The Findings - Micahel E Lake FCA
The following is a reproduction of the main body of a letter dated 10th July 2002, sent to me by the Professional Standards Office of the Institute of Chartered Accountants in England and Wales, followed by details of the press release issued by the ICAEW on 8th January 2003.
Your complaint against Mr Michael E Lake FCA
This matter was considered by the Investigation Committee on 2 July 2002. The Committee decided that a prima facie case had been established under the Disciplinary Bye-laws and that disciplinary action was appropriate with respect to a complaint that:
Mr M E Lake, as the engagement partner responsible for the tax affairs of Mr S M Wooler:
- in the period from October 1992 to March 1999 failed to ensure that adequate payments on account were made in respect of Mr S M Wooler's capital gains tax liability arising on the disposal of his shares in S &M (Processing) Limited in November 1988.
- in the period from February 1991 to October 1994 failed to ensure that correspondence with the Inland Revenue in connection with the tax affairs of Mr S M Wooler was dealt with on a timely basis, in particular, replies to Revenue letters dated 9 May 1990 and 25 November 1992.
In accordance with the Institute's Bye-laws, the Committee has given Mr Lake the opportunity to consent to a disciplinary order being made against him. Mr Lake has the right to make representations on either the finding and/or the terms of the proposed Order.
The reasons for this decision are:
- The Committee noted that there was no written follow up to Mr Woodward's discussions and correspondence with you in December 1992 and January 1993 to ensure that you fully understood the need to make a further payment on account, and thereby avoid or reduce further interest costs accruing. The Committee considered that in his role as the engagement partner, Mr Lake should have consulted with Mr Woodward and Mrs Poll, and later with Mr Francis, to ensure that adequate internal hand-over arrangements were made and any material outstanding issues identified. Had he done so, the need to confirm the position as to your payments on account should have been identified, and significant savings in interest costs could have been made. In these circumstances, the Committee concluded there was a case for disciplinary action.
- The Committee considered that, once the Revenue wrote directly to Mr Lake in February 1991 to express concerns over the firm's failure to respond to correspondence dated May 1990, he should have monitored the position to ensure that both outstanding and subsequent correspondence was dealt with on a timely basis. Whilst the Committee noted that primary responsibility for dealing with correspondence had been delegated to other senior members of the firm, it concluded that the length of the delays constituted grounds for disciplinary action.
If Mr Lake accepts the Order, I will send you a copy of the press release. Similarly, if he makes representations, I will let you know what view the Investigation Committee takes of them and whether it decides on a different course of action from that outlined above.
PRESS RELEASE - 8th January 2003
With the agreement of Michael Edward Lake FCA of Key House, 342 Hoe Street, Walthamstow, London, the Investigation Committee made an order that he be reprimanded, fined £3,000 and pay costs of £3,200 with respect to a complaint that he, as the engagement partner responsible for the tax affairs of Mr "X":
- In the period from October 1992 to March 1999 failed to ensure that previous advice was followed up that further payments on account should be made in respect of Mr "X's" capital gains tax liability arising on the disposal of his shares in a Limited Company in November 1988.
- In the period from February 1991 to October 1994 failed to ensure that correspondence in connection with the tax affairs of Mr "X" was dealt with on a timely basis, in particular, replies to letters dated 9 May 1990 and 25 November 1992.
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