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Hillgrove trial: Phantom person revealed

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6th Mar 2014
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The third day of Richard Hillgrove's tax trial kicked off this morning with Geoff O’Sullivan revealing the name of a character Hillgrove referred to as “this phantom person” the previous day.

The judge ended proceedings yesterday ordering O’Sullivan to come back with details of the person who was “having a hand” in the accounts, other than the previous accountants Howell Cook.

O’Sullivan revealed to the court he had met Kevin May at his home in Sherborne, and that he had told him he was a part-time accountant to Hillgrove Public Relations.

May had not replaced Howell Cook, but applied for the same financial controller position as O’Sullivan, lasting just 24 hours.

Hillgrove informed the court that May was not an accountant, but in fact a bookkeeper.

He continued his cross examination referring to a letter that O’Sullivan had made reference to a “previous service provider” who had been “apathetic”.

O’Sullivan explained who that was: “It was a mixture of Howell Cook and whoever Hillgrove employed internally to do their accounting”

Hillgrove came back: “Are you saying that Howell Cook, a chartered accountant, was ‘apathetic’?”

O’Sullivan replied: “They did not robustly ask Hillgrove Public Relations the sort of questions I would expect them to ask. I recommended getting the accounts on a robust footing and resolving the Sage accounts.”

Hillgrove also said that O’Sullivan failed to show up to an important meeting with Howell Cook.

“There was a meeting that I couldn’t attend and we agreed to have a three-way phone conversation,” O’Sullivan replied.

Hillgrove went on to suggest that with the £8,000 payment to Howell Cook and the growing HMRC debt, did he think it was a good idea to get another accountant involved.

“Could you have been the intermediary to resolve this issue?” Hillgrove asked. To which O’Sullivan replied: “I tried to but you hadn’t paid them for the work.”

Hillgrove also revealed that Bishop Jones had done the bookkeeping and payroll for O’Sullivan’s sister in law’s company, and that on 28 February 2013 he had told an HMRC investigator, officer Harding, that he knew Bishop Jones through “a relation”.

Asked whether he received a referral fee for the Bishop Jones engagement, O’Sullivan said: “No, I’m sure I did not.”

Hillgrove added: “You also told an HMRC investigator that Howell Cook was 40% of the problem,”.

 “I was trying to resolve at your behest the outstanding issues,” O’Sullivan replied.

O’Sullivan also failed to attend a meeting with HMRC’s Fiona Sugrue. Hillgrove emailed O’Sullivan saying: “Geoff you’re making us look chaotic.”

Hillgrove went on to ask O’Sullivan: “Do you think it was more important to engage another accountant or pay some tax? You got Bishop Jones to re-do everything done by Howell Cook, but do you not think the most important thing to do was pay some tax?”

O’Sullivan said that the nature of the arrears owed to HMRC became clear to him over his seven month employment with Hillgrove.

“Did Fiona Sugrue ever disclose the amount?” asked Hillgrove, despite the “30 communications” he alleged took place between the two.

“Not to me directly but we thought it was somewhere in the order of £50,000”, O’Sullivan said, who contested the number of communications that took place. “Sugrue was pressing for an agreement, not payment. On no occasion did she ask for payment. She wanted a business plan and agreement”

On the previously discussion about converting an LLP to a limited company, O’Sullivan said he did not know enough about this and that Bishop Jones advised on it accordingly.

O’Sullivan added: “I have no recollection of Fiona Sugrue telling me that it was not normal policy of HMRC to take the tax debt of one legal entity and transfer it to another.

“I reviewed the figures and Louise Dale told me Mr Hillgrove was happy with the figures.”

Hillgrove also questioned O’Sullivan’s growth projections which were partly based on his lead list.

“Are you telling me that in the middle of the recession we would double our revenue in a year? Were the projected figures unreasonably optimistic?” asked Hillgrove. To which O’Sullivan replied “no”.

Hillgrove also brought up O’Sullivan’s involvement in trying to get James Caan involved in bringing Dragon’s Den to India, and this being a distraction from his financial role with Hillgrove Public Relations.

“Were you distracted from your work that you should have been doing as a financial adviser to Hillgrove Public Relations by your other business interests?” he asked.

O’Sullivan denied that this had been a distraction.

Hillgrove also grilled O’Sullivan on what he thought was an appropriate business expense.

As a company based in Somerset would London hotel and restaurant bills be appropriate for doing business as a company pretending to be based in London, he asked.

“Would staying in a hotel in London be classed as lavish?” Hillgrove said,

Finally Hillgrove revealed that he had in fact paid HMRC a significant sum of PAYE money and that O’Sullivan had not informed the investigator about this.

“Did you tell Paul Harding, an HMRC investigator, that Hillgrove Public Relations had paid some money, around £105,000, to HMRC? It’s not zero”

O’Sullivan replied: “I cannot recall if I told them”

O’Sullivan also confirmed that after the 20 January 2011 meeting he permanently parted company.

“From 21 January I had no further contact. I was not party to the incorporation,” he added.

Mr Ticehurst went on to question Michelle Bishop of Bishop Jones in the afternoon. The trial continues next week.

* * *

5 March : Adviser grilled over PR's finances

The second day of Richard Hillgrove's tax trial opened today with accountant and business consultant Geoff O'Sullivan being questioned over his professional role and involvement with Hillgrove Public Relations.

Bristol Crown Court heard how O'Sullivan had replied to an advert Hillgrove placed in a newspaper in July 2010 to be financial controller for Hillgrove Public Relations. O'Sullivan advised the PR man that he didn’t need a full time financial controller and suggested instead a part-time bookkeeper/accountant, and a part-time business adviser.

He said his assignment was to understand the business and ascertain the state of the company records. At the time he thought it was a limited company but later discovered that RJH Management LLP was the legal entity.

After being hired, O'Sullivan said he worked on “six to eight issues” with the previous accountant’s work that Hillgrove had written to him about.

“The previous accountant was not taking a robust enough position with Hillgrove Public Relations,” O’Sullivan said. “There wasn’t a proper system of accounting being used. There was a Sage account but that was out of date.

“The documentation was not complete and not ordered from a professional accountant viewpoint… They didn’t pursue the right line of questioning that another accountant would normally ask,” O'Sullivan added.

The consultant also said Hillgrove Public Relations did not have complete monthly management accounts and that the end of year statement to Companies House had not been signed off.

The historical company records were inaccurate, he said, but the business model going forward was good. “I saw no reason, if it could pay off the debt, why the numbers couldn’t be met or exceeded,” O'Sullivan said.

He noted the large outstanding creditors in the accounts, including VAT and PAYE, and his assessment of the income generated by the company was around £300,000-400,000 on an upfront basis.

“The problem with the business was Hillgrove was paying himself and his family a larger than expected amount for the business. I communicated this to Mr Hillgrove and his wife,” he said.

O'Sullivan proposed to pay off the previous accountant £8,000 “so they could move on” and engage a new firm of accountants to assess the situation. He also told Hillgrove to be cautious and pay the creditors, the court heard.

Accounting firm Bishop Jones was appointed to run the company payroll and later took on the wider accounting side of the business. 

O'Sullivan said it was discovered that outstanding VAT had not been paid, so he arranged with Bishop Jones to meet and discuss the situation with HMRC. The accountancy firm recommended that when Hillgrove Public Relations raised an invoice, the VAT money be put in a separate account for safekeeping until it fell due to HMRC.

O'Sullivan and Louise Dale from Bishop Jones prepared a business plan for HMRC to demonstrate that Hillgrove Public Relations could afford to make repayments under a time to pay (TTP) agreement.

According to O'Sullivan, RJH Management LLP was the legal entity discussed at the TTP meeting and Hillgrove Public Relations was just the marketing front of the business.

Hillgrove agreed to the repayment arrangement and signed the document.

Questioned in court by Hillgrove, who is defending himself, O'Sullivan said it wasn’t clear from the previously prepared accounts whether money had been spent on the business or on personal expenses.

O’Sullivan said he believed someone else had been engaged by Hillgrove PR to manage the accounts and this person had handed O'Sullivan a number of files and a disc in Sherborne.

The judge ended proceedings for the day by ordering O’Sullivan to come back the next day with details of the character Hillgrove referred to as “this phantom person”, 

Day 1: Celebrity PR's tax trial opens in Bristol

The trial continues. For legal reasons, comments have been disabled on this article.

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