A 14-year ban for a jailed tax adviser who ripped off hundreds of small firms is “pointless” because he could still get someone to ‘front’ a company while he pulls its strings from the shadows, accountants warn.
Darren Upton, jailed last February for six years, was this month disqualified from being a limited company director until 2027, following a lengthy investigation by The Insolvency Service.
But in cases like Mr Upton’s, preventing the offender from being a company director is “pointless and ineffective as a punishment - regardless of the length of the ban," believes Derek Kelly, managing director of ClearSky Accounting.
He told Moore News: “It’s far too easy for such individuals to arrange for others to be named as directors in the eyes of the law, while maintaining a significant influence over a company from the shadows.”
Despite the disqualification order preventing Upton from acting as a company director, or taking part (directly or indirectly) in promoting, forming or managing a company (or a LLP), another accountancy firm told Moore News that it shares Mr Kelly’s concerns.
“Both HM Revenue & Customs and the FSA have acted to prevent him [Upton] having the ability to operate as a director in the future, but there is a risk he could have someone ‘front’ a company for him,” warned The Low Tax Group.
Accountants at DNS Associates agreed. They told Moore News: “Upton cannot be a limited company director [for 14 years], but he might find accomplices, such as a friend or even his wife, to help him run a business not registered in his name.”
DNS's managing director, Sumit Agarwal, pointed out that there was a way to stiffen what he called “too lenient” a punishment for Upton’s “astonishing level of dishonesty”, but an industry body ducked it.
“The Association of Certified Chartered Accountants found Upton guilty of misconduct on three counts but quite frankly, his ban from ACCA membership should have been for his lifetime, not just five years," said Mr Agarwal.
“On no account should this practitioner ever again hold practice membership, so on this basis I believe that the ACCA is failing both its members and the general public.”
Upton’s defenders would likely counter that the Yorkshire-based accountant is already being punished for his fraud and deception (between January 2010 and June 2011) with a hefty jail sentence.
They may also stress that rather than trying to evade justice, Upton promptly admitted to multiple counts of fraud which his defence team said he only committed because he was in financial difficulty.
In particular, regulatory action against his accountancy practice was said to have hit the father-of-one's finances, compelling him to pocket £250,000 that his small business clients had set aside to pay their tax.
But The Low Tax Group’s managing director Richard Bayliss believes Upton's six-year term is “unlikely to be much comfort to those [former clients of Upton & Co] who have suffered financially.”
Similarly, rather than just imprisonment, ClearSky's Mr Kelly preferred: “If the authorities want to create a genuine deterrent, they should aim to seize an individual’s personal assets and wealth.
"This would be adequate punishment for someone who has betrayed his or her clients’ trust.”
Meanwhile, an appeal to officialdom was sounded by Mr Agarwal: "The justice system needs to get tougher with this sort of individual who, in this case, clearly has a problem with recognising the boundaries that separate right from wrong."
He added: "On his release from prison, therefore, should Upton attempt to become a director of a company or try to register for professional accreditation, the door should be firmly shut in his face."