TaxWatch have submitted a formal complaint to both the Chartered Institute of Taxation (CIOT) and the Institute of Chartered Accountants in England and Wales (ICAEW) about one of their members, namely David Warren Hannah from Leicester. This is as a result of his inclusion on HMRC’s ‘Current list of deliberate defaulters’. This is the fifth complaint lodged by TaxWatch to professional bodies.
The reasons for reporting
HMRC has published details of deliberate tax defaulters over the last decade. Today, each of those listed has avoided paying at least £25,000 in tax and has received a penalty, either for deliberate errors in their tax returns, or, deliberately failing to comply with their tax obligations. HMRC also identifies the date of default and notes: ‘the published person may have changed their behaviour’ since the time of the default. Despite the value and deliberate nature of the defaults, individuals and businesses are only ‘named and shamed’ on HMRC’s list for 12 months.[1]
David Warren Hannah was first included in HMRC’s ‘Current list of deliberate tax defaulters’ on 24 March 2022. It describes him as a “property tax advisor” and declares he was charged a penalty of £17,136 for having deliberately defaulted on £30,600 tax between 6 April 2011 and 5 April 2012.
CIOT lists a David Hannah as a personal and property tax advisor for Cornerstone – a firm based in Leicester. The ICAEW website identifies a David Warren Hannah of Leicester as a member. Both organisations state their members are governed by the Professional Conduct in Relation to Taxation (PCRT) amongst other things. The PCRT was developed by the ICAEW and others including the Chartered Institute of Taxation as a means by which the professional bodies could take a greater lead in setting and enforcing clear professional standards.
It is suggested Mr. Hannah’s actions clearly breached the ‘Integrity’ rule of the Professional Conduct in Relation to Taxation in place at the time, for rule 2.2 of the PCRT (published on 4th January 2011) stated:
“A member must act honestly in all his dealings with his clients, all tax authorities and other interested parties, and do nothing knowingly or carelessly that might mislead.”
It is also argued his actions breached PCRT 2.16 which demanded:
“A member’s own tax affairs should be kept up to date. Neglect of the member’s own affairs could raise doubts within HMRC as to the standard of the member’s professional work and could bring his professional body into disrepute.”
It is posited Mr. Hannah’s activities reveal a breach of sections within the ICAEW’s Code of Ethics (1 January 2011 – 31 December 2019) including Section 150.1 which stated:
“The principle of professional behaviour imposes an obligation on all professional accountants to comply with relevant laws and regulations and avoid any action that the professional accountant* knows or should know may discredit the profession. This includes actions that a reasonable and informed third party, weighing all the specific facts and circumstances available to the professional accountant* at that time, would be likely to conclude adversely affects the good reputation of the profession.”
Interestingly, Mr. Hannah is the director of over a thousand companies[2]. While Cornerstone Tax Limited went into Liquidation in 2021, it appears that Cornerstone Tax 2020 Limited took its place[3]. Mr. Hannah recently resigned as a director of Cornerstone Tax 2020, however, this company lists Cornerstone Group International Limited as the ‘person with significant control’ on Companies House[4]. Mr. Hannah remains as a director of Cornerstone Group International and holds 75% of more of its shares[5].
Following our submissions, the Taxation Disciplinary Board, an independent body that deals with complaints to CIOT, has informed TaxWatch it is unable to proceed with any complaints against Mr. Hannah pending the outcome of proposed judicial review proceedings brought against CIOT by Mr. Hannah. In contrast, the ICAEW has explained its Professional Conduct Department was already aware of the matter and is considering the case.
Unfortunately, despite several efforts, TaxWatch has been unable to contact Mr. Hannah to obtain his point of view.
[1] ‘Details of deliberate tax defaulters’, HMRC, https://www.gov.uk/government/publications/publishing-details-of-deliberate-tax-defaulters-pddd
[2] Companies House search result for ‘David Warren Hannah’, https://find-and-update.company-information.service.gov.uk/officers/J7GT9-bNfyEdm9MZs-llx5UHY_A/appointments
[3] Section 2.4 of Cornerstone Tax Limited Liquidator’s Annual Report to Members and Creditors For the Year Ending 7 February 2022 noted: “On 09 February 2021, a sale of the assets of the Company was completed to Cornerstone Tax 2020 Limited who is a Connected Company. Mr. David Hannah is the common director of both companies”. Section 2.6 stated: “On 19 February 2021, a sale of the Company book debts was completed to Cornerstone Tax 2020 Limited who is a Connected Company”.
[4] Companies House, search ‘Cornerstone Tax 2020 Ltd.’, ‘People’. ‘Persons of Significant Control’.
[5] Companies House, search ‘Cornerstone Group International Limited’. ‘People’. ‘Persons with Significant Control’.
