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‘Burghers of Dartmouth dishonest,’ claims director of accountancy firm in admininstration

AN accountant has claimed in court that ‘all or many’ of Dartmouth’s business owners are breaking the law by dodging tax.
Michael Ghersie, director of MG Associates Ltd which went into administration last week, made the unsubstantiated claim during a hearing at Bristol Mercantile Court.
Giving evidence before Mr Recorder David Blunt QC, Mr Ghersie stated ‘the burghers of Dartmouth are dishonest’ and, according to the judge, ‘implying that all or many of them are tax evaders’.
Mr Ghersie, whose company operated from offices in Victoria Road, Dartmouth, Fore Street, Kingsbridge, Torquay, and Cawsands in Corn­wall, was making a counterclaim against David Beeny, from whom he bought the Dartmouth practice.
Mr Beeny had earlier been awarded £227,027.79 by the court after bringing a case against MG Associates and Mr Ghersie, a fellow member of the Institute of Chartered Accountants England and Wales, who had failed to pay for the business he bought in December 2010.
The counterclaim was based on a claim that Mr Beeny had misrepresented or overstated the value of the Dartmouth business when he sold it to Mr Ghersie.
Mr Ghersie’s wife Marlene Baylis said this week: ‘In the first trial in 2013, the judge found Mr Beeny to be liable for misrepresentation, inducing the agreement to purchase his business.
‘The court listed a second trial to establish the level of damages due to MG Associates Ltd because of Mr Beeny’s misrepresentation.
‘The figures quoted from the judgement for the first trial are what Recorder Blunt found was the true value of the company, not what Mr Beeny had misrepresented it to be.
‘In the second trial in 2015, the judge found, as a matter of fact, that if Michael had known the true fee income of Mr Beeny’s practice, he would not have bought it. However, the judge found that no damages were due from Mr Beeny as a result of his misrepresentation of the fees.’
In response, Mr Beeny said: ‘The contract stated that for the first year the turnover from the transferring clients would be about £220,000. The judge found that the turnover during the first year after completion was £216,150.
‘During that first year a number of clients left the practice. If they had remained as clients then there would have been additional turnover of about £18,000, which would have made turnover for the first year to be in the region of £234,000. Consequentially no loss of income.’
The judge said that based on the figures provided by MG Associates’ solicitors, by December 2012, the turnover was down to £60,000. He added: ‘I have found that the turnover during the first year after completion was £216,150. The loss of 72 per cent of turnover in the space of just over 18 months is remarkable.’
He added: ‘It is clear that the dramatic fall in turnover only occurred in the second year after completion, when only [one named person] of the inherited staff was still in post (and then only until June 12, 2012). Michael Ghersie admitted… that MG Associates at times provided a poor service, and made mistakes and that accounts were filed late.
‘Clearly, once [one named person] had left, MG Associates lost clients through a combination of the fact that new staff did not have any established connection with the clients, through errors and poor service, and through poor client management.’

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