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an eye for an eye then
one year in jail for each year on the fiddle..
One wonders how he slept at night knowing that he must be found out!
Early release.
Very much doubt he'll serve anything like his whole term, probably more like 3 years.
Not even 1 year, don't forget one only typically serves 50% of the sentence. He may also be in a low security day trips home butlins type establishment.
Cornwall tax fraud
He sounds very stupid. One question leaps to mind:- How did he manage to get 40 clients (and presumably more) in the first place? Did they not check his qualifications, or was he just very cheap? Usually there's a reason why accountants are cheap - they're not very good..
Protected Title Now!!
In the real world nobody cares about qualifications. All they are interested in is getting their tax liability worked out as quickly and cheaply as possible. Those in the profession like to brag how their qualification is the best and members of other institutes are inferior, etc, but Joe Bloggs on the street really couldn't give a damn!
The sooner the title accountant becomes protected like the term solicitors and doctors the better. This nonsense has gone on too long!
Proceeds of Crime
Does he keep the £2m? Seven years (no doubt reduced for good behaviour or whatever it is called these days) in jail for that kind of reward seems possibly worth while.
What a silly sausage
There are easier and less risky ways of making some dodgy cash - just become an MP, bang in hefty expenses claims, refurbish your second home at the tax-payers' expense, flip homes and sell the 'secondary' (ie primary) home to avoid CGT. Then sit tight, avoid the flak, refuse to resign and carry on as before. Pass Go, do not go to jail, and collect £200.
Jail time & getting clients
A person sentenced to a jail term in excess of 12 months can (in most cases) expect to be released from prison at the half-way stage or before - but subject to recall into prison for subsequent misbehaviour. So Mr Pearce can expect to be out of prison in 3½ years from now and perhaps earlier.
Mr Pearce was generally popular with clients because he was quick at producing tax returns (usually within 2-4 weeks), he prepared returns and accounts on a fixed fee (which was very reasonable), he visited clients at home out of hours and was (apparently) successful at claiming business expenses which were not claimed to the same extent by other accountants. His clients frequently recommended him to their friends & co-workers.
In consequence he accumulated a large number of clients - arguably more than he could cope with.
The figure of £2m is said to be the tax 'lost' to HMRC over a period of years in relation to his clients as a whole. At trial the prosecution alleged that Mr Pearce had retained £170,000 in tax refunds belonging to his clients but accepted that at least part of that was due to him for legitimate accountancy fees.
The prosecution did not seek a confiscation order.
David
Wow. .
And I worry even when I do my utmost to do everything by the book. . . .
Bravo to HMRC and all who worked on getting justice!
You get less time in prison for murder these days!
Just goes to show that defrauding the government or anything to do with money carries harsher punishment that some more severe crimes.
Jamie4f, you don't need qualifications to be good at your job, there could be many factors why he hasn't got any, time barred, just simply froze under examination conditions but that doesn't mean he's not qualified to do the work.
Sounds stupid? the only stupid thing he's done was get caught!! extremely unprofessional comes to mind, lets face it, there are probably hundreds of accountants out there that have done the same thing and are have got away with it. Lets just hope that this is a lesson to all dodgy accountants out there..HMRC will find you at some point!
Cornish accountant
In the first place he erred in calling himself Accountant when he was not thus soiling the reputation of professional Accountants-hence the sentence( holding out to be an accountant when you are not).However,legally, an accountancy qualification, though desirable, is not a requisite for the job of tax consultancy .The tradeoff is found on the risk taken by a non-professional in doing such jobs for professionals.His defence of ignorance on some tax issues may be true though not admissible..'ignorantia juris non excusat' principle.
Ignorance of the law
Ignorance or misunderstanding of tax law is not of itself a criminal offence.
Mr Pearce was convicted of cheat and fraud. Those offences necessarily involve dishonesty which means that the jury were sure that Mr Pearce realised he was acting dishonestly in preparing & submitting the tax returns and in failing to pay refunds on to his clients reasonably promptly and fully (net of legitimate fees).
The common law offence of cheating HMRC is one of the relatively few offences in English law for which there is no maximum sentence. The maximum sentence for defrauding anyone other than the Crown is 7 years.
Mr Pearce was and is an accountant - although I imagine he will not be practising whilst in prison.
David
Client rebates
Will the de-frauded clients receive the rebates he stole from them David? Why didn't the prosecution ask for confiscation order - does he have no assets left?!
A reply of sorts
Will the de-frauded clients receive the rebates he stole from them David? Why didn't the prosecution ask for confiscation order - does he have no assets left?!
I hope you will excuse a somewhat cagey reply!
It appears that where HMRC believe that a taxpayer's income has been under-declared but the taxpayer himself has not ultimately benefited from that under-declaration then they are not pursuing the taxpayer for the tax 'lost' (nor penalty / interest on it).
Incidentally HMRC wrote to all Mr Pearce's clients (i.e. those for which they had him listed as tax agent via 64-8 etc) in 2012 informing them that he was the subject of a criminal investigation and 'inviting' them to make a voluntary disclosure. In consequence a number of these taxpayers instructed new accountants & asked them to review returns submitted by Mr Pearce and negotiate a settlement with HMRC.
Some of Mr Pearce's clients pursued him through the civil courts for their refunds - with mixed results.
I don't know why the prosecution didn't go for a confiscation order (I was instructed by the defence). Like you I could make a guess - you may not be far wrong!
David
Cornish Accountant
We as qualified accountants must be very careful as to arrogance we can portray that qualifications make us better than others.
Qualifications allow us to perform tasks that non-quals cannot but that does not of necessity make us better. It may however allow us to charge more!
When I was training I was under the charge of an accountant/audit manager who was brilliant and taught me a great percentage of what I now know. He was not qualified. Why? Because he felt his aged parents should have his attention and not exams.
Where I live and operate there is a 60 y.o lady who has a practice which is perfretly. She has been in practice for 35 years but is not qualified? Why? Because as a dyslexic she could not take exams. The pressure in the exam room made the illness worse.
For many years I was a professor of accounting in Eastern Europe. I know full well that you could find ways around passing your professional exams. Just as some are unqualified there are those who are qualified who should not be.
Lets accept that anybody is allowed to call themselves an accountant and then we can assess them by the quality of their work and output. Pressing home the "I am better because I am a xxxx" in my view does not advance the cause of accountants.
Yoshik
shome mishtake shirley
mcchoc don't you mean £20,000 ?? However Maria Miller aside Macshane got 6 months for £12900 that works out at £25800 per annum.If you takes this guys £2170000 that comes out at £25833 per month. On the same basis as Macshane he should have got 84 years so he got off lightly and personally I think anyone in practice who didn't know taper relief went 6 years ago deserves 84 years.
Re Mr Winchs comment about not practising while inside haven't you seen the Shawshank Redemption ???
The ultimate loser as ever is mug the taxpayer as the cost of this trial must have far exceeded the alleged loss to HMRC and hes going to to cost us another quarter mill before hes out.
cornish accountant
The moral of this is beware unqualified accountants. A qualified accountant who is regulated by a professional body is subject to checks and balances including compliance visits and education and training requirements, and is required to have insurance. Had Pearce been qualified the compliance visits should have unearthed these problems long ago. You have to ask why an accountant is unqualified. Whilst there may be some deserving cases the inference is that a lot of them were not good enough to sit the exams and pass them. Would you take legal advice from an unqualified "lawyer"?
Every one wants cheap
Having worked for a national firm of chartered accountants for a number of years in their marketing department, I have come to the conclusion that what many SME's and owner managers want is "cheap" and if the accountant is unqualified so what ? Would they take legal advice from an unqualified lawyer ? if the price was right some of them would
competence
The moral of this is beware unqualified accountants. A qualified accountant who is regulated by a professional body is subject to checks and balances including compliance visits and education and training requirements, and is required to have insurance. Had Pearce been qualified the compliance visits should have unearthed these problems long ago. You have to ask why an accountant is unqualified. Whilst there may be some deserving cases the inference is that a lot of them were not good enough to sit the exams and pass them. Would you take legal advice from an unqualified "lawyer"?
Only problem is there are similar examples with 'qualified' accountants!? Ripping people off is not only the domain of non qualifieds
Incompetence is mostly the domain of non qualifieds but their is also incompetence in qualifieds, jumping through hoops parrot style for a few years dosent make one a highly competent individual.
accountancy services
What I love is when people who aren't qualified try to seek some sort of legitimacy by signing up to various 'professional bodies' who have zero entry requirements.
Then splash all over their website that they are a member of the Worshipful Body of Whatever in the hope that it will help them grift some work out of an innocent client.
Makes me chuckle.
Either be upfront and honest about your lack of qualifications (nothing wrong with that) or get hold of yourself, knuckle down, sit the exams then there would be no more ducking and diving, and no more embarrassing conversations with clients about how you can't actually witness their passport renewal or sign off the profits on their mortgage application.
Just don't imply you're something that you're not. It's a small step away from fraud.
Thing is the law does not require an accountant be a member of certain highly regarded organisations (e.g. Icaew) in order to perform tax and accounting services, aside from audit which many businesses are exempt from. So why should someone in business in accountancy services tell people they are not something that they are not required to be?
Simon Pearce
perhaps David Winch can explain why a confiscation order under the proceeds of Crime Act 2002 was not made by the court.
. . . or perhaps not!
perhaps David Winch can explain why a confiscation order under the proceeds of Crime Act 2002 was not made by the court.
As you hint, the court itself has power to make a confiscation order under s6 PoCA 2002. In practice I have never come across this.
In every case of which I am aware the initiative for a confiscation order has come from the prosecution.
In Mr Pearce's case the prosecution did not ask for a confiscation order and none was made. However the court did make a Financial Reporting Order under s76 SOCPA 2005.
David
Already answered
I don't know why the prosecution didn't go for a confiscation order (I was instructed by the defence). Like you I could make a guess - you may not be far wrong!
Companies House
shows S T Pearce Accountants (Truro) Ltd was set up in 2007 and submitted 1 dormant set of accounts in 2011 before being finally dissolved in February last year. Another company set up in 2006 was dissolved in 2009 without submitting any accounts. Strange that this ties in with the period of the offence although the reports appear silent on whether he traded through these companies or as a ST. If he did then alarm bells regarding the guys honesty ringeth for the jury I would have thought.
@pembo
The jury trial was concerned only with Mr Pearce's conduct in relation to his clients and their tax affairs. So the issue to which you refer was not before the jury.
As is often the case, the jury were expressly told by the judge not to google the internet for information relevant to the case. Juries are required to reach their verdicts based only on evidence which is presented before them in court.
Whilst the existence of those companies might have been relevant to a proposed second jury trial of Mr Pearce concerning his own tax affairs (which would have been heard by a different jury), in the event Mr Pearce pleaded guilty to cheat of HMRC in relation to his own taxes.
David
cornish accountant
With regard to SJH's response, Of course qualified accountants get it wrong but the checks and balances surely mitigate those risks but most importantly a qualified accountant will be required to have insurance of the correct type and cover. As it happens I am presently promoting legal action against a qualified accountant who gave appalling tax advice and put risk-averse clients into failed tax schemes, but he has insurance. I am also promoting a negligence claim against an unqualified accountant who ran up surcharges of over £70,000 (and concealed his negligence from the client) and we don't yet know if he has insurance.
Cornish Accountant
Couple of points here-
1. Not sure why the whole topic is relevant for Accounting Web readers - do we really need to have the details of exotic fraud and pathetic excuses to remind us - qualifed or not - about our obligations?
2. I had my annual reminder this morning to pay HMRC £110 by 1st June for my MLR supervision fee - I have sked them on several occasions to tell me the benefit I am getting out of this, apart from the privilege of not being debarred from ASP activities - their response has invariably been that my practice is not seen as "high risk".............so that's the beneift apparently.
Any views on this illogical posture would be appreciated!
Pearce
As a former HM Inspector of Taxes and since the 1980's someone who has been in practice as a tax consultant and accountant I note with some dismay the comments about non qualifieds.
I can tell you that I have seen some very good work from qualifieds but also seen some really bad work verging on criminal activity.
I repaired some of the Pearce cases and one factor was inflated expenses without invoices or probability arguments which could be presented to HMRC, are you qualifieds saying that you do not know of at least one qualified who has not inflated expenses to reduce taxation.
This should be a wake up call to all accountants.
It's good to see a successful conviction
I'm glad that HMRC were able to secure a conviction. This is tricky when the members of the Jury are ordinary members of the public who don't have much knowledge of, or interest in, accountancy or taxation.
They're told by the prosecution lawyer that the Defendant did x, y and z, and all those things are illegal. They're then told by the defence lawyer that actually x, y and z are perfectly OK, or the Defendant didn't know they were happening and/or didn't realise they were wrong, and that the real crooks are the prosecution witnesses who've made up vexatious stories about their poor client.
Under the current system the odds in these complex fraud cases are stacked too far in favour of the Defendant. We probably need to scrap Juries for this type of trial and move to a system where a decision is made by a Judge supported by a couple of expert assessors.
Regulatory bodies and federations
The problem is there are too many bodies and federations most of which are for the benefit of paying members and self regulatory. Even Government regulation is ineffective; the FSA was in denial about the scale of the banking crisis right up to the bailout in 2008.
The Courts are the ultimate regulatory body with the power to remove the offender from society and confiscate ill-gotten gains.
Supervision by HMRC
I’m not sure if Keith Lyons is replying @ 13:45 to my comment Nr 2. of 13:41 but………given his historical experience as an HMIT Inspector, what is his take on HMRC’s ongoing refusal to understand that MLR 2007 (and whatever subsequent nuances have been made to that legislation) can’t be seen as being complied with simply because an ASP’s client-list doesn’t feature “high risk” occupations?
My client-list includes brickies, Alexander Technique instructors, wig-makers etc………..none of these occupations precludes the individuals involved in fiddling around with unsavoury transactions that should be reported to SOCA (were it not, of course, for my penetrating approach to compiling their submissions to HMRC with the necessary caveats).
qualified v unqualified
These kind of stories inevitably lead to the qualified v unqualified argument, but one simple fact is always overlooked. It would be possible for parliament to pass a law tomorrow making it illegal for anyone unqualified to call themselves an accountant, but, retrospective laws are illegal (Human Right Act Article 7) so anyone unqualified and already calling themselves an accountant could not be covered by such a law.
Assuming someone unqualified and aged, say 20 was already calling themselves an accountant, and, assuming they continue to trade until they were 90, that would mean it would be at least 70 years before such a law actually fully protected the term “accountant”.
Hardly practical is it?
@ David
appreciate your point however if the prosecution was attempting to discredit the guys credibility surely an eyebrow would have been raised regarding his corporate history that naturally is in the public domain anyway unless his subsequent guilty plea was in his capacity of a director of the companies and was therefore off limits for the prosecutor. His first company was wound up by 652a in 2004 having never apparently traded. His second (same name) was wound up by the OR in 2009 having filed no accounts and his third was wound up by DSO1 in 2013 again having never apparently traded. Interestingly the last 2003 accounts of the first company were apparently prepared by one R D Smith FCA despite being dormant accounts. All very strange.
Who rattled your cage?
Glad to see the usual penqines and trolls are very quiet on this subject
So ... I get slated when I do post, and get slated when I don't post. Why don't you go poke your big stick at a real troll?
@ pembo
Well, there's rules.
I understand that if a prosecutor wants to raise matters before the jury he has to be able to show that the matter is properly evidenced (and that almost always will require a witness in the box - not simply the documents) and that the matter is relevant to the case.
Added to that we were here dealing with a case which was already massive - it ran for 10 weeks in court and involved more than 40 clients giving evidence plus a smattering of HMRC officers & expert witnesses. (Sadly one planned witness had died between making his statement & the commencement of the trial.) The jury were provided with 4 lever arch files of key documents, but these had been whittled down from approaching 40,000 pages of exhibits.
So the prosecution would be wanting to ensure that they had sufficient evidence in front of the jury in court to get them across the finish line - but anything beyond that they would wish to exclude. Obviously they had their own decisions to make on tactics, witness selection, etc.
Equally in any court case the defence will make decisions about which issues they wish to fight about and which they wish to let go by unremarked.
If we had heard in court about everything which MIGHT be relevant the case could have run for many more weeks - perhaps 20, 30 or more!
Bear in mind a Crown Court hearing is not an enquiry into events to establish the truth, it is an adversarial exercise in which the prosecution seek to make the jury sure the defendant is guilty of the offences with which he has been charged and the defence seek to frustrate that.
David
I do love the would-be lawyers on here
They need to read more carefully the legislation that they cite. There is nothing in Article 7 of the HRA to prevent relevant legislation applying to all non-qualifieds from tomorrow.
And, BTW - spotted.
Qualified vs Unqualified
A crook is a crook regardless of whether or not he or she are qualified.
To qualify or not.
Would any of you go to a dentist or a doctor who is not qualified just because they are cheaper? A fair proportion of any qualified accountant's fees is to gain recompense for the cost of obtaining the degree in the first place, insurance, MLR, and CPD plus many other expenses incurred in keeping his knowledge of tax law current. It seems that accountancy is the only profession where qualifications do not matter. And before we get the old red herring about motor mechanics do not need qualifications, would any of you really risk your life by having your car serviced in a back alley, unregulated, garage?
Maybe I would
Would any of you go to a dentist or a doctor who is not qualified just because they are cheaper?
If it was a simple task, eg. scaling, then I would be happy to use a cheaper technician. If it was more complex, them I would prefer to use someone with a good reputation who is skilled in the particular task I needed. However, when using a qualified I would expect my dentistry/doctoring to be done by the actual qualified person, and not by a unqualified junior, as frequently happens in larger practices.
There are good and bad in both qualified and unqualified and until 'qualified' guarantees quality and competence then I fail to see how anything can change.
The profession is to blame...
OK, a little tongue in cheek comment but since when has the ICAEW had an active interest in protecting the "small fry" local general practitioners? If they had then extensive lobbying could have made at least the tax side of our profession a "qualified only" trade like the lawyers.
I took on a couple of the ex-Pearce clients and have seen at first hand what happened. His attraction... he was quick and cheap, they paid less tax and he often got them tax repayments. Key issues for many small sole trader clients in any area.
Seriously, there will always be bad apples, qualified or not. Its just refreshing when they get caught.
Now all the ICAEW needs to do is PUBLICISE THIS CASE!!!!!
This dreadful case.
So much sanctimonious commentary upon the qualified by examination and the qualified by experience accountancy practitioners.
Over the last 45 years I have encountered non-quals who should not be allowed to wield a pencil never mind "run" a practice and I have also encountered qualified accountants of various persuasions who are an absolute disgrace to an important profession.
Surely, we should be looking at each individual practitioner on the basis of merit and not by some global and prejudiced yard stick - after all the Enron debacle (among others) caused more financial damage to more people than this clown in the land of the tin mine.
I'm all for regulation of accountants so that they're either qualified by exams (with experience to back it up) or qualified by genuine experience (because not everyone performs well in exam conditions and passing exams doesn't guarantee you can apply that knowledge to real life). But I object to being forced to stay with one of the institutes to be able to practice because they're not in it for the good of the public's interests or for ours. They care about getting as much money out of members as possible for the least effort. I qualified with ACCA and have since kicked them into touch. I'm now with ICPA and they're far more focussed on actually providing a benefit (well lots of them) to their members AND fighting their corner with HMRC et al. And HMRC takes my money for ML registration (money for old rope though).
But yes, there are good and bad in all camps whether it's qualified by exams, qualified by experience, or winging it with no clue.