1676.62 + 95.00 court fees
Quick bit of background
I work part-time as a residential care worker with children, employed by a local authority through an employment agency. I was advised by the employment agency to maximise my earnings by forming a Ltd company & they put me into contact with an accountant. The accountant formed the Ltd company on my behalf & he advised me to join the Small Business Flat Rate VAT Scheme. Due to my working part-time, roughly month on month off, we verbally agreed a fee payable for each weekly invoice I submitted, this was initially £30 but after 2 years rose to £40 per invoice. This system worked perfectly for me & I was very happy with the worry free service provided for me by my accountant. However in May 2012 I received an invoice from my accountant for £828.76. When I called for an explanation I was told that a minimum yearly fee applied to my account & that this amount was the shortfall. I explained that this was the first I knew of a change in our arrangement to a minimum yearly fee, he explained that I should have been informed & that it was a mistake on their behalf that this had not occurred (I mistakenly believed that this admission meant the fees did not apply as I had not been informed of them beforehand). He explained that the present per invoice arrangement was not financially viable for him & we negotiated a monthly fee of £100, payable every month & not dependent on how much I worked. This arrangement continued happily until May of this year when I received another invoice for unpaid fees for a total of £1400; this consisted of a shortfall in minimum fees for years 2008-09, 2009-10, 2010-11. I was shocked to discover that I now owed that was for me a significant amount of money (Last year I earned £12000). I questioned this amount on the basis that the accountant had been negligent in not informing me of these amounts in the years they occurred & that he had to accept some financial responsibility for this error. I was coldly informed that the agreement I had signed in 2005 therefore gave my agreement to the minimum fee arrangement on p.3 para 8. I obviously had no argument as I had in fact signed the aforementioned agreement. I was then informed that the shortfall in fees that were owed had formed part of the company accounts that had been submitted to Companies House & as they were a matter of record & I had signed the accounts I therefore again had no argument. Again I must accept some responsibility for not forensically examining my company accounts for my million pound business! However, I considered it unprofessional practice of my accountant to not inform me of these fees at the appropriate time & that there should be some renegotiation of these fees based on his mistakes. This made him angry & he threatened me with court action unless I paid the fees in full, any negotiation on this matter was refused & he obviously ceased to work on my accounts.
Needing to still be compliant with my HMRC payments I employed a new accountant (having informed him fully of the situation). His letter of professional clearance was rejected by my old accountant on the basis that no information whatsoever on my accounts would be released until the unpaid fees had been paid. My new accountant informed me that this was bad practice as it would prevent me from being HMRC compliant & that I should consider speaking to his regulatory body & seek advice/mediation for the problem. I checked the website of my old accountant & found that he was a registered member of the ACCA. When I spoke to the ACCA they could find no record of membership in his or his company’s name. I asked my old accountant for details of his membership to a professional association so that I could seek mediation as I believed this was my right, I also again offered to discuss a settlement between us. His response – See you in court.
What you should do is defend the claim on the basis that you have no contract with the accountant. In order for him to sue you personally there needs to be a contract between you and him. If not then his claim will fail. So you need to file a defence just saying that there is no contract between you personally and the Claimant and invite the Court to strike out the claim.
In any event even if there were he is falsely advertising he is a member of a body when he is not. this could be an offence in his own right.
Therefore at this stage you should file a defence saying there is no contract and ask the Court to strike out the claim as it has no prospect of succeeding.
If this answers your question, please take a moment before you leave and rate my service, which I hope has been excellent, it only takes a second and is an important part of the process. Otherwise if you need more information or help then please click reply. Alex