Too many barristers
Too many barristers
A chartered accountant has had his disciplinary appeal dismissed after he was stung for costs of £59,300 and a fine of £10,000 for not dealing with a client’s affairs in a timely manner – and he now has a further £23,322 of costs to pay on the appeal.
Manchester-based practitioner W had been issued with a severe reprimand and ordered to pay the combined costs and a fine of almost £70,000.
As reported in March’s ICAEW disciplinary orders, W attempted to appeal the decision, but his case was largely dismissed, in that the fine was reduced.
W was previously pulled up in front of the ICAEW disciplinary tribunal for a number of issues relating to the negligence of a client who was a member of a girl band.
The popstar client had engaged W in 2011 after the group disbanded and the client was in a dispute with the third member of the group. To add to their troubles, the accounting and tax affairs of the group were left in some disarray.
But by mid-2013 the situation had deteriorated. The singer had not filed a tax return for some years and it turns out HMRC had made very large assessments of her tax liability.
Things got so bad that HMRC issued a statutory demand for £648,513 and then petitioned for bankruptcy in 2013.
The singer pressed W to annul the bankruptcy. However, a year later the client had grown frustrated with W and went to another accountant. This resulted in a complaint to the ICAEW.
But it was W who was left singing a ballad, as the singer’s complaints were referred to the ICAEW’s Disciplinary Committee.
At the disciplinary hearing, W was found to have failed to submit his client’s tax return for four consecutive years, not dealing with the annulment of her bankruptcy order and not responding to a professional clearance request or providing handover information.
The Disciplinary Committee emphasised that “the appropriate manner of dealing with a client who is a high-flying business executive may be different from that of the proverbial ‘little old lady’”. It added that a successful pop star “who was not herself experienced in financial matters, would require professional handling appropriate to her circumstances”.
Faced with a sentencing order he deemed as “both excessive and disproportionate”, W decided to take the case to an appeal hearing, arguing that the complaint should have been made against the firm and not him.
For this reason, he didn’t think he should be held responsible for not responding to the professional clearance request because he had delegated the response to a subordinate member of staff.
As for his failure to submit the client’s tax returns, he contended that the Disciplinary Committee was wrong to find that he should have used estimated or provisional figures on his client’s tax return – which he deemed “inappropriate in the circumstances”.
W also criticised the Disciplinary Committee for not hearing expert evidence when it made its findings of fact.
However, the Appeal Committee dismissed W’s grounds of appeal. It said that the Disciplinary Committee had justified its findings and W had ample material to have submitted the tax returns on his client’s behalf with estimates or provisional figures.
The appeal committee said W should have engaged on his client’s behalf with HMRC, which had been pressing for returns for several years and was even threatening to issue a statutory demand with an estimated tax liability.
The Appeal Committee also said that W had told lies by letting his client believe that he was actively pursuing the annulment of her bankruptcy and leading her to assume that this could be achieved.
The Appeal Committee didn’t budge either on the sanction. It said the Disciplinary Committee was fully justified in admonishing W with a severe reprimand. But the Appeal Committee did rein in the fine from £10,000 to £7,500. However, the money saved will do little to cover the additional appeal costs W now has to pay of £23,322.50.
Chris Cope comments:-
Two points to make –
- This was an interesting case where both the Investigation Committee of the ICAEW and the member were represented by Counsel. The Professional Conduct Department of the Institute obviously decided that this was a sufficiently important case to be using external Counsel. It was certainly not a good outcome from the viewpoint of the member. Nor his barrister.
- The finding will now enable the former client to sue for negligence. Professional indemnity insurers cannot go behind these decisions and will have to pay up – no doubt very substantial damages. Will the member then be able to renew cover on affordable terms?
Accountant excluded after claiming false rail fares
The ICAEW has excluded an accountant who dishonestly claimed £164,368.80 being the cost of rail tickets, when she had received refunds.
The case centered on the events between February 2012 and September 2016, when Mrs ‘X’ was employed as a senior manager of a firm. During those years she claimed £164,368.80 in rail fares from Virgin Trains as expenses, without notifying her employer that she had received refunds for the tickets.
The British Transport Police contacted her firm after Virgin Trains raised concerns over the high volume of refunds claimed. After being contacted by the transport police, the firm looked into the use of the corporate card that Mrs ‘X’ was using and found a total of 373 refunds for £164,368.80 over four years.
Mrs ‘X’ was dismissed immediately after the firm found out about the false claims.
In her defence to the ICAEW disciplinary tribunal, Mrs ‘X’ said she asked for the refunds when she could not change the dates of the tickets as she no longer required them for her meetings in London.
However, she confirmed that she generally knew the dates in which she was going to stay in London, as she would book a hotel.
She also confirmed that she was aware of the refunds going in to her corporate Amex account and her credit card statements show she was using the card to make personal payments.
Mrs ‘X’ said her expenses and refunds were ‘out of control’ and that she should have stopped at the beginning but she got herself into a ‘vicious cycle’.
She confirmed she knew that claiming the tickets without submitting the refunds was fraudulent. She added that she intended to repay the money, but that she didn’t because she was struggling with debt problems. She had other difficult personal circumstances, including coping with a demanding job and raising a family.
The tribunal regarded the case as very serious and determined that the only penalty that it could impose was exclusion, although without a financial penalty because of Mrs ‘X’’s limited means.
Mrs ‘X’ had already said that, although she enjoyed her studies, she did not enjoy the job and had no intention ever going back into accountancy.
Chris Cope comments:-
This is a sad case. Clearly, Mrs X had many problems, not all of which are disclosed in the report. This makes reference to a number of ‘private’ disclosures, which clearly persuaded the tribunal that there were exceptional circumstances why Mrs X should not be named. No publicity of name in an exclusion case is very unusual.