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Christopher Lunn convicted for £6m tax evasion

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4th Dec 2015
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Accountant Christopher Lunn has been convicted for evading more than £6m in tax. A source familiar with Christopher Lunn & Co’s activities told AccountingWEB how the firm considered its fraudulent behaviour ‘a bit of a joke’.

The saga surrounding Christopher Lunn & Co, which specialised in media freelances. hit the headlines in 2010 when HMRC arrested Lunn after unearthing offences including inflating accountancy fees and fraudulent use of trading losses. Lunn allegedly used these tactics to evade paying both his own and his clients’ taxes.

In January 2014 Lunn was acquitted on two charges, while the jury was unable to reach a verdict on the remaining four. Five years after HMRC launched its investigation, Lunn was finally convicted on four counts of cheating the public revenue.

Someone previously familiar with Lunn’s firm outlined its cavalier attitude towards the tax authorities: “The practice of over-claiming expenses and inflating accountancy fees was considered a bit of joke within the firm. The attitude of Christopher was that he was too clever to get caught and HMRC wouldn't notice. So those practices were widespread.

“One staff member in particular would sign people’s tax returns for them by holding up a previously signed document against a window and pressing the signature page of the new tax return against that document. You could see the outline of the earlier signature, and the staff member would trace that signature on to the tax return.”

This process was known within the firm as “window teching”. The technique was so widespread that there was a separate category for it on the time-keeping system.

Forging signatures was the tip of the iceberg, but it was packaged as a “bit of a game” with HMRC, so staff went along with it on this basis.

Lunn’s fraudulent tax return treatment left many of his clients scrambling to repair the damage. Many AccountingWEB members have picked up Lunn & Co clients in the aftermath of HMRC’s investigation. In the fallout of Lunn’s arrest, our source has been involved in clearing up the tax affairs of former Lunn clients.

“That has been a painful process for those clients. Out of the disclosures I’ve seen, many have been handed additional tax bills of £5,000-10,000 to correct the issues with the Christopher Lunn accounts,” the source said.

One client paid £50,000 to correct their accounts. Other clients are being hit interest and penalties on top of the outstanding liabilities, our source explained.  

Jennie Granger, HMRC’s Director General, Enforcement and Compliance said: “Lunn believed he could make up fraudulent claims to benefit both himself and his clients. Hard work from HMRC officers across the department proved him wrong. This long-running investigation has already recovered £20m, as Lunn’s former clients settle their tax liabilities, with more to come.

“I hope this result serves as a reminder to those who try to cheat the public purse – particularly those in the tax profession – that no one is above the law and that HMRC will relentlessly pursue tax evaders to bring them before the courts."

Lunn will be sentenced on 6 January 2016. HMRC has said that as Lunn’s clients were unaware of his actions, they have been offered a chance to put things right for themselves by paying any tax and interest due. Any client who has not yet come forward pending the outcome of the trial is encouraged to speak to HMRC to bring their affairs up to date, as many of Lunn’s clients have already done.

However, our source warns: “Penalties for people who have only recently approached HMRC, or have yet to, are going to be higher than 10%.”

Last year Lunn’s son, Christopher Jonathan Lunn, was convicted on six counts of misrepresentation under the Fraud Act for overstating clients’ accountancy fees.  

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Replies (21)

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By thomas34
05th Dec 2015 17:32

Lunn

Presumably this matter is no longer sub judice. As someone who has seen the rubbish prepared by this firm and submitted to HMRC I'm delighted that HMRC stuck with this case after the original jury couldn't reach a decision.

The problem seems to have been the law that says a person can't be found guilty if they were unaware that they were breaking the law i.e. alleged incompetence is a protection against a fraud accusation. For someone in Lunn's position (a practice with several thousand clients) and a former member of the Institute the latest jury obviously didn't buy this.

 

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By B.R.
07th Dec 2015 11:56

Sentence

Got to show a strong response against fraud - 200 hours community service, your Honour, will teach him a lesson!

 

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Shorty
By Shorty
07th Dec 2015 12:00

Twitter

I particularly enjoyed Giles Mooney's tweet the other day about this :-)

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By Robertnz
07th Dec 2015 12:22

Lunn ex-clients

We inherited 3 Lunn clients and I must admit after cleaning up 6 years of the fraudulent mess they created, I was amazed at the scale of the cosmetic accounting they used. It cost these clients the best part of £20,000 to settle everything. However they were smart enough to take our advice to settle and so the penalties were minimal, despite Lunn still emailing them to assure that everything was in good order and not to settle.

Question - does anyone know if there is a chance of claiming against Lunn PI? I am not sure whether PI covers Lunn's fraudulent accounting. Anyone have success on this.

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Replying to Arthur Putey:
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By rebeccarothman
07th Dec 2015 12:59

PI cover

My client who was with Lunn is in contact with other ex-clients of his, and I understand that an approach has been made to a solicitor regarding this, my client 's understanding is that a case could be brought but due to the costs they are looking to get some more ex clients interested in order to spread the legal costs. If anyone is interested in taking this further please let me know and I will contact my client to get all interested parties talking. my email is [email protected]

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By johnjenkins
07th Dec 2015 12:24

So he'll

do a bit of bird, come out and carry on as if nothing has happened. He will probably be doing it inside.

So why? Could it be because we have such an oppressive tax system in this country that tax payers are quite happy to fight back (that's not to say they are right, just an observation). The fact that some were waiting for the "outcome" of the court case says a lot of his clients were happy to take the chance.

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By ipaythebills
07th Dec 2015 12:24

Lunn

A disgrace to the profession. We dealt with a couple of Lunn cases - I remember about 4 or 5 years ago asking a client of his to bring in their records from the previous year so I could compare them to the accounts submitted by said "accountant" of word beginning in "f". There was no resemblance between the two! Not sure HMRC come through with flying colours (although they got there in the end) - I remember one email where they cc'd all the Lunn clients' new accountants rather than bcc so we all had a very helpful email list!!

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By carnmores
07th Dec 2015 12:32

@ipaythebills

I do hope that you didnt use this list its priveliged information

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Replying to iCoder:
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By AndrewV12
08th Dec 2015 13:10

Sorry mate not the time or the article to preach to others

carnmores wrote:

I do hope that you didnt use this list its priveliged information

 

The whole article is a shame on the Accounting profession, lets not preach to the good Accountants, concentrate on identifying and hounding out the crap Accountants.  If your comment was a brilliant sarcastic joke please forgive me.

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By alfamale
07th Dec 2015 15:01

Among his string of dubious practices you can add not registering a client with a £200k turnover for VAT and then distributing partnership profits in different percentages each year to minimise tax - even though it was set up on a 50:50 basis...

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By johnjenkins
07th Dec 2015 16:27

@alfamale

You can distribute partnership profits however the partners like. This is normally changed to reflect the work that is done during the year. I'm sure sometimes it's done to reflect a tax saving. This is what happens when an Accountant starts being dodgy. Sometimes true circumstances get lost and we have to deal with it.

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By tax novice
07th Dec 2015 19:47

dodgy

I took over a practice from an accountant who was closed down by the revenue. He put all his clients files in a skip, so I got nothing. He used to take in clients books then guess the profit he expected , conjure up expenses finally arriving at turnover. He then charged them in full. He was a PR genus luckily he was not qualified.

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By North East Accountant
08th Dec 2015 09:00

Plenty cowboys out there

Got a case came to me this year already on Enquiry. Previous accountant made up Turnover (just under VAT limit) and expenses to come up with a profit just over the personal allowance. Must have taken him 10 minutes start to finish. Banked turnover (simple case of adding it up) was over  double declared turnover and well over VAT limit. Client not VAT registered of course.

HMRC need to get serious to route out these cowboys.

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By chatman
08th Dec 2015 09:10

"We don't do double entry".

I rang Christopher Lunn as the client data they sent over for a new client only showed part of the picture.I said I needed something that reflected the double entry and the lady told me "We don't do double entry".

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Should Be Working ... not playing with the car
By should_be_working
08th Dec 2015 09:44

Unenviable CVs

I wonder what Lunn's staff are doing now? Some of them, presumably, will have been largely 'trained' just at that firm. I don't evny anyone with the name of Christopher Lunn & Co. on their CV ... or the practice who takes them on.

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Replying to Southwestbeancounter:
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By AndrewV12
08th Dec 2015 13:00

Lets be kind on the staff

should_be_working wrote:

I wonder what Lunn's staff are doing now? Some of them, presumably, will have been largely 'trained' just at that firm. I don't evny anyone with the name of Christopher Lunn & Co. on their CV ... or the practice who takes them on.

 

Lets face it, most of us have worked for a 'Lunn' style organisation at some point in our Accounting career, its amazing what they can get away with. 

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By teek1
08th Dec 2015 10:22

Good news for the HMRC, but before you pat yourself on the back maybe you should take another look at the 1000+ super rich tax dodgers that have over 70 billion in hsbc's swiss accounts since nothing has been done in the last 5 years since it had surfaced.

only one person has been convicted??

Problem being thats alot of bartering  power.

 

Its ridiculous how we're fed this crap about lower class benefit cheats,chased for a few measly quid ,surving below living standards yet a blind eye is shown to filthy rich  tax evaders that owe millions in tax liability , living the high life.

 

 

 

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Replying to UR1:
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By chatman
08th Dec 2015 10:25

Inequality and Bribery

teek1 wrote:
Problem being thats alot of bartering  power.

Did you mean bribing power? That is why massive inequality always brings massive corruption; simply because it gives the super rich enormous funds with which to bribe.

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By tax novice
08th Dec 2015 11:56

Good point but its not ridiculous. Authorities always go for the easy pickings, take parking over theives. These international tax doggers have the cards all in their favour and will continue so. Tax Justice etc rant and rave, quite rightly, but wont get far. The only solution is the imposition of a much higher and fairer VAT system so we tax their spend.

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Replying to John Stokdyk:
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By chatman
08th Dec 2015 12:03

How about a tax on land and buildings?

tax novice wrote:
The only solution is the imposition of a much higher and fairer VAT system so we tax their spend.

How about a tax on land and buildings?

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By AndrewV12
08th Dec 2015 13:05

This says more about....

This says more about HMRC than Lynn, they should have identified a pattern of Accounting nonsense years ago.

 

Just how sloppy are HMRC, if they were a football team they would be Kidderminster Town

 

Played 23 won 2 lost 8 lost 13 ...yep sounds about right.  Maybe HMRc need some new powers, but are they capable of using them correctly or at all.

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