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Losing money

ICAEW member excluded over £32,000 CIOT expulsion


An ICAEW member was excluded and ordered to pay costs of £7,250 this month following a ban from the CIOT.

14th Sep 2021
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ICAEW member Ray Davis was excluded this month and incurred costs of £7,250 after offences involving cases of dishonesty were found to be proven against him by another professional body.

The offence

As well as being a member of the ICAEW, Davis was a member of the Chartered Institute of Taxation (CIOT). 

The ICAEW disciplinary report investigated the original CIOT complaint, which dates back to February 2020 when the Tax Disciplinary Board found that Davis, acting as a tax agent, was dishonest on four counts:

  • He prepared and submitted self assessment tax returns on behalf of his clients that included claims for Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) relief that he knew were not available to those clients 
  • He prepared and submitted a VAT return that deliberately understated the liability for Client A by £247,500 for the period ended 31 March 2014
  • He prepared and submitted a VAT return understating the liability for another client by £42,468.41 for the period ended 30 April 2013
  • Applying for the VAT registration for another client to be backdated to March 2013 when he knew the client had been raising VAT invoices since at least 3 February 2013.

In addition, Davis allegedly prepared two incorrect corporation tax returns for Client C. In total, the errors amounted to about £30,000.

Counts of dishonesty

Throughout the period of 20 February 2013 to 10 February 2017, Davis submitted around 150 EIS/SEIS investments to HMRC that he knew clients were not entitled to. The total value of those investments was in excess of £4.5m.

The incorrect VAT returns he submitted deprived HMRC of a total of £247,500.

On the basis of this misconduct, the CIOT found that Davis had failed to be straightforward and honest in his professional and business relationships.

The report stated he had “failed to uphold the standards of CIOT and ATT” and had brought himself and his professional body into disrepute.

For his misconduct, Davis was expelled from the CIOT. He was also fined £20,000 with costs of £12,836.95.

The hearing

Davis was not present at the subsequent ICAEW disciplinary hearing in April this year. The hearing report confirmed, however, that the day before he sent an email confirming his agreement for the hearing to proceed in his absence. 

Although Davis had made a number of statements that might be regarded as admissions throughout the investigation, his absence at the hearing prevented the tribunal from confirming that he accepted the complaints in the form in which they were drafted.

The tribunal concluded that Davis's previous statements could not be regarded as an unequivocal acceptance of the complaints. Therefore, the ICAEW investigation committee was required to prove its case.

Given the CIOT's earlier findings and Davis's admissions,  the tribunal was satisfied that he had acted dishonestly. There was no other logical conclusion that it could reach.

The sanction

Given the amounts involved, the position of trust that Davis held and the negative impact his conduct would have on public confidence in the accountancy profession, the tribunal concluded that it had no option other than to exclude from membership. Davis was also ordered to pay costs of £7,250.

The tribunal concluded that as financial penalties had already been imposed by both HMRC and CIOT for the same offences it would be inappropriate for the institute to make a further financial penalty.

Legal Director for Blake Morgan LLP Samantha Hatt comments:

"Despite what was clearly a foregone conclusion as to the outcome in this matter, the report of the Tribunal demonstrates the care and caution it took when reaching its decision. Before deciding to conduct a hearing in absence of the member concerned, the Tribunal is required to undertake a detailed assessment that balances the reasons for that member's absence against the principles of fairness and the public interest. Once the Tribunal decides to proceed in absence, it is fundamental that the member's absence does not affect or devalue the Tribunal's careful consideration of the evidence before it.

“In Davis's case, this principle was highlighted by the Tribunal's decision not to treat his statements during ICAEW's investigation as admissions to the complaints before it, given his absence at the hearing. The Tribunal's conclusion that Davis had not acted dishonestly in respect of the conduct concerned at Complaint 1(d), also demonstrates its careful consideration of the evidence. Whilst the DC made clear that the earlier decision of the CIOT was not determinative of the complaints before it, it was also satisfied that the CIOT Tribunal's findings and Davis's admissions to that tribunal led it to the inescapable conclusion that Davis had acted dishonestly. It relied on persuasive evidence in reaching its own conclusion, and in doing so made a fair and considered decision in the absence of the member concerned.”

Should you require advice or representation please feel free to get in touch with Samantha Hatt, Chris Cope or Matthew Corrie.

Replies (5)

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By Ian McTernan CTA
17th Sep 2021 15:07

£7,250 to basically rubber stamp another Institute's decision....I bet he regrets being a member of both now.

He's probably ecstatic that they dropped complaint 1d. Made all the difference to the outcome and cost him £7,250 for the privilege.

Seems like a waste of resources when quite clearly he was found guilty on numerous counts by another Institute.

Thanks (5)
Replying to Ian McTernan CTA:
By wilcoskip
19th Sep 2021 15:02

Yep, looks for all the world like a money-grab on a dead cert.
Are we surprised?

Thanks (5)
By Tosie
21st Sep 2021 20:46

Why is he not in jail ?

Thanks (1)
By AndrewV12
23rd Sep 2021 10:42

Extract above
'He prepared and submitted a VAT return that deliberately understated the liability for Client A by £247,500 for the period ended 31 March 2014'

He almost made a quarter of a million pound fraud. Better luck next time.

Thanks (1)
Replying to AndrewV12:
By montgomery
03rd May 2022 15:48

Did he pay the £247,500 back on top of the fines?

Thanks (0)