VAT: Events were a salutary lesson for barrister, says tribunal
A barrister who “lost control of his finances” during the breakdown of his marriage and was convicted of a VAT offence has been reprimanded by a Bar disciplinary tribunal.
The tribunal dismissed three charges relating to “issues of dishonesty and integrity” brought against William Giles Hugh Powell by the Bar Standards Board, which he denied.
The tribunal heard that Mr Powell was “a successful barrister who lived and worked in London with the inherent expenses that such a lifestyle incurred”.
Following the breakdown of his marriage, he “lost control of his finances and accrued significant debts to HMRC”.
He “defaulted repeatedly upon his VAT obligations” and in June 2019 HM Revenue & Customs issued a statutory notice requiring him to give security for his debts.
This “prohibited the supply of further legal services” until its conditions were met. Despite this, the tribunal said Mr Powell continued to practise as a barrister between July and December 2019, which “amounted to a criminal offence”.
Mr Powell was convicted of an offence, which he admitted, under section 72(11) of the Value Added Tax Act 1994 at Mid Wales (Merthyr Tydfil) Magistrates’ Court in December 2020. He was fined an unspecified amount.
By this time the HMRC had withdrawn the notice of requirement for security. Mr Powell told the tribunal that he considered the notice to have been unlawful and subject to challenge under the European Convention of Human Rights.
He submitted a skeleton argument along those lines to the magistrates’ court, but HMRC withdrew the notice before the hearing, making the argument redundant. The tribunal noted that the VAT offence which Mr Powell admitted was one of strict liability.
The tribunal said that at the time of his misconduct, the barrister held a “genuine belief” that the notice from the HMRC was unlawful and found his evidence “credible”.
For this reason, it was not satisfied that ordinary, decent people would regard his conduct as dishonest or a failure to act with integrity, in a way that was likely to undermine public confidence in the profession.
Mr Powell admitted failing to take reasonable steps to manage his practice competently in failing to account for tax to HMRC, causing a bankruptcy petition to be presented against him in November 2018 in respect of unpaid tax and causing a bankruptcy order to be made against him in January 2020.
He admitted acting in a way likely to diminish confidence in the profession through these failures.
The barrister also admitted failing to be “open and co-operative with his regulator”, by failing to report the conviction.
He denied failing to act with honesty and/or integrity by supplying legal services in contravention of an HMRC notice of requirement and in the knowledge that he was committing a criminal offence.
Mr Powell denied two further offences, in the same circumstances, of acting in a way likely to undermine confidence in the profession and failing to take reasonable steps to manage his practice competently. The tribunal found the three offences he denied were not proven.
The aggravating features of the barrister’s misconduct were “the diversion of money that should have been paid to HMRC leading to a criminal conviction”.
In mitigation, the tribunal noted that “he had taken steps to rectify his affairs with HMRC”, expressed “true remorse” and this had been a “salutary lesson”.
The sanction imposed was a reprimand on all charges. Mr Powell was ordered to pay £2,100 in costs.
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