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SOCA report? Maybe one for Mr Winch!

SOCA report? Maybe one for Mr Winch!

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Okay, this could be a long one and I apologise in advance!

Client provided us with Option Agreement relating to sale of land which provides for payments to be made for grant of option over five separate tax years. (Very large amounts). I advised client that CGT due and that computation is based on full amount received for option (as ascertainable deferred consideration) in tax year of date of agreement (and first instalment). Tax Return completed on that basis and sent for signing with full explanation.

Client not happy about how much tax she will have to pay, speaks to the other joint owner of the land who's accountant has said that the declarations can be made year on year (i.e. when each instalment is received), with a caveat that HMRC could query it and that penalties would be charged, etc. Client asks us to revise tax Returns on same basis as other accountant. 

I discuss matter with her client manager (I am employee of firm, her client manager is ex-partner, now self-employed consultant to our firm) and explain why I believe we are correct - he asks me to get a second opinion, which I do and which concurs with my interpretation of the law. He discusses with client but she is adamant that if her associate will be declaring it a certain way (and paying the lower tax) then she wants to aswell. I advise client manager that I refuse to do this (I am CTA) and that we should refuse to act on that basis. I subsequently wrote to client on that basis and advised them that they would need to complete their own Tax Return, or arrange for another accountant to do it as we believed that our interpretation was correct. I made a verbal report to the principal of the firm (our MRLO) as to what action had been taken - I don't believe he took the matter any further.

A year later, I come across the lady's file in the cabinets, have a look, and find that one of my tax team (unqualified) has completed her 2013 Tax Return declaring one instalment received in the year. I asked on what basis he had done this and he informs me that the client manager asked him to do it. He was told to complete the paper Tax Return, add the CGT computation and send it to her but advise her to post it to HMRC herself as this should 'cover our backs'.

I immediately ask client manager why this was done, bearing in mind that my professional opinion had been that this was clearly incorrect. He now says he disagrees with my opinion, and that of the second opinion ( a solicitor) and that if the other party's accountants are doing this, we should too. (I would add at this point that the family of the client are undesirable and notorious and I believe that he is scared of any retribution, should he go against their wishes - he has acted for the client's husband and his companies for many years). He also says that we are no longer engaged to act for her so we are covered, should there be any tax enquiry, etc.

I am now in a situation where I honestly believe that this taxpayer has purposely under-declared tax (the amounts are substantial, the difference in tax being over £30,000) and we are right in the middle of it. I spoke to the principal and asked him to send a letter to the client saying that we believed the Tax Return was actually incorrect and would need amending - he has not done so (mostly apathy, probably fearful also).

I now do not know what I should do - If I make a formal report to the MLRO (the principal), I suspect  it will not be dealt with and will be in the bin before the day is out. I have thought about making a report direct to SOCA, but not sure if this is the correct action. Or, do I have no obligations at all, because this is 'interpretation of the legislation'?

This is eating me up and I really would be grateful for any advice.

Thank you for reading my version of War and Peace ;-)

Replies (9)

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By KAN
03rd Feb 2014 12:43

I will report it only if I have to and the failure to report will land me in trouble. If this not the case keep away from NCA by the way and not SOCA any more. Make sure that you have fulfilled your anti MLR obligation may be you might have within the framework of your training and briefing.

But I check and recheck

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By frankfx
03rd Feb 2014 13:52

wider issues

You are clearly troubled.

You may want to report the other professionals  to the NCA.

but that widens the  case and does not do you any favours.

Is the firm a training office?

Sends  a bad message to junior and trainee staff on good behaviour/ practice and ethics. breeds the next generation ............

 

We all sign up to ethical standards--  which mark us as being professional and trustworthy.

 

As Bob Diamond , ex ceo Barclays , stated :

Ethics is what you do when no one is looking.!

Was he looking in a shaving mirror at the time?

 

What happens next time? £5000 error or £50,000 error  / favour?

I worked for a practice where the partners  were totally  cavalier, and were constantly imposing on staff. with self -justifying delinquent procedures.

Ultimately cover your back , E mails  , with their time stamps  really help.

IS  your job safe ?

I was asked to leave , after 6 months , as I questioned dubiuos procedures that I was unwilling to be a party too. In tough times getting another job in a good location proved troublesome. 

 

 

 

 

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By northernmonkey
04th Feb 2014 11:36

Thanks for your comments.

It is a training practice - it's a standing joke how cavalier the principal is unfortunately.

Job is safe - been there over ten years and am indispensable :)

Should I/Can I report straight to SOCA (Or NCA!)?

Thanks

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By mrme89
04th Feb 2014 12:04

I wouldn't send a report to SOCA.

 

Send a report to your MLRO and then forget about the matter. It is up to your MLRO to act on any reports. You have fulfilled your obligations by sending the information to your MLRO. Don't even mention in passing "did you get my email regarding Mr X". Forget about it once the email is sent.

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By Mathswizard
05th Feb 2014 13:50

Dillema

We all face them at some point, I would report to MLRO, making sure you have a record of that report having been made and then get on with your life.

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By northernmonkey
05th Feb 2014 14:06

Okay, thanks - I'll do that.

Part of me is really annoyed as taxpayer gets away with it at the end of the day - grrr

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By sabtuc
07th Feb 2014 14:16

New job

I would also start looking for a new job - do you really want to work for people like that?

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By northernmonkey
09th Oct 2014 09:44

Help again!

See new thread

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By northernmonkey
08th Oct 2014 10:28

Bump!

Sorry to bump this but I'm having trouble sleeping and really could do with the advice of you lovely people.

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