A Stevenage accountant who promoted the Icebreaker scheme has been excluded from the ICAEW after he concealed his commission, while his clients were left with huge tax bills.
According to the ICAEW's November disciplinary orders, a recurring theme emerged in the case against Geoffrey Long: his disregard for the rules when it wasn’t to his advantage to follow them.
The disciplinary committee shone a spotlight on a number of allegations placed against Long. The most serious of these centred on his failure to disclose the introducer commission he received when his clients signed up to avoidance schemes.
Following this revelation, Long had his twenty-year ICAEW membership torn up and was left to pay the £47,000 costs in addition to a fine of £8,000.
Long introduced the five dentist client complainants to the same independent financial adviser. Each of the complainants invested a considerable amount of money in tax planning schemes such as the Icebreaker partnership scheme and the Liberty Syndicates scheme.
Received a sizable commission
The IFA then paid Long a “sizable amount of commission” and further payments thereafter. But these payments were paid through a company called Accountancy and Taxation Services Limited, where Long’s mother acted as the sole director.
The complainants' investments failed. When a first-tier tribunal shut down the Icebreaker scheme, HMRC opened enquiries into a number of the dentists’ tax affairs and they were found liable to pay additional tax. The complainants not only complained to Long about the schemes he introduced them to but one complainant complained to the ICAEW, asking if Long received any financial gain from recommending the scheme.
A solicitor for Long responded in August 2015 that the IFA did pay an introducer fee but to ATS, where Long was “a nominee” not an officer or shareholder.
As the ICAEW disciplinary orders state, a client is right to assume that their adviser is not influenced by a financial benefit when making an introduction. For this reason, the investigation committee disputed that the commission arrangements created an “undisclosed conflict of interest”.
But that was not the only matter. Long submitted dormant accounts of his dissolved firm Long & Company to Companies House between 2005 and 2012, despite records showing that the firm was still trading. Furthermore, Long held himself in the correspondence for this firm as the director when he was not listed as such.
In another complaint, Long’s practice prepared the partnership tax returns of a dental practice for each of the five years from 5 April 2007 to 5 April 2011. In 2010 HMRC opened an investigation into the partnership’s tax returns, and the dentists ended up paying additional tax and penalties. But Long denied any negligence accusations in regards to this; he instead blamed the bookkeeping system used by the dentists.
On the dormant accounts matter, Long contested that the companies were not involved in any ‘significant’ transactions, so they were entitled to submit dormant accounts. But the tribunal found that to the outside world the companies were still trading entities as they still employed staff and sent out engagement letters.
Reacting to the improperly filed dormant accounts, the investigation committee said: “The public would be rightly concerned to find that a chartered accountant, particularly one who undertook to advise others on matters relating to business structure and incorporation, conducted his affairs in this way.
But Long did admit and show regret towards the undisclosed commission payments. That offence alone was enough to justify Long’s exclusion but combined with the dormant accounts and holding himself as a director the sanction was pushed to the upper end of the scale.
While he assisted with the investigation, had no previous disciplinary record and apologised to the Institute, the matters against Long were serious. The tribunal ultimately concluded that “[Long’s] motivation was to maximise his personal gain whilst minimising or avoiding his personal liabilities. In doing so he had blatantly disregarded his duties to his clients and the obligations of his professional status.”
About Richard Hattersley
Richard is AccountingWEB's practice correspondent. If you have any comments or suggestions for us get in touch.