few people who could help me.

I own two companies both involved in the betting industry, accounts for the bigger company are due for filing at the end of this month, the accountant who has done my books for the last three years has recently left the company I was using and started his own business. I only found this out by chance and decided I'd rather stick with him and give someone starting out in business some much needed work.

In hindsight this was probably a bad decision as the existing accountant is refusing to release any information he's requested in regards to previous year's accounts so he is suggesting we file for a three month extension with companies house.

My questions are:

1.) What effect does requesting an extension have on me and my company if any?
2.) What steps can I do to try and get the existing accountant to release the information requested.

Hi Sharbtastic, you don't specifically say what the accountants did for you, were they doing all the bookkeeping and preparing the accounts? Were the accountants preparing your tax return and submitting to HMRC on your behalf? Were the same accountants also preparing an audit opinion (or perhaps you didn't need one).

Some of the replies to your posts have hinted at the accountants having the right to retain because it is their IP (intellectual property).

I recommend you take a look at Documents and records: ownership, lien and rights of access on the public access section of the ICAEW website.

https://www.icaew.com/regulation/documents-and-records

The introduction states: "Guidance for members in practice on which documents the member owns; how long documents should be kept; if the client owns the documents, whether the member always has to hand them over; and the member's obligations to allow others access to documents."

The guidance is prepared by ICAEW for its members. The same guidance will apply to members of any of the accounting bodies.

Good luck.

[dsr]

Hi Sharbtastic, you don't specifically say what the accountants did for you, were they doing all the bookkeeping and preparing the accounts? Were the accountants preparing your tax return and submitting to HMRC on your behalf? Were the same accountants also preparing an audit opinion (or perhaps you didn't need one).

Some of the replies to your posts have hinted at the accountants having the right to retain because it is their IP (intellectual property).

I recommend you take a look at Documents and records: ownership, lien and rights of access on the public access section of the ICAEW website.

https://www.icaew.com/regulation/documents-and-records

The introduction states: "Guidance for members in practice on which documents the member owns; how long documents should be kept; if the client owns the documents, whether the member always has to hand them over; and the member's obligations to allow others access to documents."

The guidance is prepared by ICAEW for its members. The same guidance will apply to members of any of the accounting bodies.

Good luck.

None of that is all that relevant to the figures in the accounts. The point about the figures in the accounts is that the board of directors have appointed the accountants to prepare the figures on behalf of the board, and the accountant has produced advisory figures that the board has approved. The accountant cannot, in law, withhold figures from the board of directors that would help the board understand what it is signing.

[Sharbtastic]

Once again thanks for all the replies,

To try and answer a few of the questions, the accountant looked after my monthly payroll, my end of year accounts and corporation tax returns and also my self assessment return. At the end of each year I'd send them all my bank statements and my business reports, I also categorised every transaction on the bank statements for them which I don't think a lot of other people would.

I have a copy of last years full accounts (not the limited version uploaded to companies house) but I don't have the CT600 or any other document that would have been submitted to HMRC.

From a few of the responses it seems reasonable to assume that from the accounts a new accountant should be able to provide a pretty accurate set of accounts for the latest financial year and assuming we can get the CT600 from HMRC if needed.

The old accountant is a member of ACCA so I think I will be submitting a complaint to them regarding their conduct as on Friday they even refused to give me my Web Filing Code so I could file my confirmation statement which is overdue, they did offer to do it for me though If I forwarded the relevant fees. The way they have acted just seems totally unprofessional and unless absolutely necessary I don't want to give them a penny more of my money.

[Cabbage]

Where’s your registered office? If you logon to companies house and tick that you’ve lost your code, they’ll send a copy to the registered office. If it’s your accountants then don’t bother, if your office/home, happy days! As I said before, ACCA will take a dim view of the outgoing accountants stopping you fulfilling a legal requirement. That also means payroll documentation if they fail to supply that promptly to your retained adviser. To speed up maters, I’d ring the original accountants and tell them that. Nothing to fear.

[Paul Waine]

None of that is all that relevant to the figures in the accounts. The point about the figures in the accounts is that the board of directors have appointed the accountants to prepare the figures on behalf of the board, and the accountant has produced advisory figures that the board has approved. The accountant cannot, in law, withhold figures from the board of directors that would help the board understand what it is signing.

But all of it is relevant to the question asked by sharbtastic - "the existing accountant is refusing to release any information... in regards to previous year's accounts"

Quoting, again, what the ICAEW addresses: "Guidance for members in practice on which documents the member owns; how long documents should be kept; if the client owns the documents, whether the member always has to hand them over; and the member's obligations to allow others access to documents."

[dsr]

But all of it is relevant to the question asked by sharbtastic - "the existing accountant is refusing to release any information... in regards to previous year's accounts"

Quoting, again, what the ICAEW addresses: "Guidance for members in practice on which documents the member owns; how long documents should be kept; if the client owns the documents, whether the member always has to hand them over; and the member's obligations to allow others access to documents."

I think the OP was asking for information, not documents. But I dare say the information is useful for all that.

[Paul Waine]

I think the OP was asking for information, not documents. But I dare say the information is useful for all that.

I'm puzzled. Don't you think the information wanted will be on the documents that the accountants hold?

[dsr]

I'm puzzled. Don't you think the information wanted will be on the documents that the accountants hold?

When you leave one accountant and ask for information about what's on the previous accounts (eg. accruals, depreciation, etc) the chances are the previous accountant will send you the information - as he is obliged to - but not the original documents, which are his. He may have scribbled all sorts of offensive notes over them! Less likely nowadays, because many accountants keep all their "paperwork" on computer anyway, so they will just print it out.

There are circumstances in which you can get the original documents, scribbles and all, but not as a matter of course.

[Paul Waine]

When you leave one accountant and ask for information about what's on the previous accounts (eg. accruals, depreciation, etc) the chances are the previous accountant will send you the information - as he is obliged to - but not the original documents, which are his. He may have scribbled all sorts of offensive notes over them! Less likely nowadays, because many accountants keep all their "paperwork" on computer anyway, so they will just print it out.

There are circumstances in which you can get the original documents, scribbles and all, but not as a matter of course.

Yes, dsr, I know all that. That's what the ICAEW Guidance is all about.