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Accountant fined for submitting returns without consent

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20th Jul 2012
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An accountant who submitted corporation tax returns and accounts for a former client without their permission has been fined £10,000 by the ICAEW and severely reprimanded.

In September 2004, Terence Veeder, of Edwards Veeder, Chapel Street in Salford, submitted corporation tax computations for Elite Communications UK to HMRC for the year ended 31 December 2002. The computations – submitted without permission from the director of the company, Mr Doogan, or his advisers H W Fisher & Co - included the surrender of losses under group relief, the ICAEW’s disciplinary committee heard in April.

When Veeder submitted the corporation tax computations he knew that Elite was wholly owned by Mr Doogan, who was a former client of Edward Veeder, and who was represented by other accountants.

It appeared that Veeder acted on in the interests of his client, Mrs Sawyer, who was Mr Doogan’s former business partner, with whom Doogan had been in dispute, the tribunal heard.

In June 2005, Veeder submitted to HMRC a set of draft accounts together with corporation tax calculations of Elite – again without the permission of Mr Doogan or without consulting his advisers. 

The corporation tax calculations, which included a claim for group relief, would (if accepted) have benefitted Mrs Sawyer’s business to the detriment of Mr Doogan’s company, the disciplinary heard.

The two deliberate acts of submitting these documents without the consent of the person and business to whom they belonged, and which could cause loss to that person, is professional misconduct, the disciplinary said.

When sentencing the defendant, the ICAEW accepted as mitigating factors, the fact that no loss has been suffered by the former client as a result of his actions and Veeder’s admission of guilt at the hearing - and the fact that he has not sought to blame others.

The ICAEW fined Veeder £10,000, ordered him to pay costs of £ 4,800, and issued a severe reprimand.

The case was one of the disciplinary rulings published by the ICAEW earlier in July.

In a separate case, an accountant was excluded from membership of the institute and ordered to pay costs of £2,850 for misleading the institute about when his firm had ceased trading and for carrying out unregulated activities.

On 20 July 2010, Mohammed Ahmedi of Chatham, Kent, misled ICAEW in advising that his practice had ceased on 31 March 2009 and recommenced on 1 April 2010, when this was not the case, the tribunal heard.

On 20 April 2008, Ahmedi on behalf of his firm, M A Ahmedi Limited, provided incorrect information on the 2008 annual return in that he failed to disclose that: M A Ahmedi and Blueberry Accountants Limited were unregulated connected activities; and that Ahmedi & Co was the trading name for Ahmedi & Co Limited.

The complaint was also that Ahmedi was liable to disciplinary action under Disciplinary Bye-law 4(1)(c) - ‘…a breach of the bye-laws or of any regulations or has failed to comply with any order, direction or requirement made, given or imposed under them’ - because:

  • Ahmedi failed to notify ICAEW within 10 business days of the incorporation of Ahmedi & Co Limited, in breach of Practice Assurance Regulation 9(a)
  • Between April 2003 and March 2009, Mr M A Ahmedi failed to arrange qualifying insurance as required by Professional Indemnity Insurance Regulation 3.1 for MA Ahmedi Limited and Blueberry Accountants

The tribunal said in its conclusion: “In order for ICAEW to regulate its members effectively, and thereby sustain the trust the public and uphold its own integrity, it is essential not only that its members keep it reliably and accurately informed about their activities but that they do not mislead it about them.

“The defendant has on two occasions misled his regulator as to the correct position of his practice: he led it to believe that he was not practising when he was. This is serious misconduct, as it gave the impression that the practice was not in need of regulation, when it was. It was also wrong of him to mislead his regulator, in any event, regardless of the consequences.”

When sentencing Ahmedi, the tribunal accepted a number of mitigating factors, including the defendant’s clean disciplinary record and his contrition for misleading ICAEW.

Ahmedi was not present at the tribunal and was not represented.

Replies (8)

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By miketombs
25th Jul 2012 11:58

Ouch!!!!

A couple of times I've only had formal authorisation to file on the day of the deadline, purely because of client inertia. In those circumstancs it's really tempting to submit them anyway, especially when i know the client is satisfied they are all correct. A £10,000 fine is a bit of a disincentive!

On the personal tax side I asked a client to confirm  some income which she eventually did towards the end of June. By the time the return was completed and submitted she had a zero tax bill, but £720 of penalties. Somewhere in her mind I'm sure she will blame me, but we can't create the numbers out of thin air.

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Replying to DMGbus:
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By karen1909
25th Jul 2012 12:05

In situations like that I have submitted on thae basis of an email agreement from the client. It is fool hardy to submit without any agreement.

 

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By G A Lyon
25th Jul 2012 14:39

Situations like that....

what when you file tax comps for companies that aren't your clients?

 

 

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Replying to Cantona1:
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By karen1909
25th Jul 2012 15:01

I dont think that I would be filing tax for companies that aren't my clients. The main reason being I wouldnt get paid LOL! I was replying to the earlier comment re deadlines and I dont think I did it right. Oops

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By shaka198
25th Jul 2012 15:23

Coy Secretary

Does being Company Secretary alter the position?

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By Roland195
25th Jul 2012 16:16

Corporate clients

There must be more to this than the article suggests but I surely the client in this case was Elite Communications UK Ltd.

The ICAEW seem to have involved themselves in a dispute between Mr Doogan & Mrs Sawyer, where all the poor sap has actually done was submit the return on the authorisation of someone who at least at some point, was authorised to do so.

There but for the grace of the gods, go us all. I bet Mr Veeder has an email on file and as much good it did him. 

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By tobri
01st Aug 2012 15:30

Mr Ahmedi was neither present in court or represented

What are the odds on the ICAEW collecting their costs of £2,850 ?  Do they normally go through the courts in cases like this?

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By patara
18th Aug 2012 22:15

Commercial reality V Legal requirement

In this case the accountant should have known the situation with regard to his client and former client and the dispute between them.

In normal commercial situation would you stick to you guns to have the tax return signed before submitting it and incur heavy penalty for the client (although he may verbally tell you to submit it) or would you risk assess it and submit it with the full professional judgement that the return was correct based on the client's accounts and that in the case of serious error an amended tax return can be submitted.

Nihaal Singh

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