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Disciplinary orders round up January 2019

21st Jan 2019
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This month’s roundup sees a chartered accountant, jailed for a “fictitious merry-go-round of false accounting”, appeal his ICAEW exclusion, while another accountant buries his head in the sand.

As always, the director of the Accountants National Compliant Services Chris Cope has reviewed the cases and provides expert commentary on the verdicts. 

The two cases are featured in January's ICAEW disciplinary orders

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The ICAEW has excluded an imprisoned chartered accountant who orchestrated two film investment schemes that a judge described as a “fictitious merry-go-round of money and false accounting”.

Terence Potter (a member since 1985) was at one point a partner in a leading accountancy firm, and created the film investment schemes between 2007 and 2012.

The disciplinary committee heard how Potter used his status as a chartered accountant and his role as a partner to bolster his credibility when selling the scheme to high net worth individuals. The committee learned that investors would obtain sideways loss tax relief from losses made by the companies’ film investments.

Potter made a profit of £1.1m from the schemes, while the potential loss to HMRC is estimated at around £2.2m. On 18 December 2015 he was sentenced to an eight-year prison sentence and ordered to pay £1.8m in confiscation proceedings, having been convicted on four counts of conspiracy to cheat the Revenue. He was also expelled from the CIOT as long ago as June 2016.

For the ICAEW, the disciplinary decision to exclude Potter was elementary. Exclusion is the starting point for a conviction of dishonesty, especially one that results in a prison sentence. The tribunal ordered Potter to pay costs of £3,374 within 12 months of his release from prison.

However, the case didn’t end there. Potter noted in a letter to the ICAEW prior to the disciplinary decision that he was in the process of appealing his conviction. However, that was abandoned. His appeal against sentence was dismissed by the Court of Appeal in February 2018.

December’s disciplinary orders also saw Potter attempt to appeal the ICAEW’s decision on the grounds that he is serving a lengthy prison sentence and has no money to pay the costs.

The appeal committee dismissed Potter’s plea as being “entirely without merit” because the costs order did take into account his prison sentence.

“Impecuniosity is no ground for resisting an order for costs,” said the appeal committee.

Chris Cope, director of Accountants National Complaint Services Limited, comments:

The dishonest enterprise began in 2007 and spanned a period of nearly five years. Between 2009 and 2012, Potter created a raft of fake material to submit to the Revenue. You have to wonder how a chartered accountant and member of CIOT could ever have become involved in such a fraudulent enterprise. It could only be the money. A shameful case which brings disrepute on the ICAEW and the profession.

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In a decision that ultimately landed him a severe reprimand, an overwhelmed accountant has admitted to burying his head in the sand instead of dealing with an ICAEW investigation.  

Chichester-based accountant Ray Davis blamed the pressure of this and other investigations for failing to provide information.

The ICAEW first chased Davis on 26 June 2017 regarding two separate complaints concerning his conduct as a company director, as well as the VAT, self assessment and CT600 tax returns he had submitted on behalf of his clients.

The ICAEW continued to pursue Davis throughout June, July and August, which escalated in a formal request made on 1 March 2018 under DBL 13, requiring a response within 14 days. However, Davis still did not respond.

It wasn’t until a conversation with a friend that Davis eventually faced up to matters.

Davis’s inaction infringes the responsibility of an ICAEW member to make responding to IC requests their main priority, as the ICAEW disciplinary committee ruled. “It is of crucial importance that members provide information to the ICAEW within the relevant timescale in order that it can carry out its regulatory functions.”

As such, Davis received a severe reprimand and was given 28 days to pay costs of £2,000. He was also given a deadline to comply with the ICAEW’s initial request dating back to March 2018.

Chris Cope, director of Accountants National Complaint Services Limited, comments:

Mr Davis very sensibly attended the hearing and was represented by counsel.

We do not know whether he had the benefit of insurance cover in respect of his legal fees. Had he been a member of Accountants’ Defence & Advisory Services Ltd (ADAS), the cost of legal representation would have been fully covered through his terms of membership.

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

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Replies (9)

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By Sheepy306
21st Jan 2019 22:24

Can’t help feeling that these articles are becoming a little “have you been injured at work, suffered a slip, trip or fall, or taken out PPI”.

Thanks (5)
By thomas34
22nd Jan 2019 08:31

I see AW have removed much of the blatant advertising present on this article yesterday. Surely it's for the members to comment upon RH's monthly summary - there's nothing to stop Mr Cope adding his own comments without contravening one of AW's rules.

Why anyone only carrying out non-regulated work should remain a member of an RPB is beyond me with the dual risk of potential claims from clients and from their own Institute/Association.

Thanks (2)
Replying to thomas34:
By garforth
22nd Jan 2019 11:10

Probably after years of study we like the prestige.
In times past many people continued membership so that they could complete mortgage application forms.
I would feel strange saying that I am an accountant and not being a member of any pb.
Would be interested to hear how other people deal with explaining to clients lack of visible qualifications. I am considering resigning my membership.

Thanks (0)
Replying to garforth:
By ColA
22nd Jan 2019 11:51

Prestige has never been an issue with me: the ability to sleep at night with a clear conscience is!
That said I do wonder how all-embracing the support by the professional bodies is, especially when I learned a couple of decades ago that I had fallen foul and infringed a practice-certificate regulation, by a single day when completing an application form!
An informal contact would have sufficed!
Wonder at 71 whether my £400 membership fee has any value!

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By frankdavid
22nd Jan 2019 13:49

I resigned as a member of the ICAEW about 3 years ago when I started to slowly wind down my business. What a relief it was. Mortgage applications have been dealt with when required, maybe not as easy as when I was a member but still sorted.

No more worrying about falling foul of the PB and getting a disproportionate penalty. I felt that the ICAEW was a club for partners of the big firms paid for by the rest of us

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Replying to frankdavid:
By cricket
22nd Jan 2019 16:32

dear frank
how do you deal with the mortgage applications now having resigned from ICAEW?

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Chris M
By mr. mischief
24th Jan 2019 21:16

deleted as in wrong thread

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By moomin_baby
14th Aug 2021 01:52

According to the Taxation Disciplinary Board, Ray Alan Davis ACA, was fined £32,836.95 in February 2020 for acting dishonestly when preparing VAT returns.

See for more information.

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By moomin_baby
14th Aug 2021 02:04

On 28th February 2020, Ray Alan Davis was expelled from membership of the Chartered Institute of Taxation (CIOT) and fined £32,836.95.

On 14th April 2021, Ray Alan Davis was further excluded from the ICAEW and fined an additional £7,250.

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