An ICAEW member has “narrowly avoided” exclusion after he failed to provide information regarding his professional indemnity insurance, as reported in the Institute's December disciplinary orders.
Accountant Brian Keates breached the Institute's disciplinary bye-laws 13 (DBL13) after he only provided partial answers to the ICAEW’s requests for documentation and information.
Despite being pressed by the investigation committee, Keates provided insufficient answers that did not help establish whether he was actually providing accountancy services.
According to the ICAEW disciplinary committee, Keates did not cooperate throughout the Institute’s investigation and his attitude was “obstructive”.
Obstructive and uncooperative
At the heart of the complaint lay the question: was Keates providing accountancy services without professional indemnity insurance?
When Keates restructured his ICAEW accountancy firm and incorporated another firm (referred to as B Ltd in the report) he approached market insurers.
However, he was unable to secure insurance that covered the tax planning which B Ltd conducted.
Without a policy that met the professional indemnity insurance committee’s requirements, Keates approached the assigned risks pool, but despite being offered cover, he didn’t obtain it.
When FCA regulation of his firm elapsed in May 2015 Keates became an appointed representative for a firm of financial advisers. But when that firm withdrew the appointed representative a month later Keates was left covered only for FCA work.
As the disciplinary report stated, the firm would require full personal indemnity insurance if it continued to trade. Without compliant cover, Keates was subject to disciplinary action.
The ICAEW professional standards initially requested information from the defendant in 2015. At first, his responses were considered sufficient, but when further information was required, the subsequent chasing only mustered partial responses.
By 6 December 2016, after Keates earlier said he was unable to reply before the New Year because of client commitments, the head of the investigation issued a DBL13, which puts an obligation on members to provide specified information. But Keates insisted that he had already responded and would not be able to provide further documents or information before March 2017.
It was at this point, on 3 January 2017, that the issue escalated to the investigation committee.
Keates later revealed that he sold his financial services company in late 2015 and the tax and accounting services in 2016, but he continued to meet clients and invoice for introductory fees.
For this reason, he said that there would be a further set of accounts. As far as he was concerned he had not ceased trading until May 2017, and for this reason could not answer the relevant questions contained in the DBL13 notice.
That said, the tribunal still needed clarification over the four outstanding information required under the DBL13 notice.
In one instance, for example, he claimed he couldn’t provide sample invoices because they were in long-term storage. Disregarding this as a credible excuse, the tribunal argued that it “defied common sense that he could not have provided any sample invoices”.
The tribunal criticised Keates' earlier response of “unknown” when asked to confirm the turnover of the firm's final year of trading.
It called his response "the least information and explanation he could possibly have given and was a good example of his obstructiveness and lack of cooperation with the Institute." He did provide this information after May 2017.
Another factor that added to the ICAEW’s case against Keates was the fact he had been pulled up in front of the disciplinary committee once before.
In 2012, Keates received a severe reprimand and a £2,000 fine because he failed to have professional indemnity insurance. This aggravating factor was not lost on the tribunal when sentencing Keates.
Despite Keates obstructive attitude towards the investigation, he escaped exclusion. However, the tribunal yet again severely reprimanded the defendant and imposed a £5,000 fine and ordered the defendant to pay the £3,500 costs of the tribunal.
Keates must also provide the outstanding information required by the investigation team.
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In other disciplinary news...
The ICAEW has excluded accountant Gerald Hyam after he fraudulently claimed £86,669 from a false VAT return submission.
Hyam was also ordered to pay the £3,500 tribunal costs.
The ICAEW disciplinary tribunal follows Hyam’s trial at Southwark Crown Court, where he was sentenced to 15 months imprisonment (which was suspended for 12 months).
In the trial, the judge said Hyam’s false VAT submission was “a futile exercise and one that stood little prospect of success” and that HMRC was “bound to pick up on it” because the company had for many months filed nil returns.
In August 2016, Hyam told the ICAEW that was going to appeal the conviction, yet no details of the appeal have emerged. He also informed the ICAEW of his intention to resign his membership.
The tribunal had no reason to deviate from the 'guidance on sanctions' which rules that any sentence resulting in imprisonment results in exclusion from the Institute. Furthermore, Hyam would not be able to reapply for at least five years.
About Richard Hattersley
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