Sole practitioner punished over unpaid fees clashby
A sole practitioner has been severely reprimanded after blocking a departing client from filing a confirmation statement with Companies House because of their outstanding fees.
Michael Pinner, a chartered accountant from London, was rapped by the Institute of Chartered Accountants in England and Wales (ICAEW) and handed a financial penalty of £4,200 alongside costs of £7,800 following a dispute with a client over unpaid fees after they appointed a new accountant.
The altercation escalated to the point where the accountant refused to release information to the client so they could file a confirmation statement.
Dispute started over unpaid fees
The disciplinary case (as reported in September’s batch of ICAEW judgments) dated back to Ms C, the client at the centre of the dispute, ending their professional relationship with the chartered accountant, citing that they required a greater level of assistance.
The relationship ended somewhat cordially, with the client breaking the news to the accountant with a bottle of wine and a handwritten note.
Pinner delivered the final bill to the client of £2,517 plus VAT. The client was on a fixed rate each year and the bill was £1,000 more than they expected.
However, Pinner said he calculated the fee based on the number of hours of assistance provided to the client during the 2020/21 financial year and the first four months of 2021/22, which included additional support with furlough payments and other work associated with the pandemic.
He claimed to the disciplinary tribunal that he had previously absorbed a proportion of the costs charged to Ms C’s firm, and the higher-than-expected final bill took into account the subsidised fees he had effectively given to the client.
Client refuses to pay
The client argued that Pinner inflated the bill out of spite for her terminating the relationship, but the accountant retorted that he could no longer absorb the costs as he had done while she was a client, but he would have reviewed the fees if she remained a client.
The tension between the two continued to boil when the client requested professional clearance, which the accountant granted, although he withheld the handover information and documentation until the outstanding fees were paid.
The conflict came to a head in September 2021 when the client was required to file a confirmation statement, but the chartered accountant refused to hand over authentication code in order to file the Confirmation Statement.
Attempting to back the client into a corner and forcing them to file online, Pinner entered the client into the PROOF (Protected Online Filing) scheme at Companies House without their knowledge or consent, which prevented the firm from submitting paper forms.
It was at this point the client escalated the matter to ICAEW. The client tried to circumvent the Companies House filing blockage by attempting to file by post, but this was blocked due to the firm being held in the PROOF scheme.
The client made a payment of £1,700 – the sum they considered payable. The ICAEW intervened in October 2021 and at that point the accountant released the documentation to the new accountants and wrote off the remaining balance.
The investigation committee saw the chartered accountant’s use of the PROOF scheme to force the client into paying the outstanding invoice as a “failure to be straightforward and honest” and a deliberate act that would bring discredit to the institute and profession. It said a more appropriate action would have been to commence legal proceedings.
Pinner shared his regret with the disciplinary tribunal, blaming the stress of the pandemic and admitted that he was not suited to dealing with the demands of a practice single-handedly, where he did not have peers as a sounding board or offer a different perspective on issues.
The sole practitioner had worked solo since the retirement of his former business partner in 2014. But he had hoped to address that issue by investigating the possibility of merging with another practice.
He admitted that he didn’t deal well with the client terminating the relationship and apologised for his “abhorrent” actions and accepted that he deserved to be disciplined.
Showing that he’s learned from this experience, Pinner said that several other clients have since left his firm owing money and rather than going the route as before, he had checked the rules and sought advice from a helpline.
Pinner’s representation described the incident as out of line with his normal “client-focused behaviour” and said the actions at the time were “utterly stupid”. But noted that the chartered accountant has demonstrated contrition towards his former client, who was reported as being “humbled by the apology.
In sentencing the chartered accountant, the tribunal acknowledged that Pinner’s actions were not driven by financial gain, but out of revenge and to recover the disputed fees.
The incident was resolved after a short period once ICAEW’s professional conduct department got involved and pointed the accountant’s attention to their rights in exercising liens against former clients, and soon after Pinner relinquished the handover information.
The tribunal concluded that the chartered accountant had recognised the “inappropriateness of his behaviour” and had addressed the factors that underpinned his conduct. The disciplinary report also referred to glowing testimonials that spoke highly of his professionalism, character and integrity.
Taking this into account, the ICAEW disciplinary proceedings found that it was very unlikely that such a lapse would be repeated and excluding him from practice would be disproportionate. Instead, the tribunal severely reprimanded the accountant and applied a fine and costs worth a combined sum of £12,000.