July’s ICAEW disciplinary orders feature a back and forth between an accountant and HMRC over an appeal letter and a couple of cases of undeclared CPD.
Chris Cope from the Accountants Complaint Services Limited (ANCS) reviews the cases and explains what accountants should do if they are faced with a dishonesty allegation.
Northampton accountant John Harris has been cleared of dishonest behaviour in a disciplinary tribunal focussed on whether he had launched a valid appeal against HMRC on behalf of a client. Two other complaints were admitted.
Harris was reprimanded, handed a fine of £1,300 and ordered to pay the costs of the ICAEW of £5,000, after he admitted that should have known that the HMRC appeal had not been sent.
Harris argued that he had filed the documents for an appeal because he left his secretary to post the letter and documents.
The dishonesty complaint was a result of Harris stating in a letter to the HMRC on 3 May 2013 that “the question of the appeal has clearly fallen between the two partnerships”.
The ambiguity behind this phrase, and the reason for the complaint, referred to whether the overall investigation or whether the work straddled two firms. Harris said in the evidence that he was buying time, which the tribunal concluded, was not a dishonest motive.
The case dates back to July 2010, when Harris lodged a challenge against an HMRC assessment that claimed his second hand car sales client under declared the sales in his VAT return, which would incur an additional VAT of £6,808 to be paid.
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After HMRC informed Harris and his client that the assessment had been upheld, Harris filed an appeal notice with the first tier tribunal (FTT) on 1 July 2011 and requested that HMRC deferred the outstanding tax until the outcome of the appeal.
But did he? Shortly thereafter, the FTT responded that it could not proceed without a copy of HMRC’s decision letter. HMRC also wrote to Harris a few months later in November 2011 stating that it had not been notified of his client’s appeal and without such confirmation it would instruct its debt management unit to take enforcement action.
Harris still maintained that his client had already appealed and told HMRC in February 2013 that it should check its records and “move the process towards tribunal if that is your intention”.
The back and forth eventually reached a conclusion on the 5 September when the client told Harris that HMRC still insisted that no evidence of an appeal had been filed and asked Harris to check his records.
In the end, the client disengaged Harris and unsuccessfully took the appeal to the FTT himself, where he found he was three years and eight months out of time. The amount of tax involved was only £460.
Harris’ defence argued that this was an isolated case where he was trying to assist a long-standing client and did not charge a fee. So there was no financial gain for Harris (as the tribunal accepted), just the inconvenience that the delay had caused his client.
The tribunal reduced the initial applied costs in the sum of £10,444 by half after accepting a submission from the defendant's counsel that two out of the four allegations had not been proven, which included the dishonesty allegation.
Chris Cope’s expert opinion
|Harris was subject to four complaints, of which one involved alleged dishonesty. Very sensibly, Harris ensured that he was represented by counsel. He was duly acquitted of the dishonesty complaint. We do not, of course, know whether he was insured or that he had to meet the costs of representation by counsel, himself. Nevertheless, the important point is that he did the right thing by ensuring that he was represented by counsel.But what should an accountant do when facing four allegations of which one alleges dishonesty which, in itself, if upheld, would almost certainly lead to exclusion?
Firstly, they should carefully consider the terms of his professional indemnity insurance policy to establish whether the policy covers disciplinary proceedings. Some policies not only provide cover but also cover the regulator’s costs, as well. Policies never cover fines imposed.
Secondly, if the PII policy doesn’t help, the accountant should consider any other existing policies, ie legal fees cover or even office insurance.
Thirdly, if there is no cover, he should give serious consideration to obtaining specialist legal advice which hopefully he can afford, or borrow money from business colleagues, friends or relatives. Surely, whatever the cost, it must be worth it if the qualification is protected.
Elsewhere, the topic of undeclared CPD reared more than once in ICAEW’s July disciplinary orders.
Firstly, the ICAEW withdrew indefinitely the practising certificate of a Nigerian-based member for failing to submit his CPD declarations for three years.
Octavius George was also reprimanded and left with costs of £2,000 for not declaring his CPD for the years 2014, 2015 and 2016.
The ICAEW chased George twice in 2016 and then warned him again in January 2017 with disciplinary action if he did not declare his outstanding CPD, but George did not respond. As two more attempts to chase George in February and March went without response, the investigation committee escalated the case to disciplinary action.
The tribunal raised concerns that George had practised over a lengthy period without meeting his CPD obligations. As an ICAEW member since 1965, George’s age played a part in the sentencing as the tribunal opted against adding a fine.
George was not the only CPD-based case in July’s disciplinary orders. In the second case, Steven Ashton, also of Lagos, Nigeria, received a consent order where he too had failed to submit his CPD records.
Chris Cope’s expert opinion
|How ridiculous that an elderly member living in Nigeria should become subject to disciplinary proceedings for failing to notify compliance with the CPD requirements. As you will note, he was reprimanded with his practising certificate withdrawn indefinitely and ordered to pay costs of £2,000. The report says that he became a member of the Institute in 1965, which makes him at least 76 years of age. Surely, the Institute could have asked one of its other members in Lagos to call on George in order to establish whether he is still alive, or in hospital, or moved, or whatever. It seems to me to be taking the proverbial sledgehammer to crack such a straightforward case by bringing disciplinary proceedings.|
You can find out more about Chris Cope and the Accountants National Complaint Service by visiting their website here.
Cope also runs the Accountants’ Defence & Advisory Services Ltd with a retired accountant. This, he said, could be another solution in the first case. For an annual premium of £225 (the minimum sub), we underwrite professional fees incurred by the member in respect of disciplinary proceedings up to £25,000. They don't, though, provide retrospective cover.
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