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  • #994868
    Redrocket23
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    Hi, we recently paid a debt collection agency monies that we owed our ex Accountant. He refused to take instalments so we had to put it on our mortgage ($4000).

    I’ve asked him for our MYOB file but he is refusing to give any of our files unless we pay over a $1000 for his debt collection recovery fee.

    Is he able to do this? I need those files desperately to complete the following years tax return wgivh the ato needs.

    Also seems a bit steep, $1000 fee for recovering $4000???

    Cheers :)

    #1198859
    Taxopia
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    Is it essential that you get the MYOB file? Obviously not having it is not ideal but if you have opening balances from a copy of the financial statements and the last tax returns you can reconstruct from there. That provides and opening position.

    If you are ever audited by the ATO my guess is that they would formally request the records direct from the previous agent. And I don’t think he could easily refuse as the lodging agent. The ATO would not take kindly to holding records to ransom.

    #1198860
    bb1
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    Taxopia, post: 235171, member: 68601 wrote:
    The ATO would not take kindly to holding records to ransom.

    Bit rich saying that the records are being held to ransom, Redrocket23 didn’t uphold their side of the bargain, why should the accountant hand over the records. Now if they had paid up there account in full and on time, than yes you could say its being held to ransom.

    #1198861
    Taxopia
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    bb1, post: 235230, member: 53375 wrote:
    Bit rich saying that the records are being held to ransom, Redrocket23 didn’t uphold their side of the bargain, why should the accountant hand over the records. Now if they had paid up there account in full and on time, than yes you could say its being held to ransom.

    It’s a figure of speech Bert. The CPA and CA by laws regulate professional accountant conduct with regard to holding client records for debt disputes. The actual terminology they use is “Lien” being a form of security. The position of the CPA by laws is (taken from CPA Lien guidelines)

    “Very broadly, and unless the terms of engagement provide otherwise, source documents (e.g. ledgers and journals), correspondence between the Australian Taxation Office (ATO) and the client or the ATO and the member as agent of the client, letters of advice to the client and financial statements belong to the client. By contrast, draft working papers of the accountant belong to the accountant providing professional services unless they are part of the agreed work under a fee engagement.”

    Obviously there are other legal issues beyond operational by laws that can effect this as well.

    I’m not taking sides (there is not enough information to determine), but it’s a bold move to withhold records in our profession. However, they may well have an engagement letter that allows them to. The ATO don’t care two hoots about the CPA CA by laws. They are highly unlikely to become party to such a commercial dispute. If they want the records they are entitled to them under the tax law. The former accountant would probably pass them direct to the ATO (as required) rather than via the client.

    Naturally we are always curious to know why people don’t pay their former accountant. It can send red flags but equally there is often a good reason (like being overcharged for something they did not agree to).

    Cheers
    Alex

    #1198862
    bb1
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    Redrocket23, post: 235162, member: 80704 wrote:
    Also seems a bit steep, $1000 fee for recovering $4000???

    Cheers :)

    I just checked my debt collection agencies fees and on $1000 to $10000, the fee is 25%, so $1000 is spot on.

    #1198863
    Paul – FS Concierge
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    Good luck OP,

    Ownership of the records in the cloud is becoming more of an issue in my view and unfortunately in my experience.

    Hope you resolve your issue.

    #1198864
    Taxopia
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    Paul – FS Concierge, post: 235243, member: 78928 wrote:
    Good luck OP,

    Ownership of the records in the cloud is becoming more of an issue in my view and unfortunately in my experience.

    Hope you resolve your issue.

    And just a tip on that. With Xero for example, as a business you can either sign up direct with your own credit card and then invite your accountant to be a user OR you can get your accountant to set it up for you using the Xero Partner protocol and they use their credit card. The difference is in the latter case I think the accountant has much more control over the account. If their card bounces then it locks your file. I’m not sure who Xero considers the owner of the data to be either. By the way the accountant gets a Xero kick back for this (reduced subscription rates).

    So our advice. Consider setting it up yourself with your own credit card and then invite your accountant as a user. You won’t get any subscription discounts this way but you will have absolute control.

    #1198865
    illena
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    You have pending debt against him, pay him all the amount. Then he will certainly fulfill your need also.

    #1198866
    doggyguinness
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    This is exactly why I changed my terms and agreements that the client signs before work commencing to state that money owing to debt collection agencies is on top of the money owed to me. That way I’m not out of pocket.

    #1198867
    nosakao
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    I am actually passing our debtor to our collection agency now.

    Recovery fee includes:

    Admin fee – I am allowd charge maximum $200 depends on the situation. I am charging $200 based on the amount of phone calls and emails that our accounts team made for debtor for 5 month. and interest charge.

    Interest charge – I can charge maimum 25% per annum from the day became outstanding. I am chargeng 5% per month from next day of invoice date ( term was due on receipt ). It can be charged out daily, weekly or monthly.

    If outstanding was $4000,
    Interest = ($4000 x 0.05) x 5 month = $1000

    It is really depnds on your case, though amount, ageing, percentage for interest…

    But $1000 for recovery fee is reasonable.

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