DISCIPLINARY COMMITTEE OF THE ASSOCIATION OF CHARTERED CERTIFIED ACCOUNTANTS

Transcription

1 DISCIPLINARY COMMITTEE OF THE ASSOCIATION OF CHARTERED CERTIFIED ACCOUNTANTS REASONS FOR DECISION In the matter of: Mr Alan Goddard Heard on: 30 August 2016 Location: The Adelphi, 1-11 John Adam Street, London, WC12N 6AU Committee: Mr Michael Cann (Chairman) Mr Robert Clarke (Accountant) Mrs Suzanne McCarthy (Lay) Legal Adviser: Miss Juliet Gibbon Persons present and capacity: Mr Christopher Ware (Case Presenter on behalf of ACCA), Miss Rachael Davies (Hearings Officer) PRELIMINARY 1. The Committee convened to determine two allegations relating to Mr Goddard having been found guilty by a judge and jury, sitting in the Crown Court at Liverpool on 1 September 2015, of an offence of being knowingly involved in fraudulent evasion of Value Added Tax (VAT). 2. The Committee had before it a bundle of papers numbered pages A-H and 1-42 and two additional bundles of tabled additional papers, numbered pages and , together with a service bundle, numbered pages 1-12 and a further additional service bundle, numbered pages ACCA was represented by Mr Christopher Ware. Mr Goddard did not attend the hearing and was not represented. 1

2 ALLEGATIONS 4. Mr Goddard faces the following allegations: Allegation 1 Pursuant to bye-law 8(a)(ix), Mr Alan Goddard is liable to disciplinary action by virtue of his conviction in the Crown Court at Liverpool on 1 September 2015, having been found guilty of being knowingly concerned in the fraudulent evasion of Value-added Tax (VAT). Allegation 2 (a) Pursuant to bye-law 8(a)(i) Mr Alan Goddard is guilty of misconduct in that he failed to promptly bring to the attention of ACCA the fact that he may have become liable to disciplinary action contrary to bye-law 10(b) by virtue of: (i) His conviction in the Crown Court at Liverpool on 1 September 2015 for being knowingly concerned in the fraudulent evasion of VAT; and/or (ii) Or His sentence in the Crown Court at Liverpool on 2 October 2015 for being knowingly concerned in the fraudulent evasion of VAT. (b) Pursuant to bye-law 8(a) (iii), Mr Alan Goddard is guilty of misconduct in that he failed to promptly bring to the attention of ACCA the fact that he may have become liable to disciplinary action contrary to bye-law 10(b by virtue of: (i) His conviction in the Crown Court at Liverpool on 1 September 2015 for being knowingly concerned in the fraudulent evasion of VAT and/or; (ii) His sentence in the Crown Court at Liverpool on 2 October 2015 for being knowingly concerned in the fraudulent evasion of VAT. 2

3 APPLICATION TO AMEND ALLEGATION 2(b) 5. Mr Ware applied to amend the wording of Allegation 2(b) to delete the words Mr Goddard is guilty of misconduct and replace with the words Mr Goddard is liable to disciplinary action. Mr Ware submitted that this was not an amendment of any substance but simply to correct a typographical error. He submitted that Mr Goddard would not be prejudiced in his defence by the amendment. DECISION AND REASONS ON ACCA S APPLICATION TO AMEND 6. The Committee considered that the proposed amendment to Allegation 2(b) was not an amendment of substance and that Mr Goddard would not be prejudiced in his defence by the amendment. The Committee therefore determined that ACCA s application to amend Allegation 2(b) should be allowed. AMENDED ALLEGATIONS 7. Mr Goddard faces the following amended allegations: Allegation 1 Pursuant to bye-law 8(a)(ix), Mr Alan Goddard is liable to disciplinary action by virtue of his conviction in the Crown Court at Liverpool on 1 September 2015, having been found guilty of being knowingly concerned in the fraudulent evasion of Value-added Tax (VAT). Allegation 2 (a) Pursuant to bye-law 8(a)(i) Mr Alan Goddard is guilty of misconduct in that he failed to promptly bring to the attention of ACCA the fact that he may have become liable to disciplinary action contrary to bye-law 10(b) by virtue of: 3

4 (iii) His conviction in the Crown Court at Liverpool on 1 September 2015 for being knowingly concerned in the fraudulent evasion of VAT; and/or (iv) Or His sentence in the Crown Court at Liverpool on 2 October 2015 for being knowingly concerned in the fraudulent evasion of VAT. (b) Pursuant to bye-law 8(a) (iii), Mr Alan Goddard is liable to disciplinary action in that he failed to promptly bring to the attention of ACCA the fact that he may have become liable to disciplinary action contrary to bye-law 10(b) by virtue of: (i) His conviction in the Crown Court at Liverpool on 1 September 2015 for being knowingly concerned in the fraudulent evasion of VAT and/or; (ii) His sentence in the Crown Court at Liverpool on 2 October 2015 for being knowingly concerned in the fraudulent evasion of VAT. SERVICE OF PAPERS / PROCEEDING IN ABSENCE 8. The Committee considered whether the appropriate documents had been served on Mr Goddard in accordance with Regulations 10 and 22 of the Chartered Certified Accountants Complaints and Disciplinary Regulations 2014, as amended on 1 January 2016, ( the Regulations ). The Committee took into account the submissions made by Mr Ware on behalf of ACCA, and accepted the advice of the Legal Adviser. 9. Notice of the hearing had been sent to Mr Goddard at his registered address on 26 July The Royal Mail track and trace document showed that the notice had been delivered and signed for in the name of Goddard on 27 July The Committee was satisfied that Mr Goddard had been given the requisite 28 days notice of the hearing and that service had been effected in accordance with Regulations 10 and 22 of the Regulations. 4

5 10. The Committee next determined whether to proceed in the absence of Mr Goddard. It accepted the advice of the Legal Adviser. It bore in mind that whilst it had discretion to commence and conduct proceedings in the absence of a member, it should exercise that discretion with the utmost care and caution. The Committee had due regard to the factors set out by Lord Bingham in the case of R v Jones 2002 UKHL The Committee was informed that Mr Goddard had written to ACCA on 12 August 2016 stating that he would not be attending the hearing because It falls on the day after the August bank holiday, exactly as the final date of my trial did in Mr Goddard indicated that he did not feel that he would be emotionally strong enough to deal with the trauma of the day. 12. ACCA had replied to Mr Goddard by on 26 August 2016 informing him that he was entitled to make an application to adjourn the hearing. Mr Goddard replied to ACCA on the same day indicating that he would not be seeking an adjournment of the hearing scheduled for 30 August DECISION AND REASONS ON PROCEEDING IN ABSENCE 13. The Committee was satisfied that Mr Goddard had been served with the notice of hearing and was aware of today s hearing. He had indicated to ACCA that he would not be attending the hearing and he had not applied for an adjournment of the hearing. The Committee determined that Mr Goddard had voluntarily chosen not to attend the hearing. There was no evidence before the Committee to suggest that Mr Goddard would be likely to attend a future hearing if today s hearing were adjourned. 14. The Committee noted that Mr Goddard had provided a full response to the allegations against him. The Committee considered there was a clear public interest that the case be dealt with expeditiously and determined that it was in the interests of justice to hear the case today. BACKGROUND 15. Mr Goddard became a member of ACCA on 21 November 1985 and a Fellow of ACCA on 21 November

6 16. On 1 September 2015 Mr Goddard was tried and convicted at the Liverpool Crown Court of one offence of being knowingly concerned in the fraudulent evasion of VAT. Sentence was adjourned for the preparation of a presentence report and on 2 October 2015 Mr Goddard was sentenced to 24 months imprisonment suspended for 24 months. He was also required to carry out 300 hours of unpaid work and ordered to pay 1500 towards the costs of the prosecution. 17. In sentencing Mr Goddard, the sentencing judge stated: You stood trial and were convicted by your jury some weeks ago of a fraud in relation to VAT. You are 61 years of age. You became a certified accountant in You founded your own firm in 1995, and you registered for Value Added Tax on the 1 st September You filed only two returns thereafter. You failed thereafter to submit at least 24 returns. Your jury was satisfied that your conduct was entirely dishonest. The loss to Her Majesty s Revenue and Customs was not less than 65,000. Not all the relevant periods have been calculated for some reason, but it is certainly not less than 65,000. I am satisfied that you got yourself into a hole, which got ever deeper, and out of which you could not and ultimately did not even try to climb. It was not sophisticated offending. Perhaps the saddest aspect of it is that you were not able to share this in any way, the turmoil itself or the subsequent criminal proceedings with your family. Mr Goddard s Case 18. In his letter to ACCA, dated 12 August 2016, Mr Goddard made detailed representations on the allegations and enclosed a number of documents relating to his conviction at Liverpool Crown Court on 1 September These included a letter from his General Practitioner, a report from a medical consultant, correspondence from HMRC in relation to the investigation that led to the criminal trial, a letter of resignation to ACCA, dated 2 April 2015, a letter written by Mr Goddard to the sentencing judge, further letters to the sentencing judge from family and friends and a report from a forensic accountant. 19. In his letter to ACCA Mr Goddard stated that he had acquired an accountancy firm in 2007 in order to expand his sole practice. He had 6

7 borrowed 325,000 against his family home in order to do so on the basis that he would acquire gross recurring fees of 275,000. After only a few weeks, however, the previous Practice Manager had persuaded clients to leave the firm and Mr Goddard lost a number of clients causing the income of the firm to be far less than expected. Mr Goddard stated in his letter that he had been working long hours and had neglected his personal affairs, including completing and returning his VAT returns. 20. Mr Goddard stated that because he had failed to submit his VAT returns, HMRC sent an estimated assessment of the VAT due which he paid on each occasion. He stated that he had not known whether the assessments were higher or lower than the VAT actually due. In his letter to ACCA Mr Goddard, however, stated that there was never an intent to defraud HMRC, which seeks to go behind the conviction for which the jury found him guilty. Mr Goddard stated that HMRC originally stated that his liability was 105,836 but he had engaged a forensic accountant before the trial who calculated his liability as 64,779. He stated this had been accepted by the prosecution and the Court. Mr Goddard paid this sum to HMRC prior to the sentencing hearing on 2 October Mr Goddard stated that on 2 April 2015 he had written to ACCA to resign his membership when he realised that he had to face a criminal trial. He has provided a copy of the letter to the Committee. It states: It is with a certain amount of regret that I have decided to relinquish my ACCA membership, and I will therefore not be seeking renewal for I shall be grateful if you will please note your records accordingly. SUBMISSIONS 22. In relation to Allegation 1, Mr Ware submitted that the Certificate of Conviction was conclusive proof that Mr Goddard had been found guilty of an offence of being knowingly concerned in the fraudulent evasion of VAT. Mr Ware further submitted that the offence was discreditable to Mr Goddard and derogatory to ACCA and the accountancy profession. He submitted that the Committee could, therefore, find Mr Goddard liable to disciplinary action by virtue of bye-law 8(a)(ix) (as it applied in 2015) which provides that a member shall be liable to disciplinary action if he has been found guilty of 7

8 any offence discreditable to the Association or to the accountancy profession. 23. In relation to Allegation 2(a), Mr Ware submitted that Mr Goddard had an obligation under bye-law 10(b) to notify ACCA of his criminal conviction and sentence. He submitted that Mr Goddard had dishonestly failed to notify ACCA and his breach of bye-law 10(b) was so serious as to amount to misconduct. DECISION ON ALLEGATIONS 1 AND 2 AND REASONS Allegation 1 Proved 24. The Committee considered all the evidence before it together with the submissions of Mr Ware and the written representations of Mr Goddard. The Committee accepted the advice of the legal adviser. 25. The Committee noted that Mr Goddard s offending behaviour took place over a number of years during which he had underpaid VAT due to HMRC as a result of failing to complete VAT returns. The jury had found Mr Goddard s conduct to be dishonest and had found him guilty of an offence of fraudulent evasion of VAT. 26. The Committee noted that under Regulation 12(2)(c) of the Complaints and Disciplinary Regulations 2014, as amended: The status of any criminal conviction is as set out in the bye-law 8 which was in force at the time the matters complained of took place, and the Disciplinary Committee shall apply the provisions of that bye-law to its proceedings. 27. The Committee also took into account that by virtue of bye-law 8(e), as it applied in 2015, a copy of the certificate or memorandum of conviction shall be conclusive proof of the conviction or caution and of any facts and matters found, as the case may be. 28. The Committee had seen the certificate of conviction and was satisfied that Mr Goddard s dishonest conviction for fraudulent evasion of VAT was both discreditable to the Association and to the accountancy profession and that 8

9 Mr Goddard was, therefore, liable to disciplinary action by virtue of bye-law 8(a)(ix). Allegation 2(a) (i) and (ii) Not Proved / Allegation 2(b) (i) and (ii) - Proved 29. The Committee determined that Mr Goddard was still a member of ACCA at the relevant time despite his letter of resignation, dated 2 April 2015, because he had not returned his membership certificates to ACCA, as requested. 30. Mr Goddard was, therefore, under a duty to bring his criminal conviction and, therefore, his liability to disciplinary action, to the attention of ACCA. He failed to do so in breach of bye-law 10(b). 31. The Committee, however, was prepared to accept that Mr Goddard believed that he had resigned his membership and, given the difficulties that were ongoing in his life at that time, that he was therefore not obliged to notify ACCA of his criminal conviction and sentence. 32. The Committee did not consider that Mr Goddard s failure to notify ACCA of his criminal conviction and sentence was a deliberate failure on his part or motivated by dishonesty. In the circumstances, the Committee did not consider Mr Goddard s breach of bye-law 10(b) to be serious enough to amount to misconduct, but it did find that he was liable to disciplinary action as a result of the breach. SANCTION AND REASONS 33. The Committee was informed that Mr Goddard had a previous disciplinary finding made against him in July 2015, when he received a severe reprimand and a fine of 2,500 by way of sanction, and was ordered to pay costs of 5,500 to ACCA. 34. The Committee accepted the advice of the legal adviser who referred it to Regulation 13(1) of the Regulations and to ACCA s Guidance for Disciplinary Sanctions (April 2016). In considering what sanction, if any, to 9

10 impose. The Committee bore in mind the principle of proportionality and the need to balance the public interest against Mr Goddard s own interests. The purpose of any sanction was not to be punitive but to protect members of the public, maintain public confidence in the profession and ACCA and to declare and uphold proper standards of conduct and behaviour. 35. By way of mitigation the Committee took the following into account: Mr Goddard had repaid the sum of 65,000 that he had under paid to HMRC as a result of his dishonest offending; There is no evidence of any repeat of the offending behaviour since his conviction in 2015; Mr Goddard appeared to have demonstrated remorse for bringing the profession into disrepute; Mr Goddard had recently engaged with the ACCA proceedings. 36. The Committee also noted the contents of the pre-sentence report that stated: Mr Goddard expressed remorse and said he is very ashamed and acknowledges that the offence is extremely serious due to his profession he reassured me that this behaviour is out of character and there will be no repetition. 37. The Committee accepted that Mr Goddard was experiencing personal difficulties and poor health at the relevant time, as set out in his written representations. It also took into account the sentencing judge s remarks: I am satisfied that you got yourself into a hole, which got ever deeper, and out of which you could not and ultimately did not even try to climb. It was not sophisticated offending. 38. In terms of aggravating features the Committee took the following into account: Mr Goddard had defrauded HMRC of a large sum of money over a protracted period of time; There had been a pattern of offending in that Mr Goddard had failed to submit VAT returns for a period of almost 6 years; There had been financial harm to the public; 10

11 Mr Goddard had not admitted his guilt but had been found guilty by a jury; Mr Goddard had continued to deny that he had been dishonest which demonstrated a lack of insight on his part. 39. The Committee considered that Mr Goddard s conviction in relation to Allegation 1 was for a serious offence of dishonesty that took place over a number of years. Given the seriousness of the misconduct the Committee determined that it would not be appropriate to take no action and a sanction was required. 40. The Committee considered the available sanctions from the least serious upwards. It considered whether the appropriate and proportionate sanction to impose upon Mr Goddard was an admonishment or a reprimand. The Committee, however, determined that to impose either of these sanctions would not adequately reflect the seriousness of the dishonest conduct in this case. 41. The Committee also considered that a severe reprimand would not be an appropriate or sufficient sanction. Mr Goddard s dishonest conduct, which led to a conviction for fraudulent evasion of VAT, was, in the Committee s view, deliberate and dishonest offending over a lengthy period of time. Dishonesty, especially in the workplace, is not the conduct expected of a professional accountant. 42. In the Committee s determination Mr Goddard s dishonest behaviour that led to the criminal conviction for being knowingly concerned in the fraudulent evasion of VAT, was conduct that was fundamentally incompatible with being a member of ACCA. 43. The Committee, therefore, determined that the appropriate and proportionate sanction was to exclude Mr Goddard from membership of ACCA. In the Committee s view such a sanction was necessary to protect the public and maintain public confidence in the accountancy profession and ACCA as regulator. 11

12 EFFECTIVE DATE OF ORDER 44. The Committee considered that in the particular circumstances of this case it was in the public interest for the Committee to order that Mr Goddard be excluded from membership of ACCA with immediate effect. ORDER 45. Mr Goddard is excluded from membership of ACCA with immediate effect. COSTS AND REASONS 46. Mr Ware, on behalf of ACCA, applied for costs amounting to 6, The Committee was informed that Mr Goddard had not provided any details of his current financial situation. 47. The Committee gave careful consideration to the question of costs. Whilst Mr Goddard had not provided details of his current means, the Committee had been informed that Mr Goddard had repaid 65,0000 to HMRC in October 2015 and that he was currently paying 250 per month to ACCA in relation to a fine and costs order of 8,000 that was made by the Disciplinary Committee in July The Committee concluded that in all the circumstances the sum of 5,000 was a fair and reasonable sum to order Mr Goddard to pay by way of costs. The Committee invited ACCA to liaise with Mr Goddard to arrange for this to be paid in monthly instalments with a starting date to take into account the current payments being made by Mr Goddard to ACCA. ORDER 49. Mr Goddard shall pay ACCA the sum of 5,000 by way of costs. Mr Michael Cann Chairman 30 August