DISCIPLINARY COMMITTEE OF THE ASSOCIATION OF CHARTERED CERTIFIED ACCOUNTANTS. Location: The Adelphi, 1-11 John Adam Street, London, WC2N 6AU

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1 DISCIPLINARY COMMITTEE OF THE ASSOCIATION OF CHARTERED CERTIFIED ACCOUNTANTS REASONS FOR DECISION In the matter of: Mr Christopher Graham Martin Heard on: Thursday, 25 January 2018 Location: The Adelphi, 1-11 John Adam Street, London, WC2N 6AU Committee: Mr John Crawley (Chairman), Mr Trevor Faulkner (Accountant) and Mr John Walsh (Lay) Legal Adviser: Mr Alastair McFarlane Persons present and capacity: Mr Mohammed Ismail (ACCA Case Presenter) Ms Pamella Ramphal (Hearings Officer) OUTCOME: Severely Reprimanded Costs of and fine of to be paid by Mr Martin No re-application to membership for 5 years Any application for readmission to membership to be referred to Admissions and Licensing Committee. 1. ACCA was represented by Mr Mohammed Ismail. Mr Martin did not attend and was not represented. The Committee had before it a bundle of papers, numbered pages A- AA and 1(a)-1(g) and 1-174, an additional bundle numbered pages and a service bundle numbered pages 1-30.

2 SERVICE/ PROCEEDING IN ABSENCE 2. Having considered the service bundle, the Committee was satisfied that notice of the hearing was served on Mr Martin in accordance with the Complaints and Disciplinary Regulations 2014 ( CDR ). 3. The Committee next considered whether it was in the interests of justice to proceed in Mr Martin s absence. The Committee accepted the advice of the Legal Adviser. The Committee was mindful that Mr Martin had a right to attend the hearing and to participate and that the discretion to proceed in his absence must be exercised with the utmost care and caution. 4. The Committee noted that ACCA s notice, dated 14 December 2017 to Mr Martin s registered address, offered him the opportunity of attending via video or telephone link, with the costs being met by ACCA. Mr Martin has not responded to the notice of hearing or to several subsequent s from ACCA asking him to indicate if he was going to attend. Indeed, he has only ever made two responses to ACCA over the course of nearly 3 years in relation to this case. They were in June and September The Committee was satisfied that in these circumstances, Mr Martin had voluntarily waived his right to attend. On the information before it and bearing in mind its duty to ensure the expeditious conduct of its business and the wider public interest, the Committee was satisfied that it was in the interests of justice to proceed in the absence of Mr Martin. ALLEGATIONS Allegation 1 It is alleged that Christopher Martin breached the Global Practising Regulations (as applicable in 2014 to 2016) by virtue of not holding a valid practising certificate with regards to the following: a) Between 26 January 2014 and 21 April 2016 he was a director of one or more of the companies listed in Schedule A which carried out public practice contrary to Regulation 3(2)(a) of the Global Practising Regulations (as applicable between 2014 to 2016).

3 b) By reason of his conduct in respect of any or all of the matters set out above, Christopher Martin is: i. Guilty of misconduct pursuant to bye-law 8(a)(i); or ii. Liable to disciplinary action pursuant to bye-law 8(a)(iii). Allegation 2 a) On 2 January 2015 judgment was entered against Christopher Martin in the sum of 11,482. b) By reason of his failure to satisfy the judgment debt referred to in 2(a) above within two months, without reasonable excuse, Christopher Martin is liable to disciplinary action pursuant to bye-law 8(a)(viii). Allegation 3 a) From 6 April 2007 to 5 April 2013, Christopher Martin neglected to ensure that Accounting Freedom Limited, of whom he was a director, paid the correct amount of National Insurance Contributions which led to him being issued with a Personal Liability Notice by HM Revenue & Customs. b) In light of the facts set out at Allegation 3(a) Christopher Martin is in breach of: i. Paragraph 9 of the fundamental principles of the ACCA Code of Ethics (as applicable from 2007 to 2010); and/or ii. Section 150 (Professional behaviour) of the ACCA Ethics and Conduct (as applicable from 2011 to date). c) In light of any or all the facts set out in Allegation 3(a), Christopher Martin is: i. Guilty of misconduct pursuant to bye-law 8(a)(i); or ii. Liable to disciplinary action pursuant to bye-law 8(a)(iii).

4 BACKGROUND 5. Mr Martin was admitted as a member of ACCA in June 2005 and a Fellow in June In February 2015, ACCA received an anonymous complaint against Mr Martin alleging that Mr Martin was under investigation from HMRC for a debt of around 1,000,000 and that he had recently had a County Court Judgment taken out against him. A search on the Members database revealed that Mr Martin did not hold a Practising Certificate. 7. On 21 April 2016, Mr Martin was removed from ACCA s Register of Members for noncompliance with CPD regulations pursuant to Regulation 12(1) of ACCA s Membership Regulations. Allegation 1 8. During the period of 26 January 2014 to 18 November 2015, Company A s website offered the following services: a) Year-end accounts; b) VAT returns; c) Self-assessment tax returns; d) Company tax returns; and e) CIS returns. 9. On 29 May 2015, Mr Martin resigned as a director of Company A. 10. On 18 November 2015, Company B s website offered the following services: a) Personal self-assessment tax returns; b) VAT Returns; c) Year-end accounts; and d) Company tax returns.

5 Company B offered the same services on its website on 23 September On 1 March 2016, Mr Martin was appointed as a director of Company B and Mr Martin resigned as a director of Company B on 30 June Allegation On 2 January 2015, Judgment was entered against Mr Martin in the sum of 11,482, which was marked as having been satisfied on 29 May Allegation 3 13 On 1 September 2005, Mr Martin was appointed as a director of Company C and on the same day became its 100% shareholder. As of 25 March 2008, Mr Martin was a 50% shareholder of Company C. 14. On 21 October 2014, HMRC wrote to Mr Martin enclosing a copy of a Personal Liability Notice ( PLN ) that they had issued against him that day. The PLN informed him that: a) Mr Martin was required to pay HMRC 617, by 20 November 2014 and that it had been issued...in respect of unpaid contributions due from [Company C] for the period from 6th April 2007 to 5 th April b) The amount of unpaid contributions (including interest) was 1,234, The unpaid contributions related to PAYE and NIC for employees of Company C. The letter further stated: It is a matter of fact that as a director of Accounting Freedom Ltd you had a statutory and fiduciary duty and personal responsibility to ensure that full and correct payment of NIC, in respect of all employees, was being made to HMRC each month....the statutory obligations to ensure payment of the full and correct amount of NIC due was not delegable to others. There is no doubt that a director who has a professional qualification as an accountant, should be particularly aware of the obligations of an employer in relation to NIC.

6 If you do not agree with the decision to issue you with a Personal Liability Notice you have the right to appeal against it. 15. On 15 June 2016, HMRC presented a petition for the bankruptcy of Mr Martin and on 1 August 2016, a bankruptcy order was made against him. ACCA SUBMISSIONS Allegation ACCA submitted that Mr Martin has breached Regulation 3(2)(a) of the Global Practising Regulations 2003 ( the GPR ). It contended that both Company A and Company B held themselves out to undertake accountancy services that fall within the definition of public practice as defined in GPR 4(1)(b) and that therefore Mr Martin was required to hold an ACCA Practising Certificate under Regulation 3(2)(a) in respect of both of these firms. 17. ACCA contended that Mr Martin has never held an ACCA Practising Certificate and that it is a breach of the GPR that was sufficiently serious to amount to misconduct. In the alternative, ACCA contended that a breach of Regulation 3(2)(a) rendered Mr Martin liable to disciplinary action under bye-law 8(a)(iii). Allegation ACCA submitted that on the basis that the Judgment was entered against Mr Martin on 2 January 2015, bye-law 8(a)(viii) became applicable on 3 March 2015 following the passing of two months with the judgment debt remaining unpaid. Bye-law 8(a)(viii) remained engaged until 29 May 2015, when the Judgment was satisfied. In order for Mr Martin to have breached bye-law 8(a)(viii), his failure to satisfy the judgment debt during the period of 3 March 2015 and 29 May 2015 must have been without reasonable excuse. 19. ACCA maintained that its letter to Mr Martin of 22 September 2016 requested Mr Martin s comments in respect of the Judgment of 2 January 2015, but that to date, Mr Martin has not responded to this particular query. Accordingly, it is submitted that Mr Martin has no reasonable excuse and has therefore acted in breach of bye-law 8(a)(viii). The Committee did not have sight of any ACCA letter dated 22 September 2016.

7 Allegation ACCA submitted that Mr Martin has breached paragraph 9 of the Fundamental Principles of the ACCA Code of Ethics (as applicable from 2007 to 2010) and Section 150 (Professional behaviour) of the ACCA Code of Ethics and Conduct (as applicable from 2011 to date). 21. On 21 October 2014, HMRC issued a PLN against Mr Martin in the sum of 617, in respect of the unpaid national insurance contributions of Company B of 1,234, in respect of the period of 6 April 2007 to 5 April Despite HMRC s letters to Mr Martin of 21 October 2014 and 29 May 2015, Mr Martin did not (i) make a payment to satisfy the PLN or (ii) appeal HMRC s decision to issue the PLN. 22. Section 150 of the ACCA Code of Ethics and Conduct required Mr Martin, during the period of 2011 to 2016, to comply with the relevant laws and regulations and avoid any action that the professional accountant knows or should know may discredit the profession. 23. ACCA contended that HMRC issued a PLN against Mr Martin as they concluded that the criteria of Section 121C of the Social Security Administration Act 1992 had been satisfied. Section 121C states: (1) This section applies to contributions which a body corporate is liable to pay, where a) the body corporate has failed to pay the contributions at or within the time prescribed for the purpose; and b) the failure appears to the Inland Revenue to be attributable to fraud or neglect on the part of one or more individuals who, at the time of the fraud or neglect, were officers of the body corporate ( culpable officers ). 24. ACCA submitted that the failure of Company C to pay its national insurance contributions, during the period of 6 April 2007 to 5 April 2013, was attributable to the neglect of Mr Martin. In respect of the period of 6 April 2007 to 31 December 2010, it was submitted that Mr Martin s neglect represented a failure by him to...comply with relevant laws and regulations and avoid any action that discredits the profession (Paragraph 9 of the ACCA Code of Ethics and Conduct, as applicable from 2007 to 2010). In respect of the period of 1 January 2011 to 5 April 2013, it was submitted that Mr Martin s neglect represented a

8 failure by him to comply with relevant laws and regulations and avoid any action that the professional accountant knows or should know may discredit the profession (Section 150 of the ACCA Code of Ethics and Conduct, as applicable from 2011 to date). 25. ACCA contended that these breaches were sufficient to reach a threshold of misconduct or in the alternative rendered Mr Martin liable to disciplinary action. MR MARTIN S SUBMISSIONS 26. In s to ACCA, dated 22 June 2015 and 2 September 2015, in response to ACCA's requests for his response to these matters, Mr Martin assertions included: A HMRC investigation was taking place into a company where I was one of the directors and a personal liability notice was issued. My fellow director has agreed a settlement figure and I shall be doing so too ; He was a director of Company A, and only carried out presentations, marketing work, gained new clients and trained staff; No audit work was undertaken; He does not believe that he is able to obtain a practicing certificate as there were not people to sign it off; He wished to resign from ACCA; He was unaware of the County court judgement; He had not received a copy of the PLN; He was not aware that he had breached any rules in respect of practising without a practicing certificate; and Company B carried out bookkeeping, vat, annual accounts and tax returns and payroll and basic tax returns.

9 DECISION ON ALLEGATIONS AND REASONS 27. The Committee accepted the advice of the Legal Adviser. The standard of proof to be applied throughout was the ordinary civil standard of proof, namely the balance of probabilities. It reminded itself that Mr Martin s absence added nothing to ACCA s case and was not indicative of guilt. DECISION ON FACTS 28. The Committee carefully considered documentary evidence it had received, as well as the submissions of Mr Ismail on behalf of ACCA and noted the only responses from Mr Martin s in his two s to ACCA in June and September Allegation 1(a) 29. The Committee was satisfied on the documentary evidence before it, that Mr Martin was a director of both Company A and Company B during the relevant periods and, as indicated on their websites, that both companies were holding themselves out as as available for public practice. The Committee further accepted that Mr Martin, as he acknowledged, did not hold a valid Practising Certificate. On his LinkedIn profile in the bundle, Mr Martin indicated that in respect both of Companies A & B his responsibilities included on the accounting side, helping to oversee the accountants work and ensuring deadlines are met. The GPR requires a director of a company holding itself out as available for public practice to hold a Practising Certificate. It was satisfied that this amounted to a breach of the applicable GPR. Accordingly, Allegation 1(a) is proved. Allegation 1(b) 30. The Committee next asked itself whether, having found Allegation 1(a) proved, Mr Martin was guilty of misconduct. In exercising its judgement, the Committee noted in particular, that Mr Martin has been the director of two firms that have held themselves out as available for public practice without Mr Martin having held a Practising Certificate. It also noted that despite ACCA having first written to Mr Martin in 2015 concerning the allegation that he was practising without an ACCA Practising Certificate, in 2016 he went on again to become a director of a third company that held itself out as available for public practice. The Committee was satisfied that Mr

10 Martin s actions amounted to a breach of a Fundamental Safeguard for the Protection of the Public. It was satisfied that acting as a director of firms that held themselves out as available to undertake public practice whilst he did not hold a Practising Certificate, was conduct that brought discredit to Mr Martin, to ACCA and to the accountancy profession. 31. The Committee had regard to the definition of misconduct in bye-law 8(c) and the assistance provided by the case law on misconduct. It was satisfied that Mr Martin s actions were serious departures from the standards expected by the profession, and had brought discredit on him. The Committee was satisfied that this would be regarded as deplorable conduct by the accountancy profession. Allegation 2(a) 32. The Committee was satisfied on the basis of the documentary evidence that on 2 January 2015, a County Court judgement (Case No A78YP026) was entered against Mr Martin in the sum of 11,482 and was not satisfied until 29 May It was therefore not settled within two months and the burden of proof falls to Mr Martin as to whether he had a reasonable excuse for not satisfying the judgement debt as required under ACCA's bye-laws. Allegation 2(b) 33. The Committee noted that initially ACCA put a general allegation to Mr Martin about failing to satisfy a CCJ within 2 months. Mr Martin, in his June 2015 response to ACCA, referred to being unaware of any CCJ relating to Company D. The Committee is unclear as to whether this response was a reference to the CCJ that ACCA subsequently gained full particulars of. Further, as noted above the Committee does not have a copy of any letter from ACCA to Mr Martin dated 22 September However, the Committee is satisfied that at the very latest when Mr Martin received the full evidence bundle from ACCA, he could be in no doubt as to the CCJ being referred to. In conclusion, the Committee considered it more likely than not that Mr Martin was aware of the judgement recorded in his name and at his address and is satisfied that he had no reasonable excuse for not satisfying the judgement within

11 two months. Accordingly, Allegation 2(b) is proved and the Committee finds Mr Martin liable to disciplinary action under bye-law 8(a)(viii). Allegation 3(a) 35. Having carefully considered the evidence, including that received from HMRC, the Committee was satisfied that in his role as a director of Company C, Mr Martin neglected to ensure that the Company C paid the full amount of national insurance contributions to HMRC, and this failure covered an extended period of several years. This neglect led to a personal liability notice being issued against him. Allegation 3(b)(i) & 3(b)(ii) 36. The Committee was satisfied that by neglecting to ensure that Company C of which he was a director paid the full amount of national insurance contributions to HMRC, Mr Martin was at the relevant material times both in breach of paragraph 9 of fundamental principles of ACCA's Code of Ethics and in breach of section 150 (Professional behaviour) of the ACCA Code of Ethics and conduct. Allegation 3(c) 37. In exercising its judgement as to misconduct, the Committee bore in mind that the extent of the underpayment of national insurance contributions by Company C was a very significant sum ( 1,234,371.12, including interest) and that the apportionment to Mr Martin was also significant ( 617,185.56). As a director of Company C, Mr Martin was responsible for payment of the full and correct amounts of national insurance contributions the company and as a professional accountant, Mr Martin ought to have been particularly aware of the obligations in relation to national insurance contributions. It also noted that despite his claim in his response to ACCA that he was going to settle the matter with HMRC, Mr Martin did not make payment of the sum specified in the PLN and HMRC subsequently petitioned for his bankruptcy which led to a bankruptcy order being made against him. The Committee had no doubt that Mr Martin s failure to ensure that Company C made the correct national insurance contributions was an omission which brought, discredit to Mr Martin, ACCA and the accountancy profession. The omissions continued over an extended period during which Mr Martin had responsibility and his neglect has

12 denied the Exchequer of a considerable sum of money. Considering all the circumstances, the Committee had no hesitation in concluding that the failure to ensure that Company C paid its national insurance contributions, reached the threshold for misconduct. In so concluding the Committee bore in mind the definition of misconduct contained in its Rules and assistance from the case law as to the threshold for conduct to amount to misconduct. SANCTIONS AND REASONS 38. The Committee noted its powers on sanction were those set out in Regulation 13(6). It had regard to ACCA s Guidance for Disciplinary Sanctions and bore in mind that sanctions are not designed to be punitive and that any sanction must be proportionate. It accepted the advice of the Legal Adviser. 39. The Committee considered that the proven misconduct under Allegations 1 and 3 to be very serious. The Committee had specific regard to the public interest and the necessity to declare and uphold proper standards of conduct and behaviour. 40. The Committee considered the following to be aggravating features of Mr Martin s misconduct: The significant extent and duration of his failure to ensure insurance contributions were paid to HMRC and the size of the sums owed; The fact that these large sums were collected from employees and not handed over, which was an abuse of trust ; The failure to settle with HMRC when he indicated he would do so; The undermining effect on the regulation of the profession and public confidence in it by acting as a director when not a holder of a practice certificate and the repeated nature of the failure; Mr Martin has demonstrated no insight into his failings; Substantial losses have been incurred by the public purse; His engagement with his regulator was extremely limited; and There has been no expression of regret or remorse. 41. The Committee considered the following to be mitigating factors:

13 In relation to the CCJ, Mr Martin satisfied the judgment within a relatively short period; and Mr Martin has no previous disciplinary history.a 42. The Committee considered the sanctions available in ascending order. The misconduct was in the Committee s judgment very serious as it damaged the reputation of the profession and caused harm to the public. Given the Committee's view of the seriousness of his conduct, it was satisfied that taking No Further Action was wholly inappropriate and that the sanctions of Admonishment and Reprimand were insufficient to highlight to the profession and the public the gravity of the proven conduct. 43. As Mr Martin is no longer a member, the Committee does not have the power of exclusion. Had this been the case, it would have no hesitation that exclusion would have been the appropriate and proportionate sanction, as the behaviour was fundamentally incompatible with being a member. It considered that the factors listed at C5.1 (a),(b),(c) and (f) in the Guidance the extent of departure from professional standards, the actual losses incurred, the abuse of trust and the extent of the misconduct involved - would have supported exclusion. 44. The Committee therefore concluded that in order to mark the gravity of the behaviour the appropriate and proportionate sanction is a severe reprimand combined with a fine in the sum of 25,000. It further directed under CDR 13 that Mr Martin may not re-apply for membership for 5 years and that any application for readmission to membership thereafter be referred to Admissions and Licensing Committee. COSTS AND REASONS

14 45. ACCA claimed costs of 5,766.50, based on a standard assessment of what work this kind of case involves. The Committee reminded itself that it had a discretion whether or not to award costs in accordance with the principles of reasonableness and natural justice. The Committee considered in the circumstances of the duration of the case, that the sum claimed was modest and appears not to reflect the re-scheduling of this hearing. The Committee considered that the case was properly brought and it had regard to the relevant factors affecting its discretion in the Guide to Costs Orders. The Committee accepted that Mr Martin had been made bankrupt, but had no information as to his financial current status and means. The Committee was satisfied it was appropriate to award the costs claimed in full. EFFECTIVE DATE OF ORDER 46. This order shall take effect from the date of the expiry of the appeal period unless notice of appeal is given prior to the expiry of that period, in which case it shall become effective (if at all) as described in the Appeal Regulations. The Committee was not persuaded that the ground for imposing an immediate order was made out given the facts of this case and that public protection is not involved. John Crawley Chairman 25 January 2018

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