IT contractor accountants have their say on Upton

A leading contractor accountant emerging with a stiff jail sentence, on top of a hefty penalty, for stealing thousands of pounds from his clients is causing other contractors to take a long hard look at their own advisors.

Whatever the hue of their service, the consensus of three accountants is that the sector’s advisors can expect fresh client scrutiny, following the issuing of a six-year jail term, plus a £495,000 confiscation order, to Darren John Upton.

Described last week by sentencing judge, Sally Cahill QC, as a “thoroughly dishonest man,” Mr Upton stole more than £250,000 from 33 contractor clients by providing them his bank account details, instead of the taxman’s, when they came to pay corporation tax.

Simon Dolan, founder of SJD Accountancy, was initially somewhat sympathetic, saying last night it was a “sad story” for all parties concerned, as Mr Upton originally had a “nice business and a decent reputation”.   

Another long-serving accountant to IT contractors, Barry Roback, of Privilege Accounts, also sounded regretful: “It is always sad to see the betrayal of trust between an innocent taxpayer and their professional advisor,” he said.

Yet where that betrayal does take place, advisers should be under no illusion as to the severity of the court’s likely response, believes Ronnie Ludwig, partner at chartered accountants Saffery Champness.

“The courts will always take a very, very strict line on any accountant or lawyer perceived to have defrauded HM Revenue & Customs or the Treasury,” he said.

“They always make an example of lawyers or accountants who are acting to defraud the exchequer – and will always literally throw the book at them, in terms of sentencing.”  

The two contractor tax specialists were more positive, in that they said there were ‘lessons to be learnt’ for contractors who have an accountant, or who are about to choose one, as Mr Roback outlined.

“A competent and honest accountant should NOT ask a client to pay over monies destined to third parties (such as HMRC or Companies House) on the assumption that these monies will be passed over in a timely fashion.

“Aside from the financial risk that this entails, an accountant who makes payments on behalf of his/her clients runs the very serious risk that such activity will be seen by the authorities as the provision of a ‘Managed Service’ and with that, debt transfer possibilities.”

He added: “The only thing you should expect to  pay your account is fees. In addition, although not necessarily an absolute guarantee of honesty, it is always best to deal with  only qualified professionals who are themselves subjected to various professional rules and regulations. “

Mr Dolan seemed to agree, arguing that the case underlines the importance of selecting an accountant with care, although letters after the advisor’s name was said to carry less clout.  

“Qualifications are of course one way of doing this, but as has been shown time and again, the ability to pass an exam and pay an annual subscription fee [to a professional body] doesn't really mean that much,” he explained.

“When choosing your accountant, you should start with qualifications, but then ask further questions. For example, how long have the been in business; how many clients do they have, is there more than just a handful of people in the firm, and can I actually go and meet them?

“I do wonder whether Darren [Upton] would have got away with it for so long if his clients actually had the ability to meet with him.”