Accountant excluded after leeching off firm's tax helplineby
An ICAEW member has been excluded from the institute after using another firm’s name and policy number to call a tax advice helpline for more than a year after her contract was terminated.
Katherine Hardy, the sole director of audit registered firm Lightwater Accountants, was found by an ICAEW disciplinary tribunal to have called another firm’s tax helpline to get help for her clients after her contract with that firm was terminated.
As reported in December’s ICAEW disciplinary report, Hardy was thrown out of the ICAEW and ordered to pay £15,105 costs after a disciplinary tribunal said she “demonstrated little in the way of acceptance that her wrongdoing involved deceit on numerous occasions and was serious”.
The tribunal heard how Hardy made telephone calls to ‘DE’ Limited’s tax helpline by dishonestly using the Surrey-based accountancy firm’s name and policy number where she did audit work for their clients and preparation of financial statements until April 2017.
The annual subscription helpline was there for clients of the Surrey firm to receive tax investigation insurance and also tax advice for the firm’s staff. Only current working employees and subcontractors are allowed to call the service and they are restricted to ask advice for only the client work relating to the firm.
But Hardy broke these rules by continuing to use the helpline after her contract with the firm was terminated in April 2017.
Hardy was rumbled in May 2018 after a worker on the tax helpline received a call from someone quoting the Surrey-based firm’s policy number but after the call was disconnected, the helpline worker tried returning the call and no one at that firm’s team had used the service that day.
Furthermore, the mobile number used to call the service belonged to Hardy. Furthermore, between 21 April 2017 and 25 April 2018, the team at the firm had only made eight of the 28 calls to the service.
Hardy denied the complaint
Hardy conceded that she made the calls to the helpline but insisted in her statement to the ICAEW that she did so to help clients of the Surrey-based firm who had turned to her for help and even claimed in one case that she called to get evidence for an ACCA complaint.
She also admitted that she used the helpline to help prospective clients seeking free advice.
Hardy recognised that she acted “without integrity” and that she should have told prospective clients seeking free advice that she couldn’t help them and they should find someone who knew the answers.
In another twist to the story, Hardy told the tribunal that she had been fired and was “basically thrown out on her ear” and was “basically cut off” from speaking with clients she had gained for the firm.
Hardy took the termination of her contract hard and it led to her struggling to get her practice up and running and even said that the helpline was a “friendly voice to talk to and to bounce ideas off” but soon realised that she would be far better off telephoning an HMRC inspector.
She then turned attention to the ICAEW and argued that she “had received no help from the Institute, despite being a member for 30 years”. Hardy also told the ICAEW tribunal that she “had done her best for her previous clients who had come to her for help and her conscience was clean”.
In reaching a decision on Hardy’s sentencing, the tribunal acknowledged that the termination of her contract had put her in a difficult situation and that she had not made any financial gain from accessing the paid for service.
But the tribunal returned to the fact that this was not a momentary mistake. In fact, the tribunal said it was repeated and continued over a long period of time - and would have continued had she not got caught out when the call was disconnected.
“Whilst she had had the opportunity before the Tribunal to make a forthright apology and show remorse for her actions she had failed to do so, instead choosing to maintain that she was the victim,” the ICAEW tribunal said in the case notes.
The tribunal concluded that exclusion from the Institute was a starting point for the scale of dishonesty shown by Hardy and ordered that she also pick up the investigation committee’s costs of £15,105. But it opted against imposing a fine.
Chris Cope, a consultant with Blake Morgan, said:
This case went through three tribunals before reaching finality. Originally, when appearing before the first Disciplinary Committee (DC), Hardy admitted the facts, but denied that she was guilty of dishonesty or lack of integrity.
The complaints were found not proved. Very unusually, the Investigation Committee appealed.
The Appeal Committee decided that the DC had been wrong to acquit. It found that the DC had failed properly to apply the test for dishonesty as decided by the Supreme Court in Ivey v Genting Casinos( 2017) UKSC 67.
It found that on a correct application of the objective test in Ivey, any ordinary person would have unhesitatingly said that the conduct was dishonest. It determined that the DC should have found that the complaint of dishonesty had been proved and remitted the case to the DC for sanction.
It was at that hearing that Hardy conceded that she had lacked integrity. However, she still did not accept that she had been dishonest. There was no further appeal.
Chris Cope is a consultant with Blake Morgan and a member of the Accountancy Regulatory Department. The team is available to assist with any disciplinary, regulatory and compliance matters arising in the accountancy profession - click here if you require any of their services.