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Hillgrove trial day 2: Accountant's evidence

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2nd Jul 2013
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After hearing opening statements on day one and evidence from HMRC, day two of Dragons’ Den PR Richard Hillgrove’s trial at Bristol Crown Court yesterday focused on the accounting mechanics behind the case. The New-Zealand PR guru is being charged with attempting to defraud the public revenue of almost £100,000 in VAT and PAYE over a 13-month period.

Hillgrove pleaded not guilty to the charges and alleged that his former accountant, Bishop Jones, was to blame for his arrest, which he also claimed was wrongful.

The jury heard evidence from sole practitioner Michelle Bishop, owner of the Wells-based accountancy firm, which acted for Hillgrove, of Glastonbury, Somerset, from 2010 to January 2012.

Bishop, a chartered accountant and member of ICAEW, AAT and ATT, told the jury the firm started off by doing personal and business bookkeeping for Hillgrove and his wife, who are both directors of the PR firm RJH Management LLP. They then progressed to doing year end accounts, payroll and VAT returns. 

Employee Louise Dale was directly responsible for dealing with Hillgrove’s accounts, the court heard. However, she is not due for questioning until Wednesday. [Editor's note: please see clarification below on this and other aspects of Bishop's evidence]

The firm was aware of Hillgrove’s previous liabilities, including tax liabilities of his PR venture RJH Management, which are not part of the charge.

Dale set up a time to pay arrangement with HMRC to allow the business time to pay its £50,000 VAT and PAYE liabilities.

The court heard from Bishop how the time to pay deal was not completely met and that HMRC was not willing to extend or amend it, due to the amount of tax to be repaid over the two years. The firm then advised Hillgrove to make some changes in his personal spending and to consider turning the LLP around or winding it up. The accountant also suggested setting up a system whereby VAT and PAYE would be paid as they fell due.

The LLP was incorporated in January 2011 to make it more tax efficient and to pay for the debts of the LLP, Bishop told the court, becoming  a new entity of which Hillgrove and his wife, Lois Hillgrove are directors, HillgrovePR Ltd.

Bishop said on some occasions that the firm was told to “hold fire” with VAT returns by Hillgrove, who, as one of the directors, had responsibility for signing them before filing with HMRC.

However, Hillgrove, cross examining Bishop and defending himself, told the jury that he sacked the accountants in January 2012 due to “gross negligence”, including receiving Sainburys’ bags of unknown expenses receipts back and sending a “wildly inaccurate” P&L  to his new accountant.

He also queried emails sent between Bishop Jones and bank manager at the local branch of Natwest, requesting to set up a business account. Bishop Jones has no record of these emails, which could be, Bishop said, due to their deletion. 

Hillgrove told the jury that he was concerned about being "landed" with an LLP and a limited company, which incurred the costs of having to have two Sage Instant licences and two PCs to run the software on. When asked by HMRC why his LLP was incorporated, he could not find any information in his files.

The jury also heard how the assets were switched from the LLP to the limited company on incorporation, but HMRC was not informed that the tax liabilities were transferred in May 2011.

Bishop said this was because her firm did not prepare the final accounts for March 2012, which would have informed the Revenue to the change. She answered under questioning that she should have informed the tax department sooner.

RHJ Management LLP was wound up by the Revenue in 2012. Bishop told the court the LLP remained open because Hillgrove wished it so, but he denied this before the jury.

The trial continues... 

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John Stokdyk, AccountingWEB head of insight
By John Stokdyk
03rd Jul 2013 15:42

CLARIFICATION regarding Bishop Jones Accountants

Earlier today the judge stopped the trial in its tracks for procedural reasons. 

While AccountingWEB has detailed above the claims made by Mr Hillgrove at court, it has been requested that in respect of fairness and accuracy, the following points referred to in the court should be added to the report:

1.       Under cross-examination, Michele Bishop on behalf of Bishop Jones strongly denied that:

she had been sacked due to gross negligenceshe had knowledge of the Sainsburys’ bags referred to by Mr Hillgroveshe sent any wildly inaccurate profit and loss accounts.

2.    Furthermore, Michele Bishop informed the court that Louise Dale was not directly responsible for dealing with Mr Hillgrove’s accounts and that Dale had only a minimal involvement in organising the setting up of the ‘Time to Pay arrangement.

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