ClearSky, liabilities shock and poor advice.

[contractUKonline]

Hi all,

I'm really hoping someone may be able to help. I've been using Clearsky for about a year, I joined as they touted themselves as contractor specialists, I was on their assure package hoping that they would take care of everything, hassle free and provide me with the right advice.

I'd hoped it would be as simple as you've been paid X, you need to put aside Y to cover everything. However this hasn't been the case.

Every month they send me management accounts, this advises me of what I can withdraw from the company broken up into corporation tax, VAT, salary, dividends and expenses. However recently I've been hit with a personal tax bill and a student loan bill which I'm only hearing about for the first time.

• They've not advised me to put aside money for these personal tax liabilities per month (even when prompted)
• They've also not advised me to put aside money for my student loan.

I've literally asked "I have X in the company account, what can I withdraw to cover everything being prudent." I'm usually directed to my management accounts, sometimes I'm offered a excel spreadsheet calculator that I'm expected to fill out. What I'm not given is clear personal, up to date advice.

What I'm interested in is what money can I take home as "mine," that's it!! (I don't expect to be advised only part of the story).

So, all of a sudden I've been hit with bills that need to be paid from somewhere! I'm so upset that I've not been given the advice I need to cover myself. I feel like I've done everything within my power to stop this exact situation from happening. I've not withdrawn the full amounts and I've double checked directly with my accountant if I need to cover anything else. I've been told that they only offer "company liabilities" and "monthly personal liabilities are not part of the service" - which strikes me as so strange. Why would I want to discover six months down the line, "oh by the way, you need to pay X amount in tax, and more money in student loan"

Has anyone else experienced these personal liabilities "shock"?
What I don't understand is why I wouldn't' be advised about ALL my liabilities!
Honestly, I expect them to refund my fee over the past year to cover these costs - would some of you expect this / feel this way?

ANY advice would be helpful.

[northernladuk]

Oh.. Might have dawned on me. Deleted my response.

[RonBW]

I've been told that they only offer "company liabilities" and "monthly personal liabilities are not part of the service" - which strikes me as so strange. Why would I want to discover six months down the line, "oh by the way, you need to pay X amount in tax, and more money in student loan"

Has anyone else experienced these personal liabilities "shock"?
What I don't understand is why I wouldn't' be advised about ALL my liabilities!
Honestly, I expect them to refund my fee over the past year to cover these costs - would some of you expect this / feel this way?

ANY advice would be helpful.

This sort of makes sense to me - who is paying the bill for their services? If it's you, then you should have given them all the information they need (did you tell them you had an outstanding loan?) ; if it's the company paying then they will only deal with the company things.

I would review the engagement letter you have with them and see what should be covered. Whatever happens, I hope you find the money to pay your bills.

[northernladuk]

This sort of makes sense to me - who is paying the bill for their services? If it's you, then you should have given them all the information they need (did you tell them you had an outstanding loan?) ; if it's the company paying then they will only deal with the company things.

I would review the engagement letter you have with them and see what should be covered. Whatever happens, I hope you find the money to pay your bills.

That was my first thought and more or less what I posted. They are your company accountants not your personal one and you are confusing two completely separate entities. You and your company.

The only thing I did wonder is what kind of tax planning might they have given the OP to avoid hitting thresholds which trigger this extra tax. If the tax is triggered at a certain level I'd be telling the accountant who might suggest only taking a certain amount in Divis to keep under it or something. That said I'd still be aware it's up to ME to take the right amount of money out even though the accountant advises what the maximum available is so it makes me come round to thinking that the OP is very much responsible ultimately.

I have a feeling Clear sky might be busting to set the record straight here but won't because he's a customer

I might have been tempted to ask another couple of friendly accountants for advice rather than taking mine to task on a public forum first.

[TheCyclingProgrammer]

When I engaged my current accountant I had to sign two engagement letters, one personally and one as director. I'm primarily paying for accountancy services for MyCo however my accountant will give me some personal tax advice within reason. I prepare my own tax returns.

I agree with the above that you should check your engagement letter to see what services were actually being provided.

That said, whilst they might not necessarily be able to give you full personal tax advice as your company activity isn't necessarily enough information to get the full picture of your personal tax situation, I would have at least thought they would have mentioned to you basic information like personal tax thresholds, rates and to be aware of when you might incur income tax or loan repayments, even if it was just a brief memo at the beginning of the tax year.

[SueEllen]

@contractukonline company accountants are not your personal financial advisors. In other words it is up to you to understand your personal tax and other liabilities.

If you had student loans you needed to pay back then the fact you were unaware of them is your fault not theirs. The Student Loans Company makes it very clear to those who took out the loans the criteria for paying it back.

[northernladuk]

You say you've not drawn the full amounts so you've got a warchest? If you are going to hit your tax breaks surely you can just ask them to help you with a directors loan to pay the extra tax and pay it back in the next tax year?

[Fred Bloggs]

I can understand the OP's concerns. Most, if not all of this will be settled when he does his personal tax return. Are Clearsky doing this for the OP? It is the OP"s duty to give Clearsky the complete picture when (if) they do his personal tax return. I don't think the OP has much to worry about at the moment.

I advise the OP to switch accountants to one that supports FreeAgent, this kind of thing can be shown in real time (providing FA has all the information it needs of course) on the FA pages.

[Michael at BI Accountancy]

Every month they send me management accounts, this advises me of what I can withdraw from the company broken up into corporation tax, VAT, salary, dividends and expenses. However recently I've been hit with a personal tax bill and a student loan bill...

Got to say I'm not really a fan of companies providing the so called monthly statement/payslip.

We've had a few clients come over in dire situations because they have taken funds based on the above and had nothing set aside.

I agree that you as the person responsible for your own personal taxes should be more aware of potential liabilities, however I also feel it's our job as accountants to make clients aware of this. Pointing out if dividends are going over thresholds, what taxes will be paid in certain thresholds etc

Do I think Clearsky will refund you...very unlikely.

Your next step would be to get a more personal accountant and preferably one that uses FreeAgent!

[Darren at Fox-Bartfield]

Tax

Agree with Michael, dividend/tax planning should be part of the service especially when in full possession of the facts using a tool such as Freeagent.

Certainly worthwhile checking the scope of their engagement and what's included in the service as shown on the website.

The monthly statements/slips are all ok but they need clarity and explanation around it rather than extracting everything from the company without any further details such as personal liabilities, etc.