False SA302 declarations & an Internet Mortgage Scam

The barefaced cheek of some Clients

This story wouldn’t be amiss in a Marx Brothers sketch

I apologise in advance for this Blog, but I just had to get this one off my chest.

I’ve had this particular client for years and years; in fact even before I took over the business of a retiring accountant in 2001, he had been a client of his for 10 years, we’ll call him Bill for the purposes of this Blog.

Bill was no problem; he always brought his stuff in on time, Lovely. He regularly recommended potential clients to me over the years not many, but perhaps one or two a year – for which I always rang to say ‘thanks’ and ‘maybe we’ll discuss a discount on next your fee’ etc etc.

Suddenly, instead of the normal one or two a year, I was getting introductions of two or three a month and good clients too but I wondered what I was doing to attract this attention.

I then get a phone call from him asking me to ring HMRC for SA302’s. I asked him to confirm which years and he said 2012/2013 and 2013/2014. But I’d not done his 2014 return? I checked HMRC’s website and I was still down as his accountant BUT a 2014 return had been submitted.

I rang HMRC and they faxed the SA302 for 2014 to me and I was able to see that the accounts showed a net profit of almost double what he had declared in previous years.

It then became blindingly obvious that he’d fiddled his books to boost his income to get the mortgage.

(The SA302 is a brief summary of the income that has been reported to HMRC. It is effectively a certificate that documents exactly how much income you have declared on your Tax Return)

HMRC will have you on Toast

So I rang him, the call went to answerphone so I left a message asking him to call in as I wanted to discuss the issue. The next day Bill breezed in and quite barefaced told me that he needed a mortgage and as a result had already submitted his tax return via another accountant who his girlfriend found and who had done the return very quickly for a cash bonus.

I then did a bit of a mini rant, asking why he hadn’t had the common courtesy to tell me he was leaving me; why this other ‘accountant’ had not asked for professional clearance; that if he really was a professional accountant (or even an accountant who knew the ropes) then he would know that SA302’s can be arranged by the client by just ringing HMRC direct; and finally, why had he involved me in his mortgage scam?

He looked at me with surprise and replied that he couldn’t understand why was I making such a fuss as he had made sure that he had upped his recommendations of new clients in recent months to (and these are his actual words), “to keep you sweet”, and that anyway, it was just for the one year as he would be back to me for next year’s accounts.

I reminded him that I’d seen the figures and could see what had been done and whilst I was pleased that he hadn’t comprised my position by asking me to submit false figures, I told him HMRC are not stupid and if it was blindingly obvious to me that the figures were false, then they would probably realise as well and that in all likelihood his 2014 return would be picked up and he’d be investigated (I think I used the words ‘they’ll have you on toast’ or some such remark).

I then informed him that as I was still down as his accountant, HMRC may well think that I’d colluded with him and submitted the return and also, did he appreciate that he would have a much higher tax bill?

In a matter-of-fact way he replied that the increased tax bill had been factored into the amount of mortgage he required. He ended by saying that this had all come about because his girlfriend was pregnant and she wanted to move quickly and as such wanted it done this way.

Internet Mortgage Broker

A couple of weeks later I was told by one of the ‘new clients’ he had introduced, that he’d used an internet mortgage broker, who took an upfront fee which included preparing a (false) tax return and if the broker got a mortgage offer based on the tax return he’d receive a success fee. Bill apparently got his mortgage and paid his broker a four figure fee.

So I did a little investigating and found that these internet sharks had used the Bill’s own HMRC user ID and password to submit the return, so if and when the doggy-doo hits the fan, they can point the finger at Bill.

Is it any wonder that honest people have difficulty getting mortgages when this type of thing is going on!

And the $64,000 question I’m left with is – when he meanders into my office with his records next year – should I take him back or suggest that he uses his internet pals Flywheel, Shyster, and Flywheel?

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