Hello,
I hope you are well. I am a little lost and seeking some guidance as to where I stand in respect of my rather difficult situation.
I am currently employed in an ICAEW regulated firm and have come to suspect that all is not quite what it seems to be. The practice appears to be a front for, frankly, tax evasion. The extent of the evasion I believe is going on and has been for some time stems from gross misconduct and negligence on behalf of the Owner of the business. It has not gone as far as deliberately assisting known or suspected criminals to hide money, but to my mind Clients are misguided into becoming unknowing criminals through following advice given.
To give you an indication of what goes on:
(1) Unsubstantiated debits to the profit and loss accounts in order to reduce total taxable profits, usually credited to the DLA to allow for further profit extraction free of tax.
(2) Recognition of Goodwill et al on the incorporation of a Company with a corresponding DLA credit despite not recognising a Gain on the relevant individuals ITSA Return.
(3) "Assistance" in restricting VAT payable for a quarter for clients "in need" by either deliberately accelerating input VAT or deferring output VAT.
(4) Further assisting "in need" Clients obtain financing from HMRC via raising an invoice between two associated businesses with one on cash accounting and the other on invoice accounting with no basis for charges and ignoring the rules for invoice accounting relating to unpaid input VAT over 6 months old.
(5) Introduction of assets to the Company (which had been incorporated long ago) with a DLA Credit at a significant over value and even subsequently claiming AIA (despite from a connected party)
(6) Disregard for review of whether or not Goodwill falls within the IFA regime.
(7) I have yet to see a P11D completed, or P11D(X) despite being present for a reasonable period.
(8) Unsubstantiated Use of Home and Mileage claims.
(9) Mileage claims at SMRS where the cars are on the balance sheet.
(10) Disaggregation of businesses to avoid VAT and to allow for "the cars to be used". Essentially the sole trade / partnership being made to incur losses then carried back against previous income whilst the Company makes significant profits.
(11) Claiming input VAT chargeable over the life of an operating lease on day 1 of the lease instead of in accordance with the lease term.
(12) Ignoring Long Funding Lease rules re Capital Allowances.
(13) Capitalising a Partner Member's "time" and then claiming AIA on said time as an asset creating a substantial Income Tax loss and then claiming a rebate. Nb no corresponding "business" or sales made on the relevant Partner's own account. .
(14) Suggesting that a Company improve its results by accounting for Revenue on a WIP contract almost a year in advance.
(15) Declaration of wages to Wife and Children up to the Secondary Threshold without regard to other income or reporting on P35.
(16) No CT600A completed and overdrawn DLA "hidden" in debtors, possibly over several years.
I can't accept that Practice is supposed to be like this 'at the coal face' as I am often told. Many clients simply follow what they are told to do and I firmly believe they do not know that they are being guided into a terrible situation.
Thoughts, guidance and suggestions are all welcome. Please. As you may have guessed, the MLRO IS the owner.
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Replies (92)
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If you suspect money laundering is taking place then you should report it to SOCA, this can be done online here - http://www.hmrc.gov.uk/mlr/reportsuspicion.htm
If it's more a case of bad practice then I would take any evidence you have to the ICAEW and let them decide on the best course of action.
Time to Move On?
Even if this were just bad practice surely if you are unhappy with the situation you should think about your escape route asap.
I know these are difficult times. Perhaps you should think about going out on your own. Pronto.
I would not start a war
Just look for another job.
EDIT: your gut instinct is correct: other practices are not like this.
Depending how far you wish to push this but I would advise contacting the 2 numbers below with the details. Both are confidential
TAX EVASION HOTLINE 0800 788887
VAT EVASION HOTLINE 0800 595000
.
As above these are very serious allegations and not "normal"
I have met a firm like this, not an ICAEW firm, but a firm just like it. Took a couple of clients off them and it was very nasty indeed to the extent I have refused to take any more, not just the attitude on take over but the re-eduction process for the clients was very painful. To act like this you have to be incredibly arrogant and in essence to believe you are cleverer than everyone else, this will naturally extend to much inferior people like employees who should no doubt shut up do as they told.
I would get out now, or you will end up being unemployable in the local area when word gets out you have worked for Cowboy and Co.™
Then once safely in new employment, I would write it all down and assuming you are a CA ring up the ICAEW ethics helpline and say "HELP" and let them guide you into the appropriate action. They have no duty to report you, and are there to help with things just like this. I wouldn't tell your new employers what you are upto however...
I've slept on this
I don't think that this is Money Laundering in the first instance as there are no monies to Launder. The fact is ill gotten gains (even without client knowledge) are created AND THEN laundered via "methods" noted under the sparkly veneer of the ICAEW.
Does this make it all the more serious or am I blurring the lines?
Move on
In this instant Money laundering does not mean actual laundering of funds. Forget about blurring the lines. Start looking for new employmnet and get out as soon as possible.
Get out
I know that's so easy to say, and hard to do, especially in this climate, but you need to get out, and also report. Lots of good advice already given.
I think there is a MLR implication here: the tax evaded is a proceed of crime because deliberate tax evasion is a crime. However, am I right? Because Mr Client doesn't know there is a crime - he thinks the accountant is being really clever and saving him money - which is what he pays him for after all.
Arguably then the clients - if innocent - are not committing crimes - but perhaps the fat fees the owner is taking represent the proceeds of crime - being paid to produce "clever tax efficient schemes" which are in fact nothing but dishonest tax evasion.
Either way, your duty ends (I believe) but reporting to the MLRO - which maybe you should do with your resignation letter.
Whether you report or not you need to
a) Take Advice from ICAEW ethics
b) Get out
Good luck - not an enviable position but you have our support.
Leave
Get out, Blow the whistle hard and dont bury your head in the sand any longer. Also dont aasume that all the clients are innocent bystanders, too many out there are only interested in reducing their tax bill and some even beleive that the accountants only purpose is to fiddle their tax. Firms such as this make it difficult for honest practices with clients tales of "my accountant makes my tax bill lower"
I remember a client saying to me " I pay you to do what I tell you to do" my response was "the door is behind you please dont slam it as you leave"
protect yourself
Depending on your personal circumstances you may have to stay here until you find another job.So try and keep a trail of all your own work.Photcopy and back up.
Make sure that any "sus" dealings cannot be counted against you,in other words the partner may say that you made a mistake in not inputting sales or something similar.Even at the risk of your own job do not do anything that you are not comfortable with.
We have all lost clients to accountants like this and they get away with it year after year.
As a warning some of the things you have outlined are well thought out and deliberate and I suspect that the partner will have answers ready which may well apportion blame to staff.
I am a coward and would not see myself as a whistle blower so often they get an awful deal and it is their life that goes pear shaped so think carefully how you deal with this aspect.Agree withccassociates the clients will be well aware of whats going on and probably paying more for such services
Good luck it is a horrible situation to be in
As I commented earlier phone the HMRC & VAT confidential evasion hotlines. It is they that have suffered as a result of the "dodgy dealings" and they who should be taking action
You state that the firm is governed by ICAEW. Be warned that if you make a written complaint to them they would reveal any correspondence were theyto take action and your name would be revealed. In which case you need to be long gone
Like Monsoon said, it is not easy to simply find another job. Therefore you find yourself in a very difficult situation. Can you not blow the whistle, resign and then claim unfair dismissal?
I wish you the best of luck!
Christopher Lunn
Perhaps you could print out the details of the Christopher Lunn case for the partners to see. I really can't see how a firm could carry on as you've described given what's allegedly happenned in that case. They must be fools.
Summary
1, it is money laundering by the accountant - tax evasion
2, Common behaviour amongst dodgy firms of which there are many
3, There is no support for you when placed in these awkward situations from the state or professional bodies
4, HMRC, SOCA and professional bodies will not be interested.
5, expected professional behaviour is that you resign (probably best option for you too otherwise you will become involved.
6, your choice whether you report or not (under no obligation as employee except to MLRO and what would be the point of tipping off) If you do use the tax evasion hotline team (can be done by post too) would do so anonymously.
7, This behaviour needs stamping out trouble is no one has the will.
Best option- as above - bite the bullet and resign - it will turn out alright.
Run now....this is serious!
Hi
You need to leave this firm as soon as you can. The things you describe are very bad. By not leaving and 'turning a blind eye' you could go down with your dodgy boss when his is found out....which he will be.
A) Leave as soon as you can
B) Report them to ICAEW
C) File a SOCA report to cover yourself.
If you simply had an idea that's things probably were not great, then that would be enough for most of us to question whether we were with the right firm. If you know these things are happening and fail to sort it out, you are basically condoning his actions, which from your post, you don't want to do.
Yes it is hard at the moment to find another job, but that should not be enough of a reason to work for a criminal! This is not good tax planning methods, this is complete law breaking......run!! NOW!
Some of the points you mention are not great....but a few are classed as fraud. When your boss gets caught...he will be in a lot of trouble!
You really do have my sympathy with this!
ICAEW and tipping off
I am sure that David Winch can confirm this, but surely if you contact ICAEW in writing with your concerns and state in the letter that you have made a SOCA report, then ICAEW could not forward your complaint letter to your boss as they would be guilty of tipping off?
I agree with everyone else that you need to leave now.
Standard Chartered Bank
I like the title - Dirty world of Small Practice. I recommend you to read about similar situations involving Barclay's Bank, Financial Services Authority and Standard Chartered Bank.
Thanks all
Thanks for the comments all.
Moving on is of course my intention. I couldn't see any other way before I even opened this thread.
I very much like the thought that I can report the firm to the ICAEW and not be identified due to ML tipping off rules. I think that may bet the angle that I approach from. If anyone can confirm this is correct that would be fantastic.
I suppose there is always benefits and CABA if I am between a rock and a hard place!
ICAEW complaint
You will probably find you are outed and dragged into this for no result, embarrassed at the very least. They will have no clue about confidentiality, discretion or concern for you.
I would not bother with professional bodies complaints procedures.
The reality is no one is really concerned - you just have to do what you think is the professional and the right thing to do - without detriment to yourself.
It is your self respect you are maintaining as I will bet you nothing becomes of your complaint.
Been there
I was a tax manager for 7 months in a similar situation. Leave as soon as you can.
The Institute will not be interested. In my case HMRC were aware of a lot of issues involving the senior partner and I heard later through a Revenue contact that they were considering using a team from Manchester to gather all files but staff cuts put it on the back burner.
Other firms in the area will become aware of what is happening and if you stay too long this will affect your employability.
Good luck
Disheartening
It is somewhat disheartening to hear so many of you say that the ICAEW can't be trusted to uphold the values that they extoll in marketing, advertising and teachings..
Can they really turn a blind eye to such practices?
What would I do
Well you need nerves of steel:
GO up to the boss and give him that list backed with numerous examples and say...did you know this is wrong?? : he only has 2 answers
1) I didnt know this was wrong, thank you for pointing this out, its why I employed you, please ensure everything is done correcctly in future.
2) Yes I do lots of illegal things, it means I can charge the clients more and if it all goes pear shaped you are getting the blame.
If point 1 you are ok if point 2 you have to tell him to stop or
a) The clients are going to sue him
b) HMRC WILL find out and tear his practice apart
c) It will all end in tears etc
d) ICAEW will nail him
Then you tell him you are only doing things correctly as you are an ACA and if he says you have to be dodgy like me, refuse. Then he fires you...hello employment tribunal and £20k compensation
Then get yellow pages and starting at A call all firms of accountants and ask them if they have any work for an ACA...I reckon by the time you get to D you will have a job
I bet theres lots of people reading this could do with someone like you to help them...we could
Tom
Bold but....
Well you need nerves of steel:
GO up to the boss and give him that list backed with numerous examples and say...did you know this is wrong?? : he only has 2 answers
1) I didnt know this was wrong, thank you for pointing this out, its why I employed you, please ensure everything is done correcctly in future.
2) Yes I do lots of illegal things, it means I can charge the clients more and if it all goes pear shaped you are getting the blame.
If point 1 you are ok if point 2 you have to tell him to stop or
a) The clients are going to sue him
b) HMRC WILL find out and tear his practice apart
c) It will all end in tears etc
d) ICAEW will nail him
Then you tell him you are only doing things correctly as you are an ACA and if he says you have to be dodgy like me, refuse. Then he fires you...hello employment tribunal and £20k compensation
Then get yellow pages and starting at A call all firms of accountants and ask them if they have any work for an ACA...I reckon by the time you get to D you will have a job
I bet theres lots of people reading this could do with someone like you to help them...we could
Tom
Surely I'd be tipping him/her off then?
When I question a course of of action I am simply told that this is what it is like 'at the coal face'.
Don't forget
to write your own reference on their headed note paper and sign on behalf of the owners name (no I am not advocating forgery).
I really can't understand why you are still there. The signs must have been obvious from the start.
Reminds me of that film with Tom Cruise "The Firm". Maybe that's where Christopher Lunn got their ideas from.
Benefits
probably not - been there
unless the rule have changed?
Because you gave up your job voluntarily and you will not be able to tell them the reason why, because you will be in breach of your employment contract.
Bold move
no its not tipping off...where did I say in my post if he didnt do what I tell him I would report him to HMRC....I said they will find out...thats different
I get it here with clients all the time...can I just put this in my accounts..NO! why not ...HMRC will find out....how sure are you...answer 100%...because what i dont tell them is that its 100% because I will report them...
Its not like that at the coal face and if you cross the line it will end in tears. Clients push you to cross it all the time and you have to say no, sorry cant do that, normally they say...thats ok, didnt think you could...the problem is I dont think your boss has the balls to say no to the clients.
You have to say, sorry boss no its not like that at the coal face...I have worked other places and have lots of other friends ( on here :)) who are accountants and you are crossing the line...Thats my job as your assistant to protect your back!
I take it you are the only other qualified person there other than the boss, which males it seem like a mountain to climb.
Ok lets put in an escape route, call up the local firms like i said and find out if anyone has any work, employed/ self employed basis... see how far you get.
Now go and see him and tell him he cant do this anymore, you need to think carefully as you are going to have a real big row andit will get him mad. make sure the conversation is taped for the employment tribunal and for any other regulatory body., when you point out what he is doing is illegal and he fires you for trying to be honest yoiu have your evidence
Or set up your own practice...I did 12 years ago and we turnover £1m+ now and I have 10 qualifieds helping...you should land 2-3 new clients a week...not including the ones that drift from the old boss.
employment tribunal
Tom may have a point - refuse to do illegal work or be associated with it.
so long as you have been there more than 12 months
he will still have to pay you until you get a new job
document and tape and collect evidence.
when he dismisses you.
demand compensation - his legal advisers will not want this any where near a tribunal so negotiate your exit fee.
Seek HR legal advice.
I don't agree with Toms other assertions HMRC and ICAEW do not have the resources or the Will
Duty (no more no less)
As noted in similar posts, it is my understanding that members of ICAEW have a obligation to report other members who are breach of their ethical duty.
Whilst the ICAEW appears to apply inconsistency to the criteria, you should be mindful of your own professional obligations and should ensure you comply with those.
I do not agree with the respondent suggesting you mention to ICAEW that you have also reported the occurences to SOCA. I suspect this could leave you guilty of tipping off.
The level of detail in your list of issues clearly indicates a degree criminal activity on the part of the accountant, probably aided and abetted by the clients. As already suggested, if you have this much knowledge of these issues, you could be in danger of participating/promoting a criminal act yourself, particularly if you are in a position of sufficient responsibility at the firm.
I suggest you report to SOCA now.
Find a new job and then report to ICAEW once you have done so.
Nil carborundum est (or whatever it is - I was never good at Latin...)
Not sure why you haven't left yet....
you appear to know all of the scams being used (in detail) and it could be suggested that you have been complicit in carrying out the fraud given your experience/knowledge and continuing assistance (as suggested by mini me).
Dirty world of small practice?....take a look at Deloittes involvement with standard charter....i am afraid it is potentially at all levels......
comments on comments
I don't agree with Toms other assertions HMRC and ICAEW do not have the resources or the Will ....
As my mam used to say,'' you dont get wrong for doing wrong its when you are found out''...you have to say it in a geordie accent though for it to make sense.
And the bad lad who is doing this will think the same...right up to the point they knock on his door....besides isnt that part of the negotiating ammunition of getting yourself out of this....
Mind you fair point from the chap above, you new what was going on you did nothing and so you were complicit...thats why I quit an FDs job once...after 3 months... as soon as I found out what the owner was up to and the no $40m was involved..all with advice adn guidance from ICAEW at the time I hasten to add.
Part of growing up?
There really ought to be a protective shield to support members who find themselves in these situations.
It is not uncommon and would be a lot more profitable for HMRC to even pay the informant like the police would pay any other informant, keeping their identity secret.
Instead we are treated worse than criminals.
It does depend on whether HMRC officers would actually understand any of the wrongdoing mentioned by the OP as I think most of that is beyond them that is why it works so well.
My tuppence worth!
I would suggest:
1. Contact (by phone) the ICAEW confidential ethics helpline for members in practice 0800 917 3526 (NB NOT the complaints / disciplinary dept) and talk the situation through with them (they will not tell ICAEW disciplinary dept, HMRC, SOCA or your employer). They will give you confidential ethical advice.
2. Start looking for a new job straightaway.
3. Think very carefully before making a report to ICAEW complaints / disciplinary dept. Ordinarily their first action is to forward a copy of your complaint to the person you are complaining about to ask for their comments. That is not what you wish at present. (Incidentally that is not 'tipping off'.)
4. You may want to make a report to SOCA. If you do they may reply with an acknowledgement email to the email address you have given them (so don't use your work email address).
5. Do NOT contact HMRC / VAT offices or tax evasion helplines (to do so could well place you in breach of your ethical responsibilities towards clients and your contract of employment).
Good luck!
David
I don't know.
I read all this mamby pamby stuff about being protected, phone this number, phone that number.
Have some backbone, and what the hell are you still doing there. If you don't like your working conditions do something about it, don't bleat. No wonder Europe is in a state of meltdown. MAKE A DECISION.
As I have previously posted you will always get things like this happening when the "Status Quo" is compromised.
LOL
I read all this mamby pamby stuff about being protected, phone this number, phone that number.
Have some backbone, and what the hell are you still doing there. If you don't like your working conditions do something about it, don't bleat. No wonder Europe is in a state of meltdown. MAKE A DECISION.
As I have previously posted you will always get things like this happening when the "Status Quo" is compromised.
Or better just punch him on the nose!
John, The poor chap probably has a mortgage, wife and kids to worry about too...not as easy as it sounds when you are trapped in these positions.
damned if you do......
It's not an easy business is it - being an ethical, law abiding citizen...especially in our profession.
After reading through all that I think I will be spending the rest of the day unravelling all the red tape I now find my self wound up in!
Good luck OP.
@The Black Knight
I fully understand that he thinks he could be trapped. Therein lies the problem. Because of all the compliance this, compliance that, nany state etc. some have forgoten to be their own boss. I suppose that is the difference between working for someone and being self-employed. The poor chap can't expect to carry on taking wages from a concern he calls "dirty" and expect sympathy. He knows what he has to do. In his own admission he states that he realised he would have to move on before he posted. As we all know theory is sometimes totally different to real life.
The Reality is
Neither SOCA nor HMRC will do anything about it.
Just get out let him fester and cover your back
.
Neither SOCA nor HMRC will do anything about it.
Just get out let him fester and cover your back
Statements like this really put me off trying to do anything and just leaving the practice to carry on regardless, which isn't right for any of us nor the public in general.
Does it take newspaper articles to give weight to an issue? I would say this is quite a serious case from what I can see.
I am leaving, that's without question. My battle is deciding what I can, should and will do about the mess.
Of course SOCA will act.....
Neither SOCA nor HMRC will do anything about it.
Just get out let him fester and cover your back
Saying SOCA will not act cannot be true.
Of course they will act. Reason, you are telling them that 100, 200 or 500 clients accounts are pretty much dodgy, plus the accountant's own accounts.
Even with limited resources, HMRC will find time to look into this guy as they have plenty of clues where to look....give it a few months, they will turn up and obtain tax from the clients...the numbers would easily be huge.
The tax inspectors have targets to reach, so when he receives this knowledge he will definitely do something about it....
you have to wonder
all the newspapers and statements about taking tax evasion seriously are complete nonsense to sell copy and win votes.
In practice no one is concerned. By all means report, to prove it to yourself that no action will follow.
The rules are there to protect the guilty.
Most of us share the same frustration as you but have been there several times and watched government apathy time and time again.
You have a life to live get on with that!
They can be prosecuted and shut down
A few years ago there was an accountant about 20 miles from us, and we acquired a few clients from them. The accounts prepared by them were a work of fiction and eventually HMRC investigated all their clients and put them out of business.
Would it still happen these days, given the staff cubacks at HMRC? I like to think so, as we occasionally hear of the large scale ones (like Darren Upton), so logic would say there are some smaller ones that we don't get to hear about.
@help
I will give you the benefit of 47 years experience in accountancy.
There used to be something called "Status Quo", which basically meant people got away with a little bit and HMRC turned a blind eye and the world went round quite nicely. The advantage of that was that when HMRC had an investigation you knew that something was amiss.
Then at some point some bright spark decided to move the goalposts, so now you have maladministration at HMRC, where the pressure to get as much in as possible belies the "right" amount of tax due, and on the other side people like your boss will strive to gain the upperhand and make his clients think he's good at his job. There are, of course varying grades between the two.
There is no battle, you tell your boss you ain't happy and this is not how it should be and you will be no part of it. What really amazes me is that you are still there taking wages.
@ShirleyM
We had one who got 7 years and he's still trading. He was actually still trading while he was inside. Apparently HMRC cannot stop you from earning a living. Something to do with the Court of Human Rights. Still at least we are sending loads of money to different countries so that they can upgrade their prison systems in order for the UK to "deport" criminals. "PRICELESS"
twice
We had one who got 7 years and he's still trading. He was actually still trading while he was inside. Apparently HMRC cannot stop you from earning a living. Something to do with the Court of Human Rights. Still at least we are sending loads of money to different countries so that they can upgrade their prison systems in order for the UK to "deport" criminals. "PRICELESS"
One of my friends accountants has been to prison twice for fraud and is still trading.
In many years I have never seen the dodgy shut down.
They may occasionally loose their badges but only if convicted of something else.
One can only assume they have immunity or are perhaps police informants and come under that protection.
and the world is more likely to accept the word of a known liar than an honest man.
They have nice cars, houses and women by the Dozen too.
I have tried to think through the possible outcomes
... and the only real way out of this is to face up to your employer and refuse to do 'incorrect' work.
He may sack you, but then you can go on to report him, and when you apply for another job you can give a reasonable explanation of events.
If you just leave, what do you say to prospective employers? They won't be impressed that you left a job to become unemployed, and you shouldn't really tell a potential employer of your concerns unless you have raised them with your current employer in the first place.
@help....
as John has said...you are still taking a wage...and presumably still defrauding the Revenue by completing work that you know to be illegal. Its no time to be ethical given that you have been complicit in illegal acts for however long. Do what you need to cover your back, and get out.....
Will soca do anything, I reckon over last 5 years I have made 20+ reporsts none of them appear to have been actioned...draw your own conclusions...
You are not the MLO so are you obliged to make a report, as I understand it, your job is to report to the MLO and let him decide, which you seem to have done as you said you have mentioned it to him. keep evidence
It comes back to the same 2 things a) Make sure you are not implicated b) Ensure you protect your income stream...take the money from the employment tribunal and hell yes tell a prospective employer you quit because the previous guy was a crook. If you told me that I would respect you more.
I woulld love to see the look on his face when you say as a member of the ICAEW I am forced to report you for aiding and abetting clients to commit tax evasion. I will be making my report this pm and you can expect to hear about them in due course. I have copies of all the documents etc to back up these allegations....his answer is
a) You are fired...go to tribunal
b) You know I promised you a partnership....here it is and can you tidy this up please..
Win win
Beleive me
I still have contact with ex colleagues in HMRC, moral is so low the man at the coalface couldnt give a monkeys as long as he gets his pay at the month end. SOCA are interested only in terrorism and drugsbecause drugs fund terrorism. And lets face it tax evasion in this country is a national sport. Hands up all those who never once in their life have paid cash for something to get it cheaper.or bought something however small knowing it "fell off a lorry"
If your hand is up, I salute you.
Honesty
Thank you all for the comments, input and advice.
It's time for me to be honest with you all. I left the firm a while ago. I set up on my own as there were no jobs going and the man I have painted a picture of had the audacity to report me for breaching ICAEW <2 year rules, I now have to justify my actions to the powers that be.
I wrote this thread to gauge if my actions had been reasonable. I took the view f many here and just left. It seems that I did not go far enough and should have reported this to the ICAEW.
Wish me luck!
So...........................
Why did you not say so at the beginning we all felt very sorry for you and trying to support you in a difficult situation.