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My accountant has been lying

My accountant has been lying

To cut a long story short my accountant has been representing the firm he worked for to us doing our companies books but in reality was doing them on the side and pocketing payment himself. His firm found out and suspended/sacked him and he fled abroad. Since then several irregularites have come to light and I know he has cost his firm a fair amont in charges.  

We have received fines from HRMC for non filing of returns now totalling over 3K which they are demanding payment. We had already paid him to file them but he didnt.

Is his company liable for allowing him to represent them? Its also come to light he had a CCJ which he had lied to his employer about, and I think this was the basis for his sacking/suspension.

Should he have been allowed to practise?

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28th Jan 2013 13:07

Contract

I would be interested to know who, in law, your contract was with - the 'rogue employee' or his firm?

Did you have a letter of engagement from the firm?  Did you get bills from the firm?  Did you make payments to the firm?

David

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By Jakarmi
28th Jan 2013 13:11

Realistically

How can the employer be liable? They were unaware of the employee's activities and he has defrauded them as well as you.

He would have been employed in good faith and as soon as they were aware they took the necessary measures.

Two things come to mind here;

Didn't you make a cheque out to the practice when making payment? Or pay by BACS? Why would you give an employee of a firm cash in the hand?

Secondly, you have received fines now totalling £3k. Didn't letters detailing fines before this come in the mail? It is unlike the Revenue to not send penalty notices out for Corporation and Personal Tax straight away so why didn't you query this before it got so high?

 

 

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By Old Greying Accountant
28th Jan 2013 13:35

If he gave sort-code and account number...

Jakarmi wrote:

Didn't you make a cheque out to the practice when making payment? Or pay by BACS?

...you wouldn't know whose account they were for!

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By Jakarmi
28th Jan 2013 13:42

I'm sure

Old Greying Accountant wrote:

Jakarmi wrote:

Didn't you make a cheque out to the practice when making payment? Or pay by BACS?

...you wouldn't know whose account they were for!

 

Don't you need a name for the account when paying by BACS for security. When I pay someone I need to say who it is as well as their details

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By Old Greying Accountant
28th Jan 2013 13:52

I don't know how much use that is put to ...

Jakarmi wrote:

Old Greying Accountant wrote:

Jakarmi wrote:

Didn't you make a cheque out to the practice when making payment? Or pay by BACS?

...you wouldn't know whose account they were for!

Don't you need a name for the account when paying by BACS for security. When I pay someone I need to say who it is as well as their details

... if any, and if he has an account in a similar name...

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By reilloc
30th Jan 2013 12:36

BACS

Jakarmi wrote:

Old Greying Accountant wrote:

Jakarmi wrote:

Didn't you make a cheque out to the practice when making payment? Or pay by BACS?

...you wouldn't know whose account they were for!

 

Don't you need a name for the account when paying by BACS for security. When I pay someone I need to say who it is as well as their details


Whilst you have to put a name in there is little or no checking of this; the money pages/programmes regularly feature stories about how a single digit error account numbers can lead to money being misassigned by the bank and it is not a simple process to get it back.
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By BKD
28th Jan 2013 13:35

Facts

As others have indicated, full (and genuine) facts will be required before any kind of meaningful answer can be given.

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By Flash Gordon
28th Jan 2013 13:53

Hadn't filed?

He'd obviously been preparing the returns as you'd have had to sign them off and wouldn't have just paid the bills without seeing anything - so why would he not then file them? After all that's the easy bit! All sounds a bit fishy to me....

 

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28th Jan 2013 14:04

Apocryphal

Makes me think of the story, which I heard when in HMCE, of the guy who would take cheque payment off traders having opened a bank account in the name H M Cande.

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By BKD
28th Jan 2013 15:00

Scams

Peter Bonetti wrote:

Makes me think of the story, which I heard when in HMCE, of the guy who would take cheque payment off traders having opened a bank account in the name H M Cande.

I seem to remember there was also someone that misappropriated cheques payable to Inland Revenue, doctored them and deposited them in his "Finlandia Revenue" account. I think he relied on the fact that by then the banks had stopped returning cleared cheques to the account-holder.

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30th Jan 2013 11:39

And there was certainly a

 

Peter Bonetti wrote:

Makes me think of the story, which I heard when in HMCE, of the guy who would take cheque payment off traders having opened a bank account in the name H M Cande.

I seem to remember there was also someone that misappropriated cheques payable to Inland Revenue, doctored them and deposited them in his "Finlandia Revenue" account. I think he relied on the fact that by then the banks had stopped returning cleared cheques to the account-holder.

And there was certainly a similar case in Ireland a few years ago.  The Revenue name is officially the "Revenue Commissioners".  When cheques were used, some people abbreviated it to "Rev. Commissioners".  One opportunist opened a bank account in the name of "Reverend Commissionari", the local representative of an Italian religious order.  Hastily scribbled cheques with the suitably abbreviated payee name somehow found their way into the bank account.  A large sum (£50,000+) was withdrawn in cash by the fake priest.  It was a while before the bank reconciliation in the Revenue threw up the discrepancies and by then, the cashier who had paid out the cash had left the bank.  Nobody was ever prosecuted for the crimes although it was very likely an inside job.  

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28th Jan 2013 14:08

Sounds a bit fishy to me

 

To cut a long story short my accountant has been representing the firm he worked for to us doing our companies books but in reality was doing them on the side and pocketing payment himself. His firm found out and suspended/sacked him and he fled abroad. Since then several irregularites have come to light and I know he has cost his firm a fair amont in charges.  

We have received fines from HRMC for non filing of returns now totalling over 3K which they are demanding payment. We had already paid him to file them but he didnt.

Is his company liable for allowing him to represent them? Its also come to light he had a CCJ which he had lied to his employer about, and I think this was the basis for his sacking/suspension.

Several things spring to mind here.

How do you know he was doing them on the side & pocketing the cash?How do you know about the irregularities and what he has cost the firm? Have they discussed it with you?Odd that the first time you hear of it the fine is already £3K!!!! these sound like SA penalties, but you state it is a company.How do you know about the CCJ?Didn't the accountancy firm chase overdue records, or payment?Didn't you speak to anyone else within the firm (to make appointments, etc)

Hmmm ... there must be lots you haven't told us!

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By Flash Gordon
28th Jan 2013 14:15

I wondered why my cat was hanging round my pc...

He's obviously smelt the fish!!

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By BKD
28th Jan 2013 14:54

Fines

To Shirley in particular, CT penalties could easily be £3k or more. If there are a number of outstanding returns then the higher rates of penalty (£500 and £1000) may have been applied. Add to that possible tax-geared penalties for returns more than 6 months late.

But as you and others have said, something doesn't quite add up here. It is possible that the accountancy firm (or some other address) was the registered office of the company and so the company did not receive the penalty notices (and demands for payment of tax if appropriate) - but one would expect such notices to have been passed on to the client for immediate attention. Indeed, whether or not that is the case, the accountancy firm ought to have received copy notices and one would have thought they would immediately have suspected something was wrong on receipt of the first one.

Luckily, I love fish.

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29th Jan 2013 14:00

In answer to some of the questions:

He was pocketing the cash. He had set himself up as a "legitimate" accountant on the side unbeknown to his firm. Previously he had been running by himself as an accountant, mainly doing bookeeping and self employed returns. When he started at his new firm he was supposed to send letters of engagement to all his existing clients and bring them across. He sent out the letters saying this, but instead continued to trade out of his house. All his existing clients continued to pay into the existing bank account as no new details were given. Fake receipts knocked up on his computer were given out. I have spoken to his old boss, who is a partner of the firm he was working for and this has been confirmed. Also he confirmed some of the incurred fines.

Our companys trading address was indeed the address were it was set up, and he was given all the mail from HRMC which he was "dealing" with, i.e. doing nothing about. Apparently accoding to him it was a HRMC computer error issuing a non payment of partnership return fine.

Basically we went from a partnership into a limited company. The fines are from the pertnership. We were unaware that he had failed to inform HRMC of the cessation of partnership, thats why they are chasing for returns. The fines relate to when he did do a return, but never filed it? Because it was taken on faith that what that he was doing what he was being paid to do, its only since he fled abroad that its come to light. Our file at his parent company is empty, he was doing it all on his home computer.

He was the point of contact for his firm, he had been practising for many years and his clientbase was mainly self employed people.

His old boss is at a loss for a lot of his actions. Why he didnt file it is a mystery, as he did do the partners s/e returns so must have done the partnership return. He sent an email from Thailand claiming he didnt file it as he was awaiting a UTR from HRMC. He sent that yesterdya! he has been gone now for nearly a year!

Really the buck stops with him, but shouldnt his firm take some responsibility as they themselves have admitted he lied when he signed with them about his past indiscretions eg: his CCJ, yet they didnt check him out but let him carry on regardless. Dont they have to check their employees out?

When we became limited all the paperwork etc. went through his firm and payments were made to them, its the period before of the partnership which incurred this  fine £1200 per partner. His previous company have had quite a job sorting all his mess out, and its cost them thousands, apparently we weren't the only ones with these fines.

 

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By BKD
29th Jan 2013 14:25

Sounds like you don't have a leg to stand on

(as far as any action against the firm is concerned). Your engagement was with the individual, you continued to pay the individual. If you believed that your engagement was with the new firm, did you not smell a rat when you were asked to continue paying into his bank account?

Your comments above display an alarming level of business naivety on your part.

And there's a whole lot that still doesn't stack up.

Having said that, David W is our resident expert on such matters, so I'd be keen to hear what he has to say on the matter.

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29th Jan 2013 14:34

Legless

I'm with BKD on this one.  I cannot see that there is evidence of a contract between you and the firm.  I assume the 'rogue' accountant was an employee of the firm (as distinct from a partner in the firm).

You would have an uphill struggle, in my view, to persuade a court that the actions of this employee created a contract with the firm and placed a duty on the firm towards you.

By all means have a chat with a solicitor about it - but don't count any chickens!

David

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29th Jan 2013 15:26

It still doesn't make any sense
You carried on dealing with the individual and paid him, rather than the firm.The partnership penalties must have gone to you direct, but you didn't question them?The firm didn't query why they hadn't received your records, or payments.The firm (and you) also ignored the penalty notices?Most of the client base was self employed people, who would have received penalty notices along with the firm, and everyone ignored them???

As BKD says, something doesn't stack up!

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By Flash Gordon
29th Jan 2013 15:33

@ Shirley

Yup, I have a large ginger cat stretched out along the edge of my desk again dribbling - Whiskas for starters, a nice big helping of fish for main!

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29th Jan 2013 15:53

Thanks for the answers:

I tried to keep it short but in summary I am basically trying to help 2 friends who unfortunately have dealt with a bad accountant. I didnt get involved in the business until recently.

Yes they did carry on dealing with the individual. They aren't stupid but have shown a naivety in dealing with him. They went from a one off yearly payment for a s/e  return, to a partnership return, and paid him directly. It was only when they formed the Limited Company that they paid the firm directly and had contact with them.he was giving out receipts/invoices all letterheaded etc. and my friends were taking this on good faith. He was continually questioned, one excuse after another, then did his disappearing act. By this time the fines had already started. But yes, I do get your point it should have been acted on sooner, but

Yes, they trusted the advice this individual gave them yes they did receive the paperwork penalties and went to him for advice, and were basically told to ignore them and he was dealing with it.Penalty notices went to the individual accountant and he was ignoring them, and stalling his clients questions. So yes they are guilty of ignoring them.

No the firm have queried why they haven't received payments for the Partnership as they have no record of it? The individual concerned portrayed he was representing them when he wasnt.

After reading the replies I understand that the firm he worked for having only been involved in the Limited Company dont have a responsibility to the activities of the Partnership.

So the individual concerned is where the buck stops. The only reason I started this thread was because he was suspended so quickly, and for not checking his background and past activities, are the firm responsible for allowing him to practise as an accountant or should they have vetted him more throughly. Is none of this against any code of conduct amongst the various accounting bodies. And if it is I do get it that it should be directed at the individual involved rather than the firm he worked for.

And yes, they are both guily of being naive, believing what they were told, of not getting correct paperwork, receipts and not questioning the payments. They have both been dealing with this individual for years, he had done their returns and had no previous problems, so they didnt assume anything was up. Their is a reason self employed pay accountants to do their returns and they do trust their accountants.They both know being so trusting was pretty stupid now after the event....

Im sure my two friends aren't the first to trust an accountant and have it backfire on them, and they will be paying for it as HRMC want their money.

I was just after a bit of advice from the forum as I am not aware of the code of conduct of accountants and thought you guys would be the ones to ask.

Thanks for all your help.

 

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29th Jan 2013 16:05

Anybody can be an accountant

Anybody can call themselves an accountant (in the same way that anybody can call themselves a bricklayer).  There is no reason why a person with a CCJ (or a criminal record) should not act as an accountant offering services to members of the public.

A person does not have to be a member of a professional body, or follow any code of conduct, to be an accountant (although they should pay a registration fee to HMRC and comply with the Money Laundering Regulations).

The firm presumably got rid of him because they found out that he had he lied to them when they took him on - but this has nothing to do with you (or your friends).

And yes, you (and your friends) are not the first people to be 'taken for a ride' by a 'rogue' accountant!
David

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29th Jan 2013 16:02

Thanks David

I was under the impression they needed to pass exams?

 

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By Old Greying Accountant
29th Jan 2013 19:16

I think ...

City Decor wrote:

Thanks David

I was under the impression they needed to pass exams?

... this is a common misconception, which to my mind needs addressing.

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30th Jan 2013 11:07

Passing exams, does not make you perfect.

Old Greying Accountant wrote:

City Decor wrote:

Thanks David

I was under the impression they needed to pass exams?

... this is a common misconception, which to my mind needs addressing.

Passing exams means nothing. I once  worked for a Chartered Accountant who was given a prison sentence for making off with clients' tax rebates.

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30th Jan 2013 11:35

It's a Mad, Mad World!

Andrew Dinkenor wrote:

Passing exams means nothing. I once  worked for a Chartered Accountant who was given a prison sentence for making off with clients' tax rebates.

And I once worked for a chartered accountant who went bonkers and spent a year in a mental asylum. Upon his release he returned to practice, and was known as the only Certified Chartered Accountant in town.

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30th Jan 2013 11:58

hha haa

Good one that!

 

I thought all "certifieds" were crackers!

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29th Jan 2013 16:05

False impression

Sorry, no.

David

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By BKD
29th Jan 2013 16:13

Trust

Im sure my two friends aren't the first to trust an accountant and have it backfire on them

Sadly, they're unlikely to be the last.

At risk of rubbing it in, you say that the individual was continually questioned, with excuse after excuse. So why did they not take the matter to one of the partners (I don't know of a single firm that does not have an engagement partner for each client)? I also don't know of a single firm where, even though the clients may have been introduced by employees, the partners do not deal with the client at some point. And the partners ought to have noticed something awry with their WIP/debtors/profits when fees were being diverted, on what is alleged to have been a large scale, into the individual's pockets.

Sorry, but that fishy smell is lingering.

It is of no comfort to you and your "friends" but if the fraud (for that is what it is) is as extensive as you suggest, the individual should certainly cop it if he ever sets foot again in the UK.

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29th Jan 2013 19:05

reasonable excuse

I am with the others re liability of the accountant, but you may be able to appeal to HMRC against the penalties,  claiming reasonable excuse on the grounds that you had taken all the steps you thought necessary to complete the accounts and returns and you believed they had been filed by the person you paid to do the job, who was supposedly a professional person and was supposed to know what they were doing....

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30th Jan 2013 12:07

Re: reasonable excuse

Thanks will give that a go.

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30th Jan 2013 11:28

Thanks for all the replies,

yes they were stupid for being fobbed off, he had worked for several large accountancy firms and up until last year no major problems.

We can put it all down to experience, self employed people do tend to trust their accountants obviously too much, they are more pre-occupied with working than paperwork

I doubt he will set foot in the UK for a while, as it would all catch up with him im sure. I take the points given, mods please end thread.

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By BKD
30th Jan 2013 11:40

Trust

City Decor wrote:

 self employed people do tend to trust their accountants obviously too much,

I disagree. Clients should be entitled to place complete trust in their advisers.

It is just a sad, and inevitable, fact that there will be the odd bad apple out there - in any trade or profession. But trust should not be confused with naivety and failure to act responsibly oneself. In this case, it seems that no trust was placed in the accountancyfirm - all of the trust was placed in one individual, including the continued payments to that individual. It is remarkable that there appear to have been so many clients that were as naive as yourselves. Most clients that have any common sense would have suspected something wrong very early on. Whilst this has clearly been an unfortunate experience for you, your implicit remark that accountants cannot be trusted is not welcome on this forum.

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30th Jan 2013 12:03

When they first signed up with him he was running his own accountancy firm with another partner, and this was the case for many years, so they trusted him.

My comment does not mean all accountants, the point I was making is that when the only dealing they have is a once a year tax return that normally is processed with no problems that the will to look deeper into everything is not really their.

I know not all accountants are bad, but look at some of the replies, they are hardly glowing recommendations...

They know they were too trusting/stupid but all I was after was a code of ethics that accountants abide by, that was my question.

You get rogue traders in any profession, and I know plenty of self employed people who do trust their accountants implicitly, in THIS case it was far too much.

Not once in the thread has anyone explained a process to complain about this individuals behaviour, to someone like ACCA, all that has been said is they were stupid to trust him, anyone can be an accountant, hardly constructive. Not one comment to explain how we could actually complain and stop him prcticing again.

Thanks for the feedback.

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30th Jan 2013 12:16

To Clarify

City Decor wrote:

When they first signed up with him he was running his own accountancy firm with another partner, and this was the case for many years, so they trusted him.

My comment does not mean all accountants, the point I was making is that when the only dealing they have is a once a year tax return that normally is processed with no problems that the will to look deeper into everything is not really their.

I know not all accountants are bad, but look at some of the replies, they are hardly glowing recommendations...

They know they were too trusting/stupid but all I was after was a code of ethics that accountants abide by, that was my question.

You get rogue traders in any profession, and I know plenty of self employed people who do trust their accountants implicitly, in THIS case it was far too much.

Not once in the thread has anyone explained a process to complain about this individuals behaviour, to someone like ACCA, all that has been said is they were stupid to trust him, anyone can be an accountant, hardly constructive. Not one comment to explain how we could actually complain and stop him prcticing again.

Thanks for the feedback.

To Clarify Accountants carrying the Chartered Badge do have a code of ethics..it is to be found in their rule books available on the Web

They are also required to have professional Indemnity insurance, etc etc.

the term accountant is not protected and you could set up an accountancy firm tomorrow with no qualification or experience (and plenty do). You would not be able to call yourself a CHARTERED accountant as that term is protected.

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30th Jan 2013 12:09

Penalties are just one of the extra costs of buying as cheap as you can.

Some people prefer to learn the hard way.

If he is not a member of a professional body you really do not have any means of redress as I'll bet there was no PI cover either?

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30th Jan 2013 12:13

Online filing

Perhaps it might be an idea for all of us to think about this, not from CIty Decor's point of view but our own and our clients'.  They do trust us, hopefully with very good reason.  Can we be sure the team members are all working for the team?  On the tax return front, most clients do not know, if we have not told them, there is an electronic receipt by way of an email from HMRC.  Perhaps it might be sensible to draw this to clients' attention and agree to forward this receipt to them.  It is after all the end of the return cycle; they have provided the data, you have processed it for their approval, they have authorised, you filed it, HMRC acknowledged it.  It gives them peace of mind that you have finished the job.

It's great to see The Cat and Peter Bonetti being mentioned in the same goal posts.

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By E Scott
30th Jan 2013 12:13

and the moral is....

if you stick to the qualified and regulated accountants (CA's & ACCA's in the term of practice) then you should have peace of mind that a) they are regulated; b) maintain certain CPD levels to keep up to date; c) are insured.  Even if you do come across a dodgy one you at least have a professional body to complain to and PI cover to claim against!

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30th Jan 2013 12:17

The Cat, Peter Bonetti and Penalties

I think I am getting end of term fever.  I cannot cope with these Stamford Bridge 60's flashbacks.

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By puzzel
30th Jan 2013 12:43

a dodgy one every minute

Saw a potential client on Monday gone, and managed to get site of a letter from his current "accountant".

I.M. Mistery - honest I am not pulling your leg.

No membership or practice number, no wonder he only gets charged £300 for a takeaway business and tax return.

Don't think I will be back to them, that is unless I want some fish & chips 

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30th Jan 2013 13:46

How many accurate accounts ?

puzzel wrote:

Saw a potential client on Monday gone, and managed to get site of a letter from his current "accountant".

I.M. Mistery - honest I am not pulling your leg.

No membership or practice number, no wonder he only gets charged £300 for a takeaway business and tax return.

Don't think I will be back to them, that is unless I want some fish & chips 

So are we harbouring a potential Greece-style level of under-reporting and collection of tax ?!

I exaggerate somewhat !

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30th Jan 2013 13:06

Trust

I believe very few are cheats. Shocked they do not need qualifications but pleased to say I have trusted my accountant for 24 years and do not intend changing!

 

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30th Jan 2013 21:17

Quick note: thread closed

Hi folks, 

The OP has requested this thread be closed (apologies for the delay - it wasn't spotted as soon as it was posted) and it does appear to have run its course. If there are any unresolved points please feel free to start a thread in the relevant discussion group or Any Answers.

Thanks!

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