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Fake letter accountant overturns ICAEW exclusion | accountingweb
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Fake letter accountant overturns ICAEW exclusion

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A chartered accountant, who falsified a letter to HMRC, has had his exclusion disciplinary sentencing overturned after an appeal panel agreed that there was an “overwhelmingly strong set of mitigating factors”. 

29th Nov 2022
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Paul O’Brien was excluded from the Institute of Chartered Accountants in England and Wales (ICAEW) earlier this year and ordered to pay £7,890 after the disciplinary committee found that his actions in fabricating a letter to send to HMRC was “dishonest” and it was in the “public’s interest” to banish him from the Institute. 

However, as reported in November’s disciplinary orders, the Manchester-based chartered accountant and his counsel successfully appealed the decision arguing that mitigating factors were not taken into account. 

The appeal panel sided with O’Brien and downgraded the accountant’s sentencing to a severe reprimand and cut his fine from £7,890 to £5,000.

Forging a letter

O’Brien’s firm was engaged to provide accountancy and taxation services to self-employed members of a dental practice who wanted to incorporate through a single limited company. 

The accountant was then pulled up by the ICAEW disciplinary committee after HMRC opened a compliance check into the dental practice’s 2013 corporation tax return and it came to light that in January 2016 O’Brien had fabricated a letter dated September 2012 that appeared to show that the trust had been notified of a proposed change in the contractual arrangements. 

In the original tribunal in April, the disciplinary committee considered O’Brien’s actions to be dishonest and “extremely harmful to the reputation of the profession”. The committee acknowledged that O’Brien had been under professional pressure but concluded that the appropriate and proportionate sanction was exclusion. 

Appeal committee

Fast forward to August and O’Brien had brought the decision to the appeal committee, where he argued that the disciplinary hearing was not conducted fairly. 

O’Brien’s counsel argued first that during the disciplinary hearing the accountant was interrupted by the chair of the disciplinary committee, who told him that he was reiterating information that the committee already had. 

The counsel put forward that these interruptions cut short O’Brien from making his point and gave the impression that the chair wasn’t interested.

Mitigating factors

O’Brien’s counsel conceded that the interruptions were well intentioned, but as the accountant was representing himself at the time with no guidance from the disciplinary committee, the intervention came at a point where he wanted to emphasise some mitigating factors. 

Namely, that the fabricated letter was actually a replacement for a genuine letter that had been mislaid and that the HMRC officer was aware of the “problematic letter” and was satisfied that it was a “one-off aberration”. 

O’Brien had referred his misjudgment in creating the letter to the HMRC senior technical manager at the time when the tax department wasn’t aware of any wrongdoing with the letter and with this rectified, the compliance enquiry continued. 

The HMRC technical manager was even complimentary of the way O’Brien treated the HMRC staff “with exemplary courtesy notwithstanding the length, pressures and frustrations of this enquiry”.

The appeal committee agreed that the positive evidence from the HMRC manager should have been taken into account. 

Similarly, the disciplinary committee didn’t consider O’Brien’s unblemished 30-year membership of the ICAEW as a mitigating factor, and in doing so, failed to present O’Brien’s conduct as an isolated failure. 

The appeal committee concluded that it was an error during the original disciplinary to discount these, and O’Brien was entitled to have had these mitigating factors considered in his favour during the tribunal. 

Very serious

That said, both parties agreed that O’Brien’s case fell within the “very serious” category and the appeal committee concurred with the disciplinary committee that the appellant’s conduct was dishonest.

However, while the appeal committee acknowledged that the starting point for such a breach is exclusion, it also concluded that the original tribunal failed to take adequate account of all of the “overwhelmingly strong set of mitigating factors”.

Therefore, the appeal committee allowed the appeal and decided that the correct sentencing was a severe reprimand and a £5,000 fine, which took into O’Brien’s financial circumstances and the 30% discount he was entitled to for his “full and unequivocal admission”. 

 

Replies (11)

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By Hugo Fair
28th Nov 2022 16:43

Another benefit of ICAEW membership struggles into the daylight:
* With 'friends' like that in your professional corner, you have no need of enemies!

The appearance given at the initial hearing was akin to a kangaroo court where mitigating factors (which were highly relevant - including positive evidence from the HMRC!) were seen as no more than an annoyance that could be disregarded.

Hats off to the Appeals Committee for calling out the failure to take adequate account of all of the “overwhelmingly strong set of mitigating factors”.

Thanks (16)
Replying to Hugo Fair:
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By paulwakefield1
28th Nov 2022 18:53

Many years ago I was on an ICAEW local society committee. One member sat on the ICAEW discliplinary committee and said there was nothing he enjoyed more than disciplining members. Depressing at the time and obviously still the mindset.

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Replying to paulwakefield1:
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By bobsto12
29th Nov 2022 10:28

Any fair judicial process requires a defendant to be allowed to make their case. Disrupting their testimony is extraordinarily inappropriate behaviour and would not stand up to scrutiny if it was referred for a judicial review in a proper court

Thanks (3)
Replying to bobsto12:
By Tom Hartopp
29th Nov 2022 11:05

Mr O'Brien chose to represent himself and mitigation is usually separated from evidence in chief, which is provided when establishing guilt or innocence, and is subsequent to arriving at a judgement.

Thanks (2)
Replying to paulwakefield1:
By Tom Hartopp
29th Nov 2022 10:56

The reference to "kangaroo court" and comments about members serving on ICAEW committees (made up I believe of a mix of ICAEW and lay members) does little to promote confidence that ICAEW is effective in promoting public confidence.

The article itself lacks sufficient detail to identify the degree of seriousness that applies to the offence and which, I would presume, those involved in arriving at the original judgement might argue was relevant to their decision.

The matter has been reviewed through the appeal process and a revised judgement issued - this may or may not illustrate that the "system" works and indicate whether questions about confidence in the ICAEW are relevant or not.

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By bobsto12
29th Nov 2022 10:20

So you lose an important letter and decide that rather than admitting it and getting a copy from hmrc your best course of action is to fabricate a copy and leave it the file to be discovered at some point in the future?

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Replying to bobsto12:
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By Hugo Fair
29th Nov 2022 11:14

Neither sensible nor justified as an action by the defendant ... who didn't deny any facts or appeal the finding of guilty.
The appeal was about the lack of due process (specifically with regard to the manner with which mitigating factors were broadly ignored) and resultant over-severity of the penalty (particularly the exclusion from membership and thus practice).
It should be possible to blot your previously unblemished & long-standing record without being castigated for all time.

Thanks (6)
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By Paul Morton
29th Nov 2022 10:34

Fabricating a document to gain an advantage. I know what I'd call it.........................

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Replying to Paul Morton:
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By moverend
29th Nov 2022 10:48

Auditing?! lol

Thanks (11)
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By AndrewV12
29th Nov 2022 10:37

'Namely, that the fabricated letter was actually a replacement for a genuine letter that had been mislaid and that the HMRC officer was aware of the “problematic letter” and was satisfied that it was a “one-off aberration”. '

So in summary he did send the letter to HMRC he just forgot to take a file copy. Surely it must have been prepared on word so a copy could be printed off at any time. Or did he not send the letter who knows.

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By Mr J Andrews
29th Nov 2022 13:05

I can't see how a satisfied HMRC officer, that the forgery was a one-off aberration, without knowing anything else about O'Brien's previous history should throw any weight towards mitigation.

Thanks (1)