Sole practitioner excluded after widespread gross negligence
A sole practitioner has been excluded from the ICAEW after a practice assurance visit discovered “widespread and egregious” AML and accounts production failings and that he was effectively using his personal bank account as his office account.
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There tends to be a number of elderly accountants who end their career in the disciplinaries - and they often note that the old accountant doesn't have the money to pay a fine.
Probably the result of a long life spending money on divorces, eating out and going to the car showroom. Often tends to be the case. I see it in a number of professionals who are still working in their 60s and 70s. All at risk of mistakes and/or being leant on by unscrupulous clients who can smell their declining faculties and desperation.
Gee Ann, thanks for reminding me I need to eat out more, I can tick all your other boxes.
Seriously though we older souls aren't all bent or gaga. There a few people out here who have a good idea of our limitations and are functioning within them to a high standard and keeping up to date in our field.
I think being a sole practitioner can be just as big a risk factor for poor professional performance - being spread too thin in an increasingly challenging world with no one to bounce ideas off or peer review work.
But hey, you hold on to ageist prejudices if it makes you happy.
I don't think it's so much about age, but anyone who is planning on not running their practice for much longer could be prone to letting their guard down, since the consequences of getting struck off diminish. You also gain a better understanding of what you can get away with as your experience increases. There are very minor things that I or my clients do which made me lose sleep when I first started but now I don't worry about them (like perhaps "correcting" a client's tax code without calling HMRC). Clearly some people take that to extremes!
The potential threat of getting struck off shouldn't be what keeps the professional on the straight & narrow ... that's achieved by a combination of personality type & experience (so a belief in the values of honesty, integrity, consistency and so on). And these don't diminish with age even if knowledge or acuity may.
But I'm worried you think "correcting" a client's tax code without calling HMRC is a "minor thing" ... you not only have no legal right to do this but will be storing up extra work for yourself and your client due to the lack of synchronisation with HMRC's data.
Well you carry on worrying if you've nothing better to do!! Not that I need to explain my actions to you, but the example I gave was a perfectly reasonable course of action under the circumstances at the time, and solved a significant problem that HMRC were unable to solve themselves. I also once drove at 80 miles an hour on the motorway.
Not a big deal
I BR my wages and my wife's wages every year and ignore the daft codings we get
HMRC are very regularly wrong
Clients with a once off expenses claim get the same amount coded each year for several years
Same issue with p11d. No benefits but benefits from prior employment stick for years
I'm well aware that HMRC get tax code notices 'wrong' (and indeed generate them via imperfect software), but that doesn't give you the right to unilaterally break the rules ... two wrongs and all that!
My point was less to do with pointing out the error of your ways (of which you're obviously fully aware), but that - by failing to follow the correct procedure (of notifying HMRC of their error and so getting the tax code amended) - you are then operating PAYE for that individual using a different baseline to HMRC. And this can (not always) leads to considerable confusion at HMRC's end ... which ends up with you and your client spending unnecessary time bringing the two systems back into line with each other.
So the 'worry' was on your (not my own) behalf ... and you're welcome to ignore it.
My more subtle point was that you lost the moral high ground (in suggesting that it is only the threat of being struck off that keeps a professional on the straight & narrow) when you go on to admit to bending the rules if it suits you.
HMRC PAYE computer codings work on triggers
When the triggers stop HMRC leaves the last bit of rubbish in place
EG
No p11d this year? leave it at last years figure
No p11d for three years? leave code restriction at three years ago figure
Well that's not the way the triggers are supposed to work (or, to the best of my knowledge, how indeed they do operate) ... but the software driving the triggers is most certainly incomplete-verging-on-broken in several aspects.
The most infamous example being its inability to differentiate between a one-off payment and regular earnings. So for example, an employee receiving salary of £3k per month but who also receives an annual bonus of £10k in May is assumed by the software to now be on an annual salary of £156k p.a.!
HMRC do know about the limitations (aka failings) in this part of their software, which is why they've made it much easier to get a tax code quickly corrected.
The converse is that their software now looks for any 'mismatches' between the tax code they told your Payroll to use and the one that the Payroll reports (via each FPS) as being used ... and these mismatches are tracked (partly so as to send you 'warnings' - but reputedly also as part of their intentions to profile Payroll service providers and agents). Big Brother is watching!
Disagree
I have every right to pay more tax than HMRC want
Been doing it for 20 years
Odd really that HMRC have never bothered getting excited about it
I always overlook the wrong codes that come out. Agent strategy was supposed to get rid of the wrongs as we would be allowed to alter where necessary. No doubt MTD will correct everything.
Well they can hardly be more wrong that the rubbishy tax codes we see from HMRC these days. The helpline staff tend to amend them on the phone without further ado so they obviously have no more faith in them than we do.
Yes, but you're missing the point.
I not only don't dispute that you see "rubbishy tax codes .. from HMRC these days", I've already agreed with this (and even given one example of why this can happen - and 'admitted' that the underlying software generating the codes is fairly broken).
So, I'm not saying that the codes are right or that you should just accept them ... I'm saying you (or the taxpayer) should do exactly what you've suggested - get the helpline staff to amend the tax code (or even more simply change it online).
The point is that there's no point in using a tax code that's different to what HMRC are expecting (according to their records) ... so, if it's wrong, get them to change it and don't just declare UDI (storing up problems for the future)!
This is where the problem is. More and more agents are using their own knowledge rather than incorrect HMRC information. The gap between us and them is ever widening and unless HMRC get rid of IR35 and QU for the under £85k business, then HMRC will go into self destruction.
I can't quite believe this conversation is still going on, but since it is I have two points to make:
1. I'm trying to make a living, and I can't afford to waste time on the phone to HMRC for such petty matters.
2. The circumstance I was thinking of originally was basically this: HMRC owed a client of mine a couple of thousand pounds of SMP. The company (just 2 directors, husband and wife) had no PAYE liability to offset it against and after a year of calls, letters, forms etc, HMRC still failed to repay the money despite promising to do so again and again. I wasted huge amounts of time that I didn't feel able to bill my client for, and still we had no solution. So I put them on a BR tax code for a couple of months, creating a PAYE liability to offset the debt HMRC owed my client's company, and then the directors' income tax was trued up via their self assessment. It worked a treat. My only regret is not doing it sooner. Hugo, I think you should worry about something else.
Well that really is storing up problems, because a) the SMP rebate is owed to the company, not the taxpayer, and b) the correct tax will come out in the wash when you do his Self Assessment and deduct the PAYE, so then you'll be back to Square One.
It would probably have been better to knock it off the corporation tax bill and write HMRC a letter requesting an offset. That worked a treat for me once, although It was a duplicate payment in that case, not SMP. Of course, it took a while for them to action it, but cashflow-wise it was done and dusted.
Well you might think it's done but it sounds like you have some loan account entries to do because the wife should have had the SMP from her company via the payroll. Hence, if she got an artificial reduction in her Self Assessment tax bill by claiming PAYE that was never paid (as it was offset against the SMP) then effectively she's had it twice, plus the extra 3% for NI, and owes the company.
Not only that, but if the husband got the benefit of PAYE that was never paid on his own Self Assessment, then they both owe the company for it.
Like I said, best to offset against corporation tax, just as we do with CIS.
I'm only responding to this because I'm stuck at home with kids and covid. You've misunderstood. Firstly, the wife got her smp from the company via payroll at the appropriate time.
The company has a PAYE debtor of say £1,000. I put the directors on a BR tax code for a few months, so they receive say £800 net salary instead of £1,000 each month. I do this for say 3 months until the PAYE debtor is used up (we don't need to pay hmrc the £400 of PAYE each month during this because they owe the company) and becomes a small creditor of £200, which the company settles in the normal way. When we prepare the directors personal tax return their P60s show say £600 income tax deducted at source and thus reduces their overall income tax bill by £600, so they effectively receive £600 each less from the company and this is offset by a £600 lower self assessment Bill. No one owes anyone anything and everything has been taxed correctly.
Yes, but you're missing the point.
I not only don't dispute that you see "rubbishy tax codes .. from HMRC these days", I've already agreed with this (and even given one example of why this can happen - and 'admitted' that the underlying software generating the codes is fairly broken).So, I'm not saying that the codes are right or that you should just accept them ... I'm saying you (or the taxpayer) should do exactly what you've suggested - get the helpline staff to amend the tax code (or even more simply change it online).
Hugo, did I say I changed tax codes unilaterally? I think you're mixing me up with another poster. I enter the rubbishy codes on my payroll software anyway as most of my clients are below the NI threshold and it makes no difference. I only bother phoning the helpline if a client with a PAYE job queries their code, it is causing problems with their net pay and it's plainly wrong, in which case they get billed for the extra work. I usually try to do 3 or 4 of them together to cut down on the dead phone time, listening to their interminable guidance, being warned about dogs barking (perhaps Rebecca B should do this before her webinars) and waiting ages on hold.
60s and 70s is not old.
The world leader Joe Biden is 79
Nancy Pelosi is 81. She has a sharp mind.
I do not understand, when people here say I am in my 6os I am retiring. I have had enough.
I think your perspective on being so ageist will change as you become old at 60.
The world leader Joe Biden is 79
I wish people would stop calling the US President "world leader" or "leader of the free world". It's so incredibly patronising, not to mention totally outdated as it was originally coined during the Cold War for propaganda purposes. The way America is going, the free world bit will soon be nothing but a bad joke.
I completely agree. No one is world leader and that's something we should all be very pleased about.
60s and 70s? Excuse me, young miss. Plenty of us are in our 60s and manage to stay on top of our game. We're not all ready for the knackers yard. I for one have got just as much zest as I had in my 30s and keep on top of my CPD as much as all you young whippersnappers. There is a common assumption amongst the young that us old greybeards know nothing about IT. As I always tell my young nephew, it was my generation that invented the IT revolution. In fact, I was writing macros in Lotus 1-2-3 back in the mid-80s.
This guy, however, must be in his late 70s or early 80s. He's obviously shown no sign of adapting to the modern world and probably still uses dusty old ledgers. His clients are probably as old as him. He is unlikely to have a website and probably hasn't taken on any new clients for many years. His existing clients will no doubt carry on using him whether he is a member or not. They should have advised him to retire, not wasted their time trying to teach him AML and end up having to shame an old man who was probably quite good in his day.
Never mind that there appears to be no question of dishonest behaviour or of invalid accounting treatments - just a bunch of boxes failing to be ticked (albeit some more important than others).
I guess he'll save on annual fees and provide his services within the 'unrepresented' segment of the market - where the quality of his work will no doubt result in a marked improvement over their previous DiY efforts!
No mention of investigations from HMRC. Makes you think perhaps he did get a few things right.
Sounds like a horrible end to a long career.
Another reminder (should I not get it every time we take on work from the 'old boy who has lost their way') that its not something to fiddle about with in semi-retirement as my ability to act declines, and no doubt my judgement of my own ability becomes impaired.
As I was explaining recently its not the sort of job you can do 3 mornings a week, you need two of them just to keep up with what's going on.
True - I quit at 67, not because of declining faculties, just got fed up of all the cr*p
Now where did I park the Bentley?
Or was it a Roller....
You have to narrow your offering, not take on certain work etc
Whilst no longer in practice one of the reasons for that was I did not believe I could keep up to date and wanted to pack in before I started making mistakes, I would be spending circa 5 hours a week on client work and five hours a week on admin and CPD.
It is the unknown unknowns that will snare you in the end.
I guess it's easier to keep up to date if you have a specialism, even a very simple one. As a GP with a declining pool of diverse clients, it's definitely hard and ultimately will stop being worthwhile.
It was always thus, when I did work full time in practice (a two partner , six to eight staff firm) we split the niches, each taking responsibility for different things thus spreading the load.
Law firms always did this, my father would be fine with your CTT work and trusts, great at conveyancing re your landed estates and their boundaries, but absolutely useless if you wanted divorced or the matter involved court work. (His court appearances in total had been defending someone drunk in charge of a bicycle and defending a poacher)
No single person, imho, can keep fully up to speed with all changes impacting even the basic smaller clients let alone all clients.
I’m managing fine, thanks. But then I don’t have to spend half my time filling in forms and ticking boxes for ICAS any more. I can just get on with my job!
Indeed, I can't see what the mini-advert at the end does to illuminate any aspect of the rest of the article.
Reminded me of what the second-hand car trade refers to as a 'cut and shut job'!
Yet those at the top of KPMG, PWC etc who really bring the profession into disrepute through their audit gross negligence and public admission of dishonesty and lying get away untouched with the biggest crimes in the profession.
Just like HMRC, simply go after the low hanging fruit and the ICAEW and ACCA can tick another box of job well done.
I bet none of the big four partners will be cashiered by ICAEW due to their 'dodgy' auditing failures though?
Apart, that is from the engagement partner for BHS, for example, and quite probably Carillion, Patisserie Valerie, Conviviality, and those KPMG clients where records were falsified.
One wonders what clientele this sole practitioner OAP was dealing with - Over a quarter of a million £ client money paid into his personal bank account over 5 years.
Dyer may have had an understanding with his clients that fees could be deducted from their tax refunds into his personal account but the contradictory statement that these refunds were not significant - but followed by the finding of no adequate records, with continued failure - are indeed something his clients should be made aware of.
Reminds me of an elderly accountant I knew who was registered for audit. The final visit from ICAEW determined that she had to have hot file reviews before signing off any more.
This is a sad story really and atypical of the usual transgressions we read about where client monies are stolen or false profits reported to HMRC. I myself joined the ICAEW in 1969 and am retiring on 31 March. I perceived as long ago as 2004 that the ICAEW probably posed more of a risk to my business than HMRC and resigned my membership. I see the day of the sole practitioner coming to an end simply because of the inability to make a decent living what with the amount of unbilled/unbillable time due to HMRC errors, MTD for SA (if it happens) etc.
So technology substituting experience?
Problem is good technology comes from good experience. We are back to the SISO scenario.
"This is a sad story really and atypical of the usual transgressions we read about where client monies are stolen or false profits reported to HMRC."
Disagree
Never see them on ICAEW disciplinaries for ordinary cooking UK based practioners
And that is the problem
Not enough bad stuff going on so the disciplinaries look for anything they can find just too validate existance
Nothing taken, no loss to client just a few accounts without the rubbish disclosures that FRS 105 and Micro accounts got rid of anyway
I have FRS102 clients that prefer the detailed profit and loss and detailed Balance sheet that the software provides over the pages and pages of pointless disclosures of the 102 accounts that I have to provide as final accounts.
Not sure what you're trying to say Paul. Unless he was a first time pass student he must be in his mid 70s. We don't know his financial situation and whether he needs to work for the money. We don't know about possible stress levels. It's easy to be critical of someone who simply can't cope with the raft of regulations imposed upon us practitioners. And what does "ordinary cooking UK based practioners" mean anyway?
Although I'm sure Paul can reply for himself, I read it as meaning that the PBs don't seem to go after (or at least don't find and penalise) the odd bent accountant who straightforwardly cooks the books - and obviously leave the big boys & girls alone (different story) - so are left chasing down failures in box-ticking in order to justify their existence?
Correct interpretation
Most accountants AML achieves very little
Accountants have been criticised for submitting pointless, covering the tail reports
Massive cash movements hit the banks and legal types up to 18 months before I see any records
Hence my report appears pointless and tail covering, the others got there first