Prudential

I should be interested to hear David's opinion on whether, following the Court of Appeal's decision on Wednesday, there remain any circumstances under which an accountant can claim to have received information under "priviledged circumstances" and whether this test is different as regards the accountant's obligations to to file a report to SOCA (or whatever replaces it these days) as contrasted with the accountant's defence to a request for information by HMRC.

With kind regards

Clint Westwood

Comments
davidwinch's picture

In a nutshell "no change" re MLR

davidwinch | | Permalink

We need to be careful not to confuse two completely different things which have similar names and, in some respects, operate in slightly similar ways.  The first is common-law legal professional privilege and the second is the statutory exemption from the obligation to report to SOCA information which has been received in 'privileged circumstances'.

The Prudential case was about whether an accountant giving legal advice could be covered by the ancient common-law rule (known as 'legal professional privilege') that information provided by a client to a lawyer in connection with obtaining legal advice or dealing with legal proceedings is 'privileged' and therefore exempt from disclosure (and indeed must not be disclosed) by the lawyer in (virtually) any circumstances (unless the client waives the privilege or is abusing the privilege to advance a criminal purpose).

The point being that if a client consults a lawyer for advice on tax law then HMRC cannot force the disclosure of the information provided by the client to the lawyer.

In the Prudential case the client had consulted an accountant rather than a lawyer for that advice.  The court held that HMRC could force the disclosure of the information supplied by the client to the accountant because he was not a lawyer and therefore the ancient common-law of legal professional privilege did not apply.

The moral of the story being that it is safer to bare your soul to your lawyer than to your accountant.

But, as you may know, common-law is not found in any Act of Parliament or statutory instrument.  It is the law simply because it has always been understood to be the law and by longstanding custom it is the way things are.

Statute law (i.e. the law made by Parliament) may make provision which is different from common-law and may indeed over-rule common-law (but has to be carefully worded to do so).

The exemption from reporting to SOCA is set out by statute law.  It is an exemption of limited application (for example, it applies only to 'suspicious activity reports' to SOCA - in other words the reports made under Money Laundering Regulations 2007, s330 Proceeds of Crime Act 2002 and the parallel legislation relating to terrorist financing).  The statute law sets out quite clearly that it applies to information received in 'privileged circumstances' (as defined in the statute) by lawyers and 'relevant professional advisers' (as defined - to include most qualified accountants).

The statutory exemption says that where information is received by a lawyer or 'relevant professional adviser' in 'privileged circumstances' there is no obligation to report it to SOCA.

The Prudential case had nothing whatsoever to do with this statutory exemption which remains entirely unaffected by the judgment.

This does (and always has) led to some anomalies.  For example, if you receive information in 'privileged circumstances' that your client is engaged in say, trafficking heroin (or, more realistically, employing illegal immigrants), then you will not report that to SOCA.  But if the police turn up at your office with an appropriate search warrant your files (including that information) are open to them.  That is because the files / information are not covered by common-law legal professional privilege even though the information was covered by the statutory exemption.  The statutory exemption only exempted you from reporting to SOCA.  (But if you were a lawyer your files might well be covered by common-law legal professional privilege as well as by the statutory exemption, in which case the police could not have access to them.)

I hope that makes some sort of sense.

David

www.MLROsupport.co.uk

cymraeg_draig's picture

Grey area

cymraeg_draig | | Permalink

Privalege is a grey area even for the legal profession, and each case must be judged on the facts.  For example, -

1) Defendant tells his counsel that he is innocent. Counsel may not believe him, but, in putting his client's case must try to convince the court that his client is innocent and can state as much in court.  In his summing up he could, for instance, say to the jury - "my client denies the allegations and is innocent". 

2) Defendant admits guilt to counsel, but insists on pleading not guilty.  Counsel must thoroughly test the prosecution case (as prosecution has an obligation to prove its case). However, at no time can Counsel actually state that his client is innocent. In this case summing up could be - "my client denies the allegations, and the prosecution have failed to prove their case". 

 

I would suggest that an accountant giving advice in legal proceedings might be more entitled to claim professional privalege than an accountant giving advice on matters which later result in court proceedings. 

Giving advice direct to the client will always be challenged as not attracting professional privalege.  However, if the solicitot acting for the client formally request the advice, AND, if the advice is given to the solicitor NOT the client, AND, of course of the solicitor pays for that advice (recharging it to the client as a disbursement) then the solicitor has engaged the accountant, not the client, and that most definitely WOULD attract professional and legal privalege. (most of the time).

 

 

davidwinch's picture

Advice from an accountant

davidwinch | | Permalink

C_D

Yes.  By way of example, in relation to criminal proceedings I am routinely engaged by defence lawyers to act as an expert witness.  I am instructed by and paid by the lawyers.  I have correspondence by email, letter and telephone with the lawyers.  I submit my report to the lawyers.  All of that material is covered by common-law legal professional privilege because it is communication with a lawyer concerning a matter in court (or on its way to court).

The lawyers will then discuss my report with their client and decide whether or not they wish to disclose it to the prosecution.  If they decide not to disclose it that is the end of that.  The prosecution may never get to know that the defence contacted a potential expert witness at all.

If however the defence want to call me as a witness in the court proceedings they have to notify the other side (and the court) of that before the hearing and forward copies of my report.  But they don't need to make that decision until after they have seen what my report says.

Occasionally I am instructed by the police or Crown Prosecution Service.  The rules there are different.  If they instruct me to prepare a report they know they have to disclose my report to the defence (whether it is helpful to the prosecution or not).

But, of course, none of this has anything to do with the statutory reporting exemption in PoCA 2002 / MLR 2007.

David

www.AccountingEvidence.com

cymraeg_draig's picture

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cymraeg_draig | | Permalink

But, of course, none of this has anything to do with the statutory reporting exemption in PoCA 2002 / MLR 2007.

David

www.AccountingEvidence.com

 

Posted by davidwinch on Thu, 14/10/2010 - 20:28

 

Not directly perhaps, BUT, statutory reporting under MLR remains largly unchallenged in the courts and I suspect that the courts would be loath to treat it much differently from any other definition of privalege.

At the risk of retracing previous conversations the huge weakness of the MLR requirements are that they require reports to be made where there is "suspicion" and the whole concept of how to define suspicion & what constitutes grounds for suspicion is open to interpretation and opinion.

To use my earlier example - counsel may well "suspect" that his client is guilty - but, does that mean he should enter a guilty plea ignoring his clients wishes?  I have often suspected someone is guilty, only to then discover thay are indeed totally innocent.  That is why I resent the government's demands that we "report" and therefore virtually convict people without hard evidence.

Indeed, in my opinion, anyone filing a report based on mere suspoicion and not backed by a reasonable level of actual evidence is, in fact, being asked by the government to commit a criminal act themselves as their actions, in my view, arguably constitute a form of harassment, and, a breach of Article 8 HRA (respect for private and family life, home and correspondence).  That is why I do not take the filing of a report lightly and would never do so without clear evidence regardless of what "the state" demands.

 

 

davidwinch's picture

We shall agree to differ

davidwinch | | Permalink

C_D

We shall have to agree to differ on some points relevant to PoCA / MLR.

David

rockallj's picture

Legal arguments

rockallj | | Permalink

The debate here between two emminent experts (in my personal opinion) is interesting in that if they cannot agree about the legal privilage/MLR issue, then how are we mere accounting mortals supposed to understand and act correctly?

I am unhappy with having to shop clients for suspicion when there are no hard facts.

It is morally and ethically wrong and goes against the principle of innocent until proven guilty. 

 

Our prof bodies should be standing up and arguing this with government. The earlier this is tackled and clarifed for us, the better. Otherwise, we are damned if we report and damned if we don't.

 

davidwinch's picture

Reporting suspicions

davidwinch | | Permalink

Rockallj

The legislation requiring reporting based on suspicion is currently in the Proceeds of Crime Act of 2002 but its ancestry can be traced directly back to Regulation 14 of the 1993 Money Laundering Regulations.  So it is hardly new although admittedly at that time it applied only to banks, building societies and similar bodies and financial advisers engaged in 'investment business' (and not to mainstream accountancy, audit and tax work - to which it was extended in 2004).

I think government would be surprised to be told at this late stage that there is a serious problem relating to the principle of reporting based on suspicion!

David

cymraeg_draig's picture

Suspicion has no place in justice.

cymraeg_draig | | Permalink

 I think government would be surprised to be told at this late stage that there is a serious problem relating to the principle of reporting based on suspicion!

David

 

Posted by davidwinch on Fri, 15/10/2010 - 15:44

 

Actually the present government is well aware of the problems and is looking at it with a view to making changes.

The problem is quite simply the definition of "suspicion" as it is an unquantifiable measure. Quite simply what makes you suspicious may not make me suspicious. That is not a reasonable basis upon which laws can be based.

We all see so called "conspiracy theories" which are dismissed by "the state".  A recent one was that the 9/11 attacks were actually carried out by the CIA to whip up support for the Iraq war. Now we know that is ridiculous (we hope) but those propogating that "conspiracy theory" obviously "suspect" it to be true.  Should we arrest the CIA based on that suspicion ?

Before making an arrest police are required to have EVIDENCE which is sufficient to give a reasonable cause for suspicion that the detained person may have committed an offence. Suspicion alone is not sufficient and any arrest made for the purpose of obtaining evidence, where no evidence sufficient to give cause for suspicion existed before the arrest, renders the arrest itself illegal.

The MLRs only refer only to "information" - which of course could simply be "tittle tattle" with no foundation in fact, or, equally could be deliberate malicious gossip.

That is why it is an appalling piece of badly drafted and disgraceful legislation which has no place in its present form in a civalised legal system and has more in comon with a communist dictatorial regime than with a reasonable just society.

 

 

davidwinch's picture

Innocent until proven guilty

davidwinch | | Permalink

Last Christmas myself, my wife and children were invited to have Christmas dinner with my in-laws.  They live just 300 yards away.  When we arrived there was a difficulty with carving the turkey and I offered to get a sharper knife from my home.  I walked home and walked back with a 12 inch kitchen knife.

Let's suppose I had been stopped in the street in possession of that knife.  On the face of it I would be guilty of an offence of "possession of an article with a blade in a public place" contrary to section 139 Criminal Justice Act 1988.  This can be a serious offence.  It carries a maximum of 4 years imprisonment (in England and Wales).

Had I been stopped by the police, arrested and charged then in order to avoid conviction I would have had to prove that I had good reason for having the knife with me on that occasion.

My point is that this is an example of the burden being upon the defendant to prove his innocence.  This is far from unknown in our criminal law.

But a report to SOCA does not purport to prove anyone guilty of an offence.  It is a report which may be considered by the authorities (whether that be police, HMRC, DWP, Trading Standards or whoever).  The authorities may decide to launch an investigation and, of course, that investigation may cause difficulties - perhaps considerable difficulties - for the subject of it (who may be entirely innocent of any wrongdoing).  That would be regrettable.

But I think it is over the top to equate making a report with causing a person to be arrested by a police officer.  I doubt very much that a police officer would arrest anyone solely based on the receipt of a report under PoCA / MLR.

Equally I do not think reporting a suspicion is morally wrong or offends against the principle of innocent until proven guilty.

David

cymraeg_draig's picture

Cremated turkey - and an Act that also should be cremated.

cymraeg_draig | | Permalink

But I think it is over the top to equate making a report with causing a person to be arrested by a police officer.  I doubt very much that a police officer would arrest anyone solely based on the receipt of a report under PoCA / MLR.

Equally I do not think reporting a suspicion is morally wrong or offends against the principle of innocent until proven guilty.

David

 

Posted by davidwinch on Fri, 15/10/2010 - 18:43

 

 

Sorry to disapoint you David but I have seen an example of HMRC raising an assessment based solely on a MLR report (which later turned out to be a pack of lies).  And I've seen examples of a person being arrested and held under the terrorism Act again on the basis of a ludicrous MLR report.

My views on anything that doesnt merely encourage but actually compells citizens to shop each other are well known - it is exactly what the East German Stasi did.

 

As for you carrying a knife through the streets - just be thankful it wasnt my ex-mother-in-law who had cooked the turkey - or you'd have needed a circular saw, a black & decker, and two sticks of dynamite to make a dent in it.  I swear that woman must have worked at the local crematorium.

 

Mike Sturgess's picture

Suspicion is deliberately subjective

Mike Sturgess | | Permalink

This discussion has moved from the original question on the impact of the Prudential case on reporting to SOCA and David is absolutely right – no change. The discussion on suspicion, like suspicion itself, is subjective. There are plenty of examples in law where subjective words are used, and deliberately so. The use of reasonable force to defend yourself is a classic example. One person’s view of what is reasonably may well differ from another’s and in extreme cases the courts have to decide what is or is not reasonable. The following statements from various guidance notes help to provide an understanding of suspicion: 

  • A degree of satisfaction and not necessarily amounting to belief but at least extending beyond speculation as to whether an event has occurred or not.
  • Although the creation of suspicion requires a lesser factual basis than the creation of a belief, it must nonetheless be built upon some foundation.
  • A suspicion that something exists is more than a mere idle wondering whether it exists or not; it is a positive feeling of actual apprehension or mistrust, amounting to a “slight opinion, but without sufficient evidence”

 However, the extent of that “foundation” or “apprehension” can be quite low. In a court case a few years ago the judge stated that to be suspicious there must be: 

  • ‘... a possibility, which is more than fanciful, that the relevant facts exist. A vague feeling of unease would not suffice. But the statute does not require the suspicion to be “clear” or “firmly grounded and targeted on specific facts”, or based upon “reasonable grounds”.’

 Like David, SWAT UK provides help to firms with the implementation of the regulations. For every complaint I get about having to “shop” my client I get a complaint that the accountant reported clear fraud or tax evasion and nothing seems to have happened as a result. The Treasury is indeed looking at the regulations, but I doubt very much that we will see any move away from the obligation to report suspicion as well as knowledge of money laundering. After all, the legislation is based on the EU Directive, which member states must implement. Mike Sturgess

cymraeg_draig's picture

Mike

cymraeg_draig | | Permalink

This discussion has moved from the original question on the impact of the Prudential case on reporting to SOCA and David is absolutely right – no change. The discussion on suspicion, like suspicion itself, is subjective. 

Posted by Mike Sturgess on Sat, 16/10/2010 - 16:55

 

However one tries to define it, an unquantifiable concept like "suspicion" cannot be accurately defined or measured and therefore makes for bad law.  Indeed your own example of "reasonable force" is one of the most disputed concepts in our courts and is redefined almost daily.

Obviously seeing bank transfers to Mr A Bin Laden, 3rd cave from the left, Afghanistan would give rise to suspicion in anyones mind, BUT, 99.9% of cases are not that clear. 

Say, for example, a client I had known for 30 years, a respected lay preacher, magistrate, and supporter of numerous charities suddenly shows an "unexplained"  deposit of £50,000 in his bank.  I ask him where it came from and he says he won it on the horses. I know that he does not agree with gambling, indeed for years he has preached about the evils of gambling in his weekly sermons. Now, do I suspect that he's actually "on the fiddle" (reportable), do I suspect that he's actually stolen it (reportable), or do I suspect he's a dam hypocrite (not reportable).  You may be highly suspicious and decide to report him. I on the other hand know about human frailties and assume he's succombed to the temptation of gambling and dont report him. 

Are you guilty of causing him unnecessary grief and slandering his good name?  Or am I guilty of being too trusting and failing to file a report?  

Any law where there is no clear defining line is, in fact, extremely bad law.

I see any "law" that assumes guilt until proven innocent to be an attack on the very basis of our legal system and our freedoms - and as such it should not only be resisted, but destroyed.

 

___________________________________________________

The Treasury is indeed looking at the regulations, but I doubt very much that we will see any move away from the obligation to report suspicion as well as knowledge of money laundering. After all, the legislation is based on the EU Directive, which member states must implement. Mike Sturgess

Posted by Mike Sturgess on Sat, 16/10/2010 - 16:55

 

Not merely the treasury - senior members of the government are reviewing much of Labours legislation, and whilst it is thought right that professionals should be able to report offences if they wish, it is not considered right that they should be forced to do so beyond the responsibility of any citizen to report crimes. Whatever the treasury, or for that matter the EU may wish, the final decision lays with the cabinet (and then parliament).  Incidently the regime in the UK at present goes far beyond the EU directive and is far more draconian than that implemented in most other EU countries.  

 

davidwinch's picture

Subjectivity & the criminal law

davidwinch | | Permalink

C_D

I understand your concerns about the role of subjective judgements but subjective matters lie absolutely at the heart of criminal law.

Take the following scenario.  Fred is self-employed.  He applies for a mortgage advance of £150,000 to buy a house.  On the mortgage application form he is asked for details of his current income.  He puts £50,000.  He obtains the mortgage.  However according to his tax returns his income is only £10,000.

The matter comes to the attention of the police in the course of an investigation of Fred for other alleged offences.  He is charged with the other offences and with mortgage fraud.

Fred says, "Although I was only making £10,000 per year at the time I was only working part-time and I knew that if I needed to I could work longer hours and make £50,000 - so when I put £50,000 income on the mortgage form I knew that was what I could make to pay the mortgage instalments".

Is Fred guilty of mortgage fraud?

Well that depends if Fred was dishonest in his application.  And that depends upon whether Fred was being dishonest by the standards of ordinary and decent people and whether Fred himself realised he was being dishonest by that standard.

The second limb of that is a subjective judgement.  But the law has long relied upon juries to consider those sort of subjective issues in criminal cases.

That, in part, is why it is better to pick a jury of 12 'common' people rather than to have questions of guilt or innocence decided by tribunals of professionally qualified lawyers and accountants (and is one of the arguments for retaining trial by jury even in complex fraud cases).

If one is making a judgement of someone else's behaviour then it is rarely going to be a matter simply of 'hard fact' in black and white.

David

cymraeg_draig's picture

Not the same thing

cymraeg_draig | | Permalink

If one is making a judgement of someone else's behaviour then it is rarely going to be a matter simply of 'hard fact' in black and white.

David

 

Posted by davidwinch on Sun, 17/10/2010 - 12:17

 

Which is fair enough - 12 people - able to discuss the issues - in possession of all the evidence - and with the safeguard that if there is any reasonable doubt then the defendant must be found not guilty.

That is NOT the situation that accountants (and others) are out in by this legislation.

1) We are asked to make a "judgement" based on few if any facts.

2) We are ordered to file a report based upon mere suspicion and that suspicion itself can be founded on the flimsiest of evidence, or indeed on no evidence at all.

3) We are not in possesion of all, or indeed even most of the facts.

4) We are actually forbidden from challenging the "defendant" to obtain his version of events - to do so would be "tipping off". 

YET, we are ordered on pain of prosecution to file a report,  the consequences of which could be months and possibly years of worry and distress for the accused and possibly a prosecution of an innocent person. 

Further the law gives every defendant the right to face his accuser, yet in MLR cases we are granted anonymity and the defendant is denied that right.

 

 

davidwinch's picture

Not the same thing - Yes

davidwinch | | Permalink

C_D

I agree it is not the same thing - because an accountant (or banker, or estate agent, etc) is only asked to indicate a suspicion - not deliver a verdict.

Incidentally, judges (in England & Wales) directing juries these days are advised by their equivalent of a professional body (the Judicial Studies Board) NOT to refer to "beyond all reasonable doubt".  Instead they will say something like:

If after considering all the evidence you are sure that the defendant is guilty, you must return a verdict of 'Guilty'. If you are not sure, your verdict must be 'Not Guilty'.

Indeed in a recent case the Court of Appeal commented that a trial judge had "gone wrong" by saying to a jury, "You must be satisfied of guilt beyond all reasonable doubt".

Also I would not agree that, "We are actually forbidden from challenging the "defendant" to obtain his version of events - to do so would be 'tipping off'."

A 'tipping off' offence can only occur AFTER a report has been made, either internally to the firm's MLRO or externally to SOCA or to another authority.  'Tipping off' occurs where the fact that a report has been made, or the fact that a money laundering investigation by the police or other authority is underway or is being contemplated, is divulged - see s333A Proceeds of Crime Act 2002.

If you wish to make enquiries with your client and ask him to explain what has gone on, the law will not impede you in that (but the law does not require you to make investigations into any suspicion you have, either before or after making a report).

If the subject of the report is charged with an offence he will know what he is alleged to have done and what law he is alleged to have contravened by doing it.  He will, therefore, be in a position to challenge the allegation.

David

Mike Sturgess's picture

Dissuading clients

Mike Sturgess | | Permalink

David - absolutely. Most people are unreasonably paranoid about the tipping off offence.

Section 333D actually allows a solicitor, qualified accountant or tax adviser to try to dissuade a client from committing a criminal offence without fear that the discussion could be treated as tipping off.

cymraeg_draig's picture

Treaty of Lisbon & Charter of Fundemental Rights

cymraeg_draig | | Permalink

I agree it is not the same thing - because an accountant (or banker, or estate agent, etc) is only asked to indicate a suspicion - not deliver a verdict.

Posted by davidwinch on Sun, 17/10/2010 - 17:55

 

When assets can be frozen WITHOUT a conviction being obtained first, then reporting a suspicion amounts to the same thing in the short term. 

Perhaps if you had experienced a totally innocent person committing suicide due to the disgraceful pressure put on them by a cretinous police force and an inept prosecutor you would be more aware of the potentially disasterous results of placing someone under suspicion.  I have also seen more than one innocent person permanently and severely damaged  psychologicaly damaged by being wrongly "suspected" of an offence.

Indeed I think it is impossible for an innocent person to be wrongly accused, even if it does not result in a court hearing, without permanent serious psychological damage. 

Therefore people should be aware that if they place someone under suspicion, and they are actually innocent, by placing them under suspicion they are effectively assaulting them because their actions WILL result in permanent injury, and possibly worse, to the accused. 

 

___________________________________________________

Incidentally, judges (in England & Wales) directing juries these days are advised by their equivalent of a professional body (the Judicial Studies Board) NOT to refer to "beyond all reasonable doubt".  Instead they will say something like:

If after considering all the evidence you are sure that the defendant is guilty, you must return a verdict of 'Guilty'. If you are not sure, your verdict must be 'Not Guilty'.

Indeed in a recent case the Court of Appeal commented that a trial judge had "gone wrong" by saying to a jury, "You must be satisfied of guilt beyond all reasonable doubt".

Posted by

 

davidwinch on Sun, 17/10/2010 - 17:55

 

No advocate worthy of the name would allow a jury to deliberate without mking absolutely certain in summing up to explain in simple terms to the jury that the law requires them to be certain beyond any reasonable doubt.

The recent trend to dumb down the wording was another of the Labour governments silly ideas, and one which goes against a thousand years of British justice.

______________________________________________________

 

A 'tipping off' offence can only occur AFTER a report has been made, either internally to the firm's MLRO or externally to SOCA or to another authority.  'Tipping off' occurs where the fact that a report has been made, or the fact that a money laundering investigation by the police or other authority is underway or is being contemplated, is divulged - see s333A Proceeds of Crime Act 2002.

Posted by davidwinch on Sun, 17/10/2010 - 17:55

 

This is something of a grey area (like many others) in that, in theory, you can ask the client to explain whatever the issue is, however, you are not allowed to tell him you intend to file a report (which of course is not "after" a report is filed).

Yet again the regulations are vague, open to differing interpretations, and therefore open to abuse by incompetent prosecutors (and I have yet to meet a CPS lawyer who wasnt incompetent).

 

Of course much of this is now open to challenge due to the Charter of Fundamental Rights which came into force as a result of the Treaty of Lisbon.

Britain is already in contravention of it by scrapping double jepardy in serious cases. 

Article 50 specifically states -

No one shall be liable to be tried or punished again in criminal proceedings for an offence for which he or she has already been finally acquitted or convicted within the Union in accordance with the law.

 This charter will be a rude awakening for the British courts as cases progress to the European court.

 

 

davidwinch's picture

Tried or punished twice?

davidwinch | | Permalink

C_D

That's an interesting thought!

As you may know, it is commonplace for the sentencing process after conviction in the Crown Court to be spread over a period of two years or more (to include imprisonment, making of a confiscation order under PoCA 2002 and the making of a financial reporting order under SOCPA 2005).  But that, I would think, in law is a single process which takes place over a number of court appearances over an extended period of time.

So I would not expect that it would be classified as being tried or punished twice.

Also where a person has been convicted of an offence from which they have benefited, but no confiscation order is made, and years later are convicted of another offence and a confiscation then is made on the basis of a 'criminal lifestyle' that confiscation order can reflect the benefit arising from the earlier offence (because of the definition of general criminal conduct in s76(2) PoCA 2002 as "all his criminal conduct").  But I think it would be argued either that (i) the punishment is punishment for the later offence albeit taking into account benefit obtained from the earlier one, or (ii) the confiscation is not 'punishment' at all - it is simply removing from the convicted defendant that which he should never have obtained.

To take a more simple case.  Suppose I am convicted of a driving offence and given 6 points on my licence.  A year later I am convicted of another driving offence and given another 6 points.  Then I will be banned under the 'totting up' rules.  Would you regard that as involving a second punishment for the first offence?  I think not.

So, yet more grey areas!

David

cymraeg_draig's picture

Criminal Justice Act

cymraeg_draig | | Permalink

Whilst what you say is true David, I had in mind the more basic change brought about in 2005 as part of The Criminal Justice Act which simply wiped away 800 years of law and allows for retrial of people acquitted in, at the last count, 30 categories including murder, rape, class A drug offences, war crimes, and serious FRAUD.

The introduction of this measure was the most despicable and disgraceful act carried out by the last government (and there were many).  It simply allows incompetent police & prosecutors to have a second bite of the cherry after having heard in open court the defendants full defence.  And YES, there are examples where important defence witnesseshave found themselves placed under immense (and illegal) pressure by police not to give evidence in the 2nd trial.

Unfortunately the majority of people in this country have the cosy belief that our police and prosecutors are overwhelmingly honest and decent - nothing could be further from the truth. Corruption, incompetence, and bone idleness are endemic in both organisations.

There are many high profile cases of gross micarriages of justice, perhaps events surrounding the murder of Jill Dando demonstrate this where an innocent man was villified and destroyed by idle police officers under pressure to find "a body" due to the high profile of the victim and simply selected an easy target who could not fight back and produced dubious "evidence" to support their accusations. 

Cases of fraud & "serious" tax evasion, are already open to second trials and, under the Charter of Fundamental Rights ALL these second trials are, in fact, illegal under european law.  Therefore, any confiscation order made as a result of a "second trial" is in fact in breach of this Charter. 

 

 

davidwinch's picture

Disclosing the defence case before trial

davidwinch | | Permalink

C_D

As you will know (but other readers here may not) times have changed with regard to criminal trials.

In my youth Perry Mason every Saturday evening dramatically unveiled a new defence witness towards the end of his client's trial.  The new witness not only managed to provide his client with a cast-iron alibi but also pointed the finger at the true murderer - who promptly broke down and confessed in court (just before the closing titles). Whew!

Actually it doesn't happen like that now in English Crown Courts (if it ever did!).

Now, prior to the trial, the defence will provide the court and the prosecution with an outline of the defence case and a list of any proposed defence witnesses (other than the defendant himself).

Similarly of course the prosecution usually provide a prosecution case summary in advance of the trial, and copies of the prosecution witness statements and supporting exhibits.

So each side has a pretty fair idea of what the other is planning (and the judge knows what both sides are planning) before the trial starts.

Of course, in the event, matters may not proceed as planned - but that's a different story!

David

Privilege

Martinn7 | | Permalink

The whole thing about "suspicion" is that it is just that. Proof is not required; it is just a gut feeling that all is not right, which may be compounded by some actual evidence of possible wrongdoing.

The whole question of Legal Professional Privilege for accountants has been rife with problems since the outset, with eminent QCs openly disagreeing about it. I always issue a warning to IFA members that while the privilege exists in theory, it may not be accepted in practice by the courts, and so should be used with extreme care, the accountant making file notes which could be used in his defence if necessary.

cymraeg_draig's picture

You need to be devious at times

cymraeg_draig | | Permalink

Now, prior to the trial, the defence will provide the court and the prosecution with an outline of the defence case and a list of any proposed defence witnesses (other than the defendant himself).

So each side has a pretty fair idea of what the other is planning (and the judge knows what both sides are planning) before the trial starts.

David

 

Posted by davidwinch on Mon, 18/10/2010 - 12:09

 

In theory you're right David, but in practice no way.  Yes we have to disclose defence witnesses statement, and we have to disclose exhibits, BUT, we do not have to disclose or explain how these "fit together".

For example, a couple of years ago we disclosed a clients car registration documents. We disclosed log books and MOT certificates for 5 cars he had owned over a 2 year period during which the offences were supposed to have been committed.  We also disclosed (making sure they were filed nowhere near the log books) assorted statements made by police officers.

However, in court, we specifically used one statement by the officer in the case where he stated he had seen the defendant drive along a road on May 1st in car registration ABC 123.

We were then able to produce the log book for car ABC 123 showing that it was first registered in the UK on July 1st that year, therefore the officer could not have seen it on May 1st.

We had made full and proper disclosure, but had not been required to explain the relevance of these documents and had "buried" it amongst other exhibits - the prosecution had not picked up on this simple point and therefore the corrupt officer had not had an opportunity to change his statement or wriggle out of it. 

The officer was ultimately charged with falsifying evidence and perjury and is now an "ex officer". Our client of course was acquitted. 

Similarly we had a client alleged to have committed an offence on November 31st - I wonder if the CPS wondered why a calendar was included in the defence bundle? 

So yes, disclosure is required, but no, you dont have to explain its significance or make it easy for the prosecution. 

 

Calendar included in the evidence

chatman | | Permalink

Would you really need to produce a calendar to show that November only has 30 days?

cymraeg_draig's picture

Yes & No

cymraeg_draig | | Permalink

Would you really need to produce a calendar to show that November only has 30 days?

 

Posted by chatman on Mon, 18/10/2010 - 13:40

 

Technically - yes.

Besides it ensured that the prosecution could not allege a failure to disclose, and I do get a perverse pleasure out of seeing CPS lawyers scratching their heads and wondering what relevance documents disclosed have.

Had they realised its relevance they would have dropped the case, as they failed top they could hardly complain when we ambushed them and made them look complete fools in court.

As you may have gathered, I not a fan of the calibre of lawyer employed by the CPS (with a few exceptions). Not all of course are legally qualified, but they all seem to share one trait - a civil service mentality of petty mindedness and a total inability to see that the police are far from perfect and often totally wrong.

 

the protection of suspicion

The Black Knight | | Permalink

I agree with CD in that this legislation is terrible and more akin to despicable regimes of past era's (both black,brown and red).

If you don't you are breaking the law ! If you do you are a shit.  Anyone seen an Inspector calls ?

However reporting a suspicion is easy either you have one or you don't ! There is no real, right or wrong answer.

Can you imagine the work involved in putting an audit  file together to draw a conclusion then being hauled over the coals for not obtaining enough evidence or drawing the wrong conclusion,  all for free !

I like the word suspicion ! thank you.

CD ?  who's fault/moral responsibility is the false accusation ? the person who gave it under duress or the police officer that obtained it ?

The result of destroying an innocent persons life is still the same, but that innocent person may also be the accuser perhaps all that has happened is that we have a system based on fear not truth.

The witchfinder general would be well proud !

p.s. payments to Bin Laden, 3rd cave on the right are bravado and joking are they not ? no one would write that down would they ?

cymraeg_draig's picture

kalden

cymraeg_draig | | Permalink

However reporting a suspicion is easy either you have one or you don't ! There is no real, right or wrong answer.

Posted by kalden on Mon, 18/10/2010 - 14:43

 

The problem I have is that "the state" is saying that YOU can be prosecuted if you are not suspecious when they think you should have been.

How the hell, unless the issue is blatant such as my Bin Laden example, can anyone dictate whether or not you as an individual should have suspected wrongdoing.   

 

______________________________________________________

CD ?  who's fault/moral responsibility is the false accusation ? the person who gave it under duress or the police officer that obtained it ?

Posted by kalden on Mon, 18/10/2010 - 14:43

 

This depends - if it can be shown that the accountant (or whoever) making the report did so from malice then of course they are responsible.

If the court can be pursuaded that a reasonable person faced with the same information would NOT have been suspicious, then there could be a claim, but again this comes back to "the state" in this case the court, second guessing the thought processes of another person - dangerous territory.

The police officer is not responsible as he is only doing his job - PROVIDING that he did so in a proper manner and his actions were proportionate to the evidence (not suspicion) in his possession.

 

_________________________________________________________

p.s. payments to Bin Laden, 3rd cave on the right are bravado and joking are they not ? no one would write that down would they ?

Posted by kalden on Mon, 18/10/2010 - 14:43

 

You never know.  Didnt you see that case reported a few months ago of a burglar who was arrested and in his home the police discovered a meticulously kept diary with addresses burgled, what was taken, who it was sold to, and how much he got?

Never underestimate the capacity of others to be stupid.

 

davidwinch's picture

Talking of being stupid . . .

davidwinch | | Permalink

I remember a few years ago dealing with a case of a chap who sold 9 ounce bars of cannabis (in the UK cannabis dealers don't talk of 250 gram bars - they have not gone metric!).

(These are sometimes known simply as '9 bars' - not to be confused with similarly sounding Dime Bars.)

The dealer was caught with a car boot full of 9 bars and a diary in which were listed initials and amounts.  Every one of the amounts listed was an exact multiple of 650.

The prosecution proceeded on the basis that he had been selling the 9 bars for £500 each.  Good grief . . . .

David

thats too easy David

The Black Knight | | Permalink

There are 9 bars for each monkey ! lol

perhaps SAR 's ought to be accompanied with a disclaimer.

"the above suspicion is a matter of personal imagination and opinion not based on fact and therefore by its nature is highly subjective, no work has been carried out to confirm or refute the above suspicion and therefore any use you wish to make of it will be at your own risk. The provider accepts no responsibility either Morally or legally for its correctness."

cymraeg_draig's picture

Stupidity

cymraeg_draig | | Permalink

Once had a client summonsed to appear in court charged with - "Driving a motor vehicle at 38mph in a 40mph zone" - some days you just can't win :) 

This actually got to court and the trial started without the clown from the CPS or the idiots on the bench noticing the fatal flaw in the summons.

 

davidwinch's picture

Opinion

davidwinch | | Permalink

As an 'expert witness' in criminal proceedings a key part of my role in giving evidence in the Crown Court is to offer my professional opinion on relevant matters.

Of course the judge / jury are perfectly at liberty to form their own opinions rather than be guided by mine - and they may also have heard from another 'expert witness' who expresses a contrasting opinion.

But isn't it the case that every accountant when preparing a set of accounts for a business is forming opinions on such matters as the collectability of debtors, the realisable value of stock and work in progress, the viability of the business, etc.?

We, all of us, in our working lives have to be prepared to form opinions and stand by them.  I see nothing wrong in that.

David

cymraeg_draig's picture

Opinion v suspicion

cymraeg_draig | | Permalink

 

We, all of us, in our working lives have to be prepared to form opinions and stand by them.  I see nothing wrong in that.

David

 

Posted by davidwinch on Tue, 19/10/2010 - 13:22

 

When "forming an opinion" regarding a set of accounts we are free to examine evidence (invoices etc), talk to the business owner etc and form an educated opinion.

The problem with MLR is that we are expected to report mere "suspicion" without any actual evidence at all. 

I think there's a vast difference between the two.  Also the difference in damage if you get it wrong can be significantly different.  Get accounts wrong and you might cause financial problems, get a ML report wrong and falsely accused people have been known to commit suicide.

 

Yes But

The Black Knight | | Permalink

Unless auditing etc, we do not express those opinions. Added to which we have usually done a lot more work to form those opinions rather than had a mere suspicion.

I may suspect my neighbour has lesbian tendencies, because she wears an old duffle coat, but she may be in disguise. Some one may later then say I should have realised she was a lesbian. When all I was being was objective and fair, should I have had a suspicion or not ?

Should we make it clear that our statements may be unreliable or made for self preservation reasons.

or perhaps also, to be objective, list all the other reasons why we could also suspect non criminal motives.

When we make statements to mortgage providers those statements carry a disclaimer.

 

davidwinch's picture

Suspicion not speculation

davidwinch | | Permalink

C_D

What you refer to as suspicion "without any actual evidence at all" is mere speculation.  I may 'suspect' that David Cameron would be a better football goalkeeper than Nick Clegg - but I have no evidence either way.  That is not suspicion at all.

Speculation is not to be reported or, as one judge put it, "a general feeling of unease would not suffice".

I would say however that (i) suspicion falls short of proof and (ii) suspicion may be based on all forms of evidence - it is not necessarily a matter of documentary evidence.

As professional people one would hope we would exercise a proper degree of care in forming, and then reporting, a suspicion.

I sometimes suggest that having a suspicion means having an opinion that 'someone in authority should look into this'.

As to suicides, I have heard of a suicide of a director following a 'going concern' qualification in his company's audit report.

David

Jon Stow's picture

That's about it, David

Jon Stow | | Permalink

I would say however that (i) suspicion falls short of proof and (ii) suspicion may be based on all forms of evidence - it is not necessarily a matter of documentary evidence.

Recently I declined to act for a prospective client because I suspected he would try to worm his way out of paying me. The evidence was very circumstantial but enough without being anywhere near proof.

This is a great thread and the information about the duffle coat explains an unsuccessful date in my distant past.

John Stokdyk's picture

You turn your head for a few hours and look what happens...

John Stokdyk | | Permalink

My thanks to Clint for raising this issue and pointing it in David's direction, and for all the other members who have added their thoughts.

I meant to dash off an email to David when the decision emerged, but other issues intruded.

So Clint, please now consider yourself assistant deputy commissioning editor, and David our legal affairs correspondent. As long as the participants in this thread are willing, I will do a short digest and publish it on the Aweb news pages to alert the rest of the community to the issues raised.

We couldn't do it without you!

 

cymraeg_draig's picture

Jon

cymraeg_draig | | Permalink

This is a great thread and the information about the duffle coat explains an unsuccessful date in my distant past.

Posted by Jon Stow on Tue, 19/10/2010 - 16:25

 

A duffle coat isn't conclusive - it's the ones with a 5'O'clock shadow you REALLY need to worry about :)

 

I suspect we could argue all day about what constitutes sufficient suspicion to warrant the serious step of filing a report. 

David may well be a suspicious type, always on the look out for someone "on the fiddle", I, on the other hand may be one of those trusting souls who always sees the good in people and takes peoples word at face value. 

Now given identical circumstances David may well consider something suspicious enough to warrant reporting, I on the other hand may see no cause for concern whatsoever. 

What I consider utterly unnaceptable is the the MLR give the courts the right to dictate to me what I "should" have considered suspicious, whether I did or not.  Conversly they do NOT have the power to dictate to David what he should NOT have considered suspicious and to compensate the victim of his incorrect report. 

That seems very wrong to me.

 

Moving back to the issue of privalege, again this is something that currently is poorly defined. In my view if a client wished to "admit" to his accountant that he has been fiddling his taxes, that should be privaleged just as it would be if he told his lawyer or his priest.

Professional privalege should ONLY cease to apply if a client actually asks his accountant how to commit an offence (obviously).

If a defendant tells his counsel "yes I did commit the rape/murder etc - but i want to plead not guilty" then counsel cannot disclose that confession. However, if a defendant askes his counsel "whats the best way to kill/intimidate a witness" then of course counsel has a duty to report that conversation.  Why should the situation with taxpayers and accountants be any different ?

 

 

davidwinch's picture

Privilege & MLR

davidwinch | | Permalink

C_D

In terms of privilege and MLR the position is pretty much as you describe it.

If a client volunteers the information to his lawyer or to his professionally qualified accountant that he has been engaged in tax evasion (or other criminal conduct) then neither the lawyer nor the professionally qualified accountant are obliged to report this under s330 PoCA / MLR 2007.

(Priests are not obliged to report under s330 PoCA / MLR 2007 in any event.)

However if the lawyer and the accountant were to be served with a court order requiring disclosure of relevant documents then (assuming each of them had made a file note of the information) the accountant would be required to hand over his file note but the lawyer would not (because of common-law legal professional privilege).

However if the client had NOT volunteered that information but, say, the lawyer came to suspect it because of information received in the course of a conveyancing transaction then the lawyer would have to report his suspicion under s330 PoCA / MLR 2007.

In the same way if the accountant came to suspect it because of information received in the course of routine accounts preparation then he would have to report it.

David

cymraeg_draig's picture

Disparity

cymraeg_draig | | Permalink

However if the lawyer and the accountant were to be served with a court order requiring disclosure of relevant documents then (assuming each of them had made a file note of the information) the accountant would be required to hand over his file note but the lawyer would not (because of common-law legal professional privilege).

Posted by davidwinch on Tue, 19/10/2010 - 21:28

 

Which is where it all goes wrong.  Many clients turn to their accountant initially for advice which is "legal advice".  How mant times have accountants said to clients that they really should go to see a solicitor?  The line between tax advice and "leghal" advice is very fine.

Now if the client is asking for what amounts to legal advice why should one professional be entitled to privalege when the other is not?  This is clearly not sensible. 

Indeed if a client asks me for legal advice it is only privaleged if he has first been referred to me by a solicitor.  If he comes to me direct he is technically not a client and the conversation is not privaleged - how stupid. 

 

 

davidwinch's picture

I take your point but . . .

davidwinch | | Permalink

C_D

I take your point.  In effect you are saying that common-law legal advice privilege should apply in circumstances where a client seeks legal advice from a professional person - because the client's purpose is the same whether the professional he approaches for that legal advice is a solicitor or an accountant.

All I can say is that the Court of Appeal do not agree with you, sadly!

David

Mike Sturgess's picture

Define what is meant by accountant

Mike Sturgess | | Permalink

Sadly, unlike the term solicitor, the term accountant is not defined or reserved. Anyone can call themselves an accountant. Within the money laundering legislation there is a definition (for "other porofessional adviser").  

“other professional adviser” means an auditor, accountant or tax adviser who is a member of a professional body which is established for any such persons and which makes provision for—

(a) testing the competence of those seeking admission to membership of such a body as a condition for such admission; and

(b) imposing and maintaining professional and ethical standards for its members, as well as imposing sanctions for non-compliance with those standards.

Whilst not listed we can work out to whom it would apply: ICAEW, ICAS, ICAI, ACCA, CIMA, CIPFA, CIOT, AAT, ATT and possibly more. Turf accountants do not qualify! However, this list of professional bodies shows how complicated the accountancy profession is. Whilst the judgement in the Prudential case is not to be welcomed it is perhaps understandable. The courts effectively said that without an equivalent definition enshrined in statute they do not feel able to extend full legal professional privilege to accountants. The ICAEW tried to get the extension through this case. Hopefully the next stage is to lobby parliament for the relevant change in the law. I suspect the Treasury and HMRC will be lobbying against it, so that they can demand to see "relevant" papers.

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