Tax: Solicitor paid his tax bill from father-in-law’s money
A partner who made a series of improper withdrawals from law firms’ client accounts totalling almost £2m has been struck off by the Solicitors Disciplinary Tribunal (SDT).
The tribunal heard that Christopher Howdle made the withdrawals while a partner at Freeths and connected firm KJD Freeths.
The SDT found that Mr Howdle had been dishonest in making the 25 improper withdrawals, but “could not identify the respondent’s motivation”.
“In respect of the improper payments, the respondent’s case was that the first few were mistakes; even if this was the case, after the first few the improper payments were planned.
“The respondent had held client money and this placed him in a position of trust. He acted in breach of that position of trust.
“He had direct control and responsibility for the circumstances giving rise to the misconduct. The respondent was an experienced solicitor and was a partner.”
The tribunal said Mr Howdle had made 14 improper withdrawals of client money “for the benefit of unrelated clients” at Freeths, totalling £984,000 and 11 similar improper withdrawals totalling over £1m at KJD Freeths.
Freeths told the Solicitors Regulation Authority (SRA) in December 2016 that its insurers had repaid an overall shortfall on client account of £203,000.
Earlier, while a partner at Knights Solicitors, he used money from his father-in-law’s client account to pay his own tax bill. Though this turned out to be with permission, the tribunal found he had used Knights’ client account as a banking facility, which is against the accounts rules.
Mr Howdle, born in 1971 and qualified in 1997, was a partner at Knights Solicitors between January and August 2013.
He moved on to become a partner at Freeths until July 2015, and KJD Freeths between February 2014 and July 2015. Mr Howdle resigned from both on 1 July 2015.
Mr Howdle did not attend the tribunal hearing and the allegations against him were treated as denied.
He was found to have made his first improper transfer of £25,000 while a partner at Knights, in March 2013.
Later that month he transferred £11,700 “from money held on behalf of his client and father-in-law” to pay his own personal tax liability. The SDT said that, in doing this, he had used client account as a banking facility, in breach of the accounts rules.
Two months later Mr Howdle was found to have inserted an incorrect purchase price of £245,000, instead of £745,000, on a stamp duty land tax (SDLT) form.
Between December 2013 and December 2014, he made 25 further improper withdrawals.
“The respondent had taken a cavalier approach to client money,” the SDT said.
“At best he had made mistakes and had not rectified them. He had not brought the errors to anyone else’s attention. He had carried on making improper withdrawals from the wrong client ledgers.”
Mr Howdle argued in mitigation that Freeths was “simply not interested in any personal pressures” and was “purely interested in billing sufficient funds each month to achieve target, and there was no let-up in the request for more and more funds to be billed”.
The solicitor said “his distress would have been clear” as he was “ill with high blood pressure” and walked around the office with a blood pressure monitor.
However, when Freeths wrote to the SRA in December 2016, the firm pointed out that “any strains that the respondent may have been under whilst at the firm was new information to them”.
The tribunal concluded that Mr Howdle’s misconduct was “deliberate”, even if at the outset it was “due to mistakes”.
There was no evidence that he had benefitted from the improper transfers, but there had been deficits in client account which had not been accounted for, and the misconduct had had “an adverse effect on the firms and their clients”.
The SDT said it was “unable to conclude that the misconduct arose at a time when the respondent was affected by physical or mental ill-health which affected his ability to conduct himself to the standards of a reasonable solicitor.”
He was struck off the roll and ordered to pay costs of £27,000.