My allegations against Cooper Hathaway arise from their incompetent and negligent handling of certain taxation matters arising from the sale of my business. The details of this case are particularly poignant as Cooper Hathaway (now trading as CH London Ltd) were partly appointed to investigate the incompetence and negligence of my former accountants (who have since been found guilty of negligence by the Association of Chartered Accountants).
My allegations are specifically against partners Simon C.Hathaway FCCA:
- I allege that Cooper Hathaway were negligent in handling my affairs by virtue of failing to deal with matters on a timely basis and by failing to give the appropriate advice that might have been reasonably expected of them. During the time that they handled my affairs and due to their delays and poor advice, the accrued interest on a Capital Gains Tax liability increased by £23,847, according to the Inland Revenue interest computation.
- I further allege that Cooper Hathaway failed in their duty of care to me by failing to verify or validate the outstanding liability with the Inland Revenue, or advise me adequately with regard to settling my liabilities with the Revenue.
- I finally allege that Cooper Hathaway agreed a share valuation with the Inland Revenue without my knowledge or permission and without validating or confirming the figures with me.
Cooper Hathaway was formally appointed as my accountants on 30th March 1999. Their primary briefs were:
- To contact the Inland Revenue on my behalf and to investigate an alleged outstanding capital gains tax liability.
- To investigate whether my former accountants, Lake Bushells of Colchester, had been negligent in their handling of the matter.
- To make formal complaint to the Institute of Chartered Accountants should they found that Lake Bushells had been negligent.
Details & Background
In late 1998, I found myself liable to a major capital gains tax charge, including some £150,000 of Revenue interest charges. I had no knowledge of any outstanding liability. The tax bill related to the sale of shares in my business, some 10 years earlier - a matter that I had believed to have been fully resolved some six years previously. Suspecting that my accountants (www.lakebushells.com) had been seriously negligent, I sought legal advice. Cooper Hathaway, then trading as Pethybridge Tarn, were appointed in March 1999 on the advice and personal recommendation of my solicitors. Although I knew nothing about the firm, I accepted the appointment based upon my solicitor's recommendation and the fact that Cooper Hathaway were allegedly Chartered Accountants.
As my letter of appointment states, Cooper Hathaway were appointed "to take over my accountancy affairs and act on my behalf in connection with various matters". They were specifically entrusted to resolve the capital gains tax matter by contacting the Revenue, establishing the exact current situation, negotiating a satisfactory settlement and to advise me accordingly. They were also instructed to investigate the handling of the matter by my previous accountants - Lake Bushells of Colchester, Essex. Full details of the Lake Bushells case can be seen on www.lakebushells.com or www.naffaccountants.co.uk. The Investigation Committee of the Institute of Chartered Accountants in England & Wales has since determined that a prima facie case has been established against two senior partners of that firm.
Within a few days of receiving the Lake Bushells correspondence files, Simon Hathaway confirmed to my solicitors that Lake Bushells had been clearly negligent. During the following two or three months there was various correspondence between Hathaway and my solicitors relating to this negligence and the defence being presented by solicitors acting for Lake Bushells. There was initially no direct communication between Cooper Hathaway and myself and both I and the solicitor assumed and believed that Hathaway was negotiating the share valuation with the Inland Revenue. During our first telephone conference, from my solicitor's offices, Hathaway had instructed me to do nothing, and pay nothing, until he had had the opportunity to investigate the affair. At that time, the Inland Revenue made no demands for any payment, nor had they issued any notice of liability. We simply knew that there was a potential substantial liability, but could only guess at the figures.
A year after appointing Cooper Hathaway, I had still no received any direct communication from them regarding the case. Then, out of the blue, I received a notification from the Revenue advising me that the case was to be presented to the General Commissioners at my local courthouse. I immediately wrote to Hathaway, asking if Cooper Hathaway had instigated this meeting, and he replied confirming that this was the case. This subsequently turned out to be a blatant lie, as the meeting was instigated by the Inland Revenue. Cooper Hathaway's defence is that they instigated the meeting by ignoring the Revenue correspondence, thus forcing the Revenue to bring the matter to the General Commissioners attention. This appears to neatly sum up the lines of logic and service to be expected of Cooper Hathaway.
A month later, the Revenue sent me 'Notices to Pay' for nearly half-a-million pounds - nearly double the amount expected. I immediately telephoned Cooper Hathaway's office, but Hathaway was out of the office. An assistant agreed to telephone Hathaway, and subsequently returned my call, informing me that Hathaway had instructed me to pay and do nothing until he had checked the figures. A few days later I received a letter from senior partner Dennis Cooper, stating that Hathaway would be asked to contact me when he returned to the office. The main purpose of the letter appeared to be raising the issue of an unpaid and overdue account of a paltry £529. I had no knowledge of this account, which had been sent to my solicitors by mistake. The solicitors had not notified me and no statement or reminder had been sent to me by Cooper Hathaway. I settled the account by return of post.
In early August I received a telephone call from the Inland Revenue's Debt Management department enquiring about payment of the outstanding account. I advised them that I was still waiting confirmation of the figures and instruction to pay from my accountants. I immediately faxed Hathaway informing him of this and asking for his advice, as a matter of urgency. I eventually received a brief note stating that he was in touch with the Revenue ".. awaiting to see if I have any further scope in mitigating interest and will advise you next week as to my intended course of action..". I never heard from him. Once again Hathaway's statement was highly misleading - the evidence and Revenue testimony proves that Hathaway was not in contact with them about the matter.
Throughout the 10 year history of this affair, the records clearly prove that I was anxious to settle all liabilities as rapidly as possible. I had no wish to be indebted to the Inland Revenue, or anyone else, and I was not comfortable with the fact that this substantial liability remained outstanding and possibly (as proved to be the case) still attracting interest. Therefore, when the Revenue telephoned for the third time, in mid-September, I decided to pay the account, in full, without the benefit of professional advice. I therefore never received any confirmation that the figures being demanded by the Inland Revenue were correct.
At this point I demanded an investigation of the matter through my solicitors. Having no confidence that I was getting the truth, I eventually insisted upon the return of the correspondence files so that I could investigate the matter myself. The Inland Revenue were extremely helpful and supplied copies of all letters, plus transcripts of telephone conversations between themselves and Cooper Hathaway.
From the information provided by the Inland Revenue Shares Valuation Division at Nottingham, and my local tax offices, it is clear that Cooper Hathaway's total communication with the Revenue on my behalf was limited to a copy of the same letter to each tax office, informing them that they had been appointed to act on my behalf and requesting copies of correspondence with the previous accountants. Over an above this, there was no communication with the Revenue, except for two telephone calls, initiated by the Revenue, asking if 'we' would agree the share valuation upon which the tax was to be based. At no stage did Cooper Hathaway seek my confirmation that I wished to accept the figure. I was never even notified what the proposed figures were, or the implication of that on my liability.
My 400-page file of evidence against Lake Bushells and Cooper Hathaway makes it totally obvious that Hathaway's opinion of Lake Bushells handling of my affairs was solely based upon a cursory examination of the supplied correspondence files. The documents in the files were filed in random order and it soon became apparent that considerable correspondence was missing (copies of more than two dozen missing letters were provided by the Revenue). These factors meant that it was totally impossible for Cooper Hathaway to have investigated the matter properly. Worse still, they verbally accepted a share valuation without any discussion with myself, and without my authority to do so.
Finally, investigation of the correspondence proved that despite clear evidence, Cooper Hathaway failed to file the formal complaint about Lake Bushells to the Institute of Chartered Accountants in England & Wales, as instructed.
The Defence Cooper
Hathaway claim that their only brief was to obtain the correspondence and documentation from the Inland Revenue and to give opinion as to whether Lake Bushells were negligent in dealing with my taxation affairs. My letter of appointment and their own letters notification of interest to the Inland Revenue clearly disprove this point. They have presented no further evidence or testimony to defend their actions.