Accountant Christopher Lunn has been convicted for evading more than £6m in tax. A source familiar with Christopher Lunn & Co’s activities told AccountingWEB how the firm considered its fraudulent behaviour ‘a bit of a joke’.
The saga surrounding Christopher Lunn & Co, which specialised in media freelances. hit the headlines in 2010 when HMRC arrested Lunn after unearthing offences including inflating accountancy fees and fraudulent use of trading losses. Lunn allegedly used these tactics to evade paying both his own and his clients’ taxes.
In January 2014 Lunn was acquitted on two charges, while the jury was unable to reach a verdict on the remaining four. Five years after HMRC launched its investigation, Lunn was finally convicted on four counts of cheating the public revenue.
Someone previously familiar with Lunn’s firm outlined its cavalier attitude towards the tax authorities: “The practice of over-claiming expenses and inflating accountancy fees was considered a bit of joke within the firm. The attitude of Christopher was that he was too clever to get caught and HMRC wouldn't notice. So those practices were widespread.
“One staff member in particular would sign people’s tax returns for them by holding up a previously signed document against a window and pressing the signature page of the new tax return against that document. You could see the outline of the earlier signature, and the staff member would trace that signature on to the tax return.”
This process was known within the firm as “window teching”. The technique was so widespread that there was a separate category for it on the time-keeping system.
Forging signatures was the tip of the iceberg, but it was packaged as a “bit of a game” with HMRC, so staff went along with it on this basis.
Lunn’s fraudulent tax return treatment left many of his clients scrambling to repair the damage. Many AccountingWEB members have picked up Lunn & Co clients in the aftermath of HMRC’s investigation. In the fallout of Lunn’s arrest, our source has been involved in clearing up the tax affairs of former Lunn clients.
“That has been a painful process for those clients. Out of the disclosures I’ve seen, many have been handed additional tax bills of £5,000-10,000 to correct the issues with the Christopher Lunn accounts,” the source said.
One client paid £50,000 to correct their accounts. Other clients are being hit interest and penalties on top of the outstanding liabilities, our source explained.
Jennie Granger, HMRC’s Director General, Enforcement and Compliance said: “Lunn believed he could make up fraudulent claims to benefit both himself and his clients. Hard work from HMRC officers across the department proved him wrong. This long-running investigation has already recovered £20m, as Lunn’s former clients settle their tax liabilities, with more to come.
“I hope this result serves as a reminder to those who try to cheat the public purse – particularly those in the tax profession – that no one is above the law and that HMRC will relentlessly pursue tax evaders to bring them before the courts."
Lunn will be sentenced on 6 January 2016. HMRC has said that as Lunn’s clients were unaware of his actions, they have been offered a chance to put things right for themselves by paying any tax and interest due. Any client who has not yet come forward pending the outcome of the trial is encouraged to speak to HMRC to bring their affairs up to date, as many of Lunn’s clients have already done.
However, our source warns: “Penalties for people who have only recently approached HMRC, or have yet to, are going to be higher than 10%.”
Last year Lunn’s son, Christopher Jonathan Lunn, was convicted on six counts of misrepresentation under the Fraud Act for overstating clients’ accountancy fees.
About Richard Hattersley
Richard is AccountingWEB's practice correspondent. If you have any comments or suggestions for us get in touch.