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Accountant severely reprimanded over £89,000 gifts from a client

24th Jun 2019
Business man receiving a gift
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The lines between professional and personal blurred in an ICAEW disciplinary tribunal case where an accountant admitted acting inappropriately in accepting gifts from his client worth £89,000.

Accountant Christopher Salmon received a severe reprimand and was ordered to pay costs of £19,314 and a fine of £4,000 after an ICAEW tribunal found that his judgment was “clouded” due to the friendship he developed with a client.

Salmon originally assisted the client with the preparation of his tax returns and later with the organisation of his general financial affairs. But the two soon struck up a friendship that extended beyond the normal accountant-client relationship and saw the client lavish Salmon with gifts totalling £89,000 from July 2004 to November 2009.

And then, shortly before the client passed away in June 2010, the disciplinary tribunal heard how Salmon advised his client to transfer the ownership of his £600,000 commercial property into the name of an LLP – of which Salmon was a member.

Although the client was described “as sharp as a tack” until his death, Salmon accepted that he had not advised the client to take independent legal advice about the transaction. The client instructed Salmon and his solicitor before his death not to register the transfer, but the solicitor did it anyway. However, there was no loss to the estate.

At the disciplinary tribunal, Salmon accepted that he should have dealt with the situation in a “more appropriate and transparent manner”.

The tribunal considered mitigating factors such as the accountant’s 20-year ICAEW membership and his belated remorse, which satisfied the tribunal that his conduct swayed more towards “serious” rather than “very serious”.

“In acting in the way in which he had, the defendant had breached the position of trust that he found himself in and his independence and objectivity had fallen well below the standard expected of someone in his position,” the tribunal concluded about Salmon’s conduct in respect of both the gifts and the transaction.

But Salmon’s late admission also went some way in reducing the fine from £5,000 to £4,000, but he was still left to pay costs in the sum of £19,314.

Chris Cope, solicitor/director of Accountants National Complaint Services Limited, said:

The only point which troubles me is in respect of the costs of £19,314. The case was concluded in a day. The investigation ought not to have been particularly time-consuming.Mr Salmon appears to have accepted that he had acted inappropriately at an early stage. Furthermore, he did not contest the proceedings. How, therefore, has the ICAEW incurred costs in excess of £19,000, especially regarding a case which dates back some 10-15 years.

Mr Salmon was legally represented. The record states that no submissions were made on behalf of Mr Salmon concerning the figure of £19,314. Well, why not? A lawyer has a duty to his client to make representations on costs sought by the regulator, particularly where the figure is high.

Of course, there is no guarantee that the tribunal having heard submissions will reduce the amount of costs sought. Nevertheless, the defence lawyer must at least try to get these reduced.

There is often duplication with more than one employee being involved in the case investigation. Sometimes, the time spent is clearly excessive, particularly with regard to preparation time and perusing of documents.

I find that, generally, following detailed representations, the tribunal will make a reduced costs order.

You can find out more about Chris Cope and the Accountants National Complaint Service by visiting their website here

Replies (10)

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By Justin Bryant
24th Jun 2019 17:09

There is nothing too crazy here re costs in my view. For example SRA costs for similar transgressions in the SDT are around that level and the punishment is almost always far harsher. See for example:

https://www.solicitorstribunal.org.uk/sites/default/files-sdt/11858.2018...

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By BryanS1958
25th Jun 2019 11:17

I seem to have the wrong clients....none of mine have gifted me £89,000:-(

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By Casterbridge Hardy LLP
25th Jun 2019 12:06

We are on the same page here, old son, although I do remember being given a pen which a client had filched from an hotel room!

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By Nippy
25th Jun 2019 11:44

Sometimes I question why bother being a member

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By AnnAccountant
25th Jun 2019 14:02

That's a lot of gifts.

Does make one wonder whether they were true gifts or whether Mr Salmon supplied something valuable or other in return or did something for the client.

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By Dandan
25th Jun 2019 14:09

[quote]The tribunal considered mitigating factors such as the accountant’s 20-year ICAEW membership and his belated remorse, which satisfied the tribunal that his conduct swayed more towards “serious” rather than “very serious”[\quote]

I detect leniency.

Other accountants that have been members longer than 20 years and committed less serious misdemeanours have been more severely treated. Did he have connections ?

How can anyone get away with acting as tax accountant and receive £89k of gifts from the client ? On top of that he advised a dying client to put their assets into an LLP in which he was a member.

Seems to me the fine is just there to give a sense that he has been admonished when in fact he got away with it lightly. As stated already the fine cannot be justified by the amount of work involved since hardly any work was required.

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By Ian McTernan CTA
25th Jun 2019 16:02

Being ordered to pay costs of £19,314 is crazy. The costs on these cases always seem to be excessive- I wonder what charge out rates are applied here?

You do wonder why you bother paying membership fees when if they take a case against you, you then need to pay the costs too...

I wonder how many cases are quietly settled with some fine of £4,000 or so with the accountant admitting the 'offence' because it's a lot cheaper to do so, even if they feel they are innocent or it is a very minor transgression.

Does PII cover this?

Perhaps it's time they don't bother to split the two amounts and just say 'a fine of £23,314 was imposed'. As effectively that what it is.

I assume costs are calculated in the same way whether it is a major practice or a small sole trader- once again the small practitioner is unfairly hit.

I don't condone the accountant's behaviour at all, my beef is with the way the Institutes dole out these costs which puts undue pressure on small/sole practitioners to settle early.

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By Balancing
25th Jun 2019 16:32

Why not charge twopence ha'penny a as a 'fine'. A few thousand would barely hit the sides and certainly not enough to discourage.

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By Tom 7000
25th Jun 2019 17:46

I would have to send 2x ACAs to a clients premises to do an Audit for a month to run up a 19k bill...

I wonder if it was 10 hours at £1.9k an hour....

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By North East Accountant
26th Jun 2019 08:07

ICAEW (full of ex-big 4ers) thinks like the Big 4 and charges accordingly.

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