Fraud in your organisation – how to protect your business

Forensic Services

Many businesses are shocked not only when they discover a fraud, normally perpetrated by someone from within their organisation, but also by how little the police are often willing or able to do about the loss.

Frauds are often complex and difficult to prosecute. Even straightforward cases can take years to bring to trial and involve a great deal of time, money and risk to reputation. With current budget constraints the local police force has neither the time nor the expertise to properly investigate and prosecute most cases.

Businesses then frequently try the civil recovery route and often end up signing a compromise agreement with the offender(s) simply being dismissed, only to arrive at their next employer with the same plan.

The first piece of advice is to look at your recruitment policies and ensure that you fully research the background of new potential employees.

However ordinary, honest people do sometimes turn to fraud. What do you need to do with your existing staff to recognise this change?

Sometimes the way people behave might suggest that they are committing a fraud.  These signs are called ‘red flags’. Although independently they may not be any cause for concern, a few at the same time may cause suspicion.

‘Red flags’ could be:

  • Significant changes in behaviour that you’ve noticed
  • An individual has large personal debts or financial losses, and a desire for personal gain
  • A resistance to take holidays
  • Constant working of unusual hours without supervision
  • Audit findings deemed to be errors or irregularities
  • Transactions taking place at odd times, odd frequencies or involving unusual amounts or to odd recipients
  • Internal controls that are not enforced, or often compromised by higher authorities
  • Discrepancies in accounting records and unexplained items on reconciliations
  • Missing documents, or only photocopied documents available
  • Inconsistent, vague or implausible responses arising from inquiries
  • Unusual discrepancies between the client’s records and confirmation replies
  • Missing inventory or physical assets
  • Excessive voids or credits
  • Common names or addresses of payees or customers
  • Alterations on documents (such as back dating)
  • Duplications (such as duplicate payments)
  • Collusion among employees, where there is little or no supervision
  • One employee has control of a process from start to finish with no segregation of duties

This is not an exhaustive list and it won’t pick up all possible cases, but vigilance and action on these areas will certainly help.

Consider having a fraud response plan and always avoid complacency – the fraudster’s friend.

For further advice regarding protection against workplace fraud, please contact David Arthur on 0191 285 0321 or email

Update on the markets – what you need to know

Following last week’s trading session you may be receiving calls or be inundated with emails giving opinions as to what went on. Please find below one view point and summary from Brooks Macdonald giving you their stance on this market volatility.

Global equity markets have suffered a sharp selloff over the last month with the FTSE 100 down almost 10% since early September. Yesterday’s 2.8% fall was precipitated by a disappointing retail sales data which recorded consumer spending in the US declining -0.3% in September, whereas analysts had expected a slightly smaller, -0.1% fall. While this is slightly disappointing, it should be taken in the context that the previous month’s figure very strong reporting 0.6% growth.

There is no single reason for the recent share price declines unlike 2008 and 2011 where the credit and Eurozone crises were clearly evident and arguably a rational reason for stock markets to decline. The recent declines can be attributed to a combination of factors including weak Eurozone growth and increasing risks of deflation, civil unrest in Hong Kong, tax changes in the US and fears over Ebola. In the short term all these factors have been successful in undermining investor confidence.

We base all our investment decisions on long term fundamental valuation and growth factors rather than on short term sentiment. We believe several important fundamental factors are currently being largely ignored.

  • Over the last 12 months the US economy has added, on average, over 200,000 new jobs every month. This has brought the unemployment level down to a six year low at 6.1%. While European economic growth is weak, global growth is still expected to be moderate with the respected International Monetary Fund (IMF) only last week forecasting 3.3% global growth
  • Modest global growth will be supportive for company sales and with little inflationary pressure, company profit margins and therefore net earnings should also be maintained. This is being ratified by the latest US company earnings reports. Around 10% of companies in the US S&P 500 index have so far released their financial statements in the latest round of quarterly discloses. These companies have reported an unusually high 9% earnings growth well ahead of the expected 4% growth. While this is only a small sample of companies it is still positive news which again appears to have been overlooked
  • Most importantly equity market valuations are generally around or below their long term averages. Equity markets look even more attractive when compared to other asset classes such as government bonds. The earnings yield on equities (ie. net profits dividend by the value of the company) is around 7-8%pa compared to very low yields on government bonds. For example 10 year maturity UK government bonds only offer a 1.99% return pa and German 2 year government bunds pay a negative yield at -0.1%pa. Investors are paying to lend money to the German government!

Finally commodity prices are also falling providing a boost for the western world. Crude oil has fallen over 25% and is now at a four year low (Brent Crude Oil has fallen from $115 to $85 per barrel) this effectively provides more spendable cash for consumers, with less money going to the necessities of petrol and heating. This is a positive for everyone bar large exporters such as Saudi Arabia and Russia. Interestingly gold has also fallen since August, now around $1,200 per ounce, yet again showing that it is a poor “safe haven” investment.

We believe that with patience current events will prove to be a long term opportunity. Accordingly, we are looking to increase our equity weightings where appropriate.

If you have any queries or would like to discuss any of the information contained in this email, please contact us on 0191 285 0321.


Reproduced under licence with the kind permission of Brooks Macdonald Group PLC. Copyright © 2014 Brooks Macdonald Group PLC

“Keep CASC and Carry On” – an important update for Community Amateur Sports Clubs

We published our blog below on the proposed changes to the CASC rules on 8th October 2014, and on 9th October 2014 the draft secondary legislation was then published for comment by the Treasury.

The draft legislation can be found here, but the principles set out in the draft legislation are in accordance with our blog issued on the 8th October.

Our view remains that the North East’s CASC’s should seek to, and be able to, stay within the CASC regime and should therefore use the draft legislation as the basis for their preparation to meet the revised obligations (which for many CASCs are not onerous).   For those CASCs which have high trading income and for whom a change in business structure may be necessary, the issue of the draft legislation should be seen as the trigger point for commencement of the review of any actions they need to take to remain within the CASC rules.   As set out in our blog of 8th October 2014 we will be delighted to discuss with any CASC what they should consider based on their individual club’s circumstances on a no-obligation basis.  If you would like to discuss the draft legislation with us, please contact Alastair Wilson or Sara Andrews.


Following our previous presentation and update documents on the proposed changes to the CASC rules we wanted to bring you up to date on the state of play with the new rules.

We are seeing inaccurate information being sent in relation to the changes to the legislation that could encourage CASCs to take steps they do not need to.

The proposed changes to the CASC rules have been well publicised and our previous summary can be found here

Importantly, CASC managers and committees should be aware that whilst we know what the new rules are intended to be and we have a very clear understanding, some aspects are still not enacted in law because HMRC are still working with sporting bodies towards ensuring the rules work as all the parties intended.

The latest position in relation to the changes to the CASC legislation is as follows:

  • The primary legislation that will give rise to the changes has existed for some time and can be seen in Finance Act 2013 (not Finance Act 2014 as has been stated by some commentators).
  • Finance Act 2013 has moved the tests relating to whether a club is “open to the community”, is “organised on an amateur basis” and “consists mainly of social members” onto a statutory basis (rather than being based on HMRC guidance as was previously the case.
  • Finance Act 2013 also creates the power to introduce the “income condition” which is the test that can affect clubs with high turnover (and in particular those with high levels of income from non-members).
  • Critically, the new income thresholds and the new requirements for those tests enacted in 2013, which have been proposed by HMRC following the consultations with sporting bodies in 2013, are not yet in fact law. They are due to be enacted by Parliament later this year or early in 2015.
  • However, Finance Act 2014 has enacted the provisions in relation to the ability for a CASC to receive donations from companies that are not then subject to tax.
  • All of this can be seen and confirmed in the notes of meetings between sporting bodies and HMRC, which are published by HMRC here:

A senior HMRC adviser on CASCs has recently confirmed to us that their proposed timetable is as follows:

    • CASCs can now receive donations from companies without those donations being subject to tax (because Finance Act 2014 is enacted as law), but the guidance is still being finalised on how HMRC expect the anti-avoidance provisions in the donation mechanisms to be operated.
    • The remaining changes which may require CASCs to change their membership fees, adopt trading subsidiaries and manage the numbers of participating members are likely to be enacted as secondary legislation in December at the earliest and their guidance will be issued at the same time (but may be more realistically in the first Quarter of 2015).
    • HMRC will provide a 12 month soft landing approach to transition from the point of the new requirements being enacted and they will write to all CASCs notifying them of this transitional phase.
    • All CASCs will also have the opportunity to deregister within that 12 month period if they cannot meet the new requirements.

What do we recommend CASCs do? 

Firstly, don’t panic! The CASC rules are intended to be helpful, not unhelpful.  Your club should seek to remain within the rules if it already is, and it is likely it will be possible for your club to remain within the rules if it already is!  Do think about whether your club is likely to qualify under the new rules, but don’t rush into making changes without understanding whether you need to.

Secondly, don’t pay for accounting “review” work you don’t need!  It will be immediately apparent to a reader of your accounts whether or not the new financial requirements and limitations on what can be classed as trading income from “non-members” are likely to be met. Likewise you will know what your membership fees are and whether they are more than £520 a year for a standard adult membership. An adviser, or your accountant, should be willing to tell you for free whether the obvious conditions are met.

Finally, if you haven’t looked at the “non-financial” aspects of the new rules relating to promoting sport and being organised on an amateur basis, such as the numbers of participating members, the numbers of social members compared to participating members and the impact of paid players, then do start considering them. However it is then highly likely that you should wait for the new legislation and new HMRC guidance before making any final decisions.

Our experience of working with the new rules

We have recently helped two large “early adopter” sporting clubs in our region to work through the impact of the rules and we are now working with a number of others across a range of sports to cascade that knowledge.  In the case of the “early adopters”, one has decided to implement the changes already and the other is awaiting the final HMRC guidance.

In each case, the clubs now understand how the changes in the rules will affect them based on their specific circumstances and what they will need to do to adapt under the new rules.  But the choices they are making are based on what is best for their club.

The typical issues for each sport differ, but what we can confirm is that in most cases the issues are relatively easy to resolve, but may involve changing certain aspects of how the club’s administrative procedures are operated. The outcome should therefore be entirely manageable and the benefits of remaining within the CASC regime should outweigh any additional work required.

If you would like a “no obligation” consultation regarding the impact of the new CASC rules on your club, please contact Alastair Wilson or Sara Andrews on 1091 285 0321 or email

The National Minimum Wage increases on Wednesday 1st October

From 1 October 2014, the rate of National Minimum Wage (NMW) for employees will rise as follows:

  • Aged 21 and over – from £6.31 to £6.50 per hour
  • Apprentices under 19 and those aged 19+ in the first year of their apprenticeship – from £2.68 to £2.73 per hour
  • Aged 18 to 20 – from £5.03 to £5.13 per hour
  • Aged 16 and 17 – from £3.72 to £3.79 per hour

Employers who fail to pay the NMW could face a fine of £200 for each underpaid employee.

The Department of Trade and Industry also states that employers who continue to ignore their responsibility to pay NMW within seven days of an enforcement notice could also face prosecution. This could result in a criminal record and a £5,000 fine – however the maximum penalty can be up to £20,000 per worker.

Dismissing a worker due to their eligibility for the NMW will count as unfair dismissal. Workers do not have to serve any qualifying period in order to gain protection against this form of unfair dismissal.

Additionally, the advisory fuel rate for company vehicles (approved by HMRC) changed on 1 September 2014 to the following:

Engine Size Petrol LPG
1400cc or less 14p 9p
1401cc to 2000cc 16p 11p
Over 2000cc 24p 16p


Engine Size Diesel
1600cc or less 11p
1601cc to 2000cc 13p
Over 2000cc 17p


These rates apply to all journeys on or after 1/9 2014 until further notice.

For any queries regarding the new minimum wage entitlements or advisory fuel rates, please contact our Payroll Manager, Claire Brown on 0191 285 0321 or email

Guidance on charitable reserves

The reserve policy is the key information given by the trustees, within the Trustees’ Report, to explain their process for holding reserves and where they are against their ‘target’ level.

It is important to distinguish reserves in the context of the policy as ‘free reserves’, as they are commonly misunderstood. Put simply, they are unrestricted and are available to be spent (i.e. not invested in Fixed Assets). This information is often given with the financial statement notes at the ‘Analysis of Net Assets Between Funds’.

Essentially, the unrestricted reserves form the sum: Debtors + Cash at bank – Current liabilities. They will also likely be significantly lower than the unrestricted figure on the balance sheet.

Driven by comments made by the trustees in their statement, there can only be four different positions of free reserves. Consequently, the policy should state the target level and explain either of the following:

  1. Reserves are too low and the trustees intend to do… to build them towards the target
  2. Reserves are too high and the trustees intend to do … to spend the excess and to and move back towards the target
  3. Reserves are about right and the trustees intend to keep them at this level by…
  4. Reserves are earmarked for specific purposes and explain how/when they are planning to spend

A good policy statement allows the trustees to explain to the readers (typically potential funders) the reasons for the charity asking for new funding.

With the forthcoming change in accounting standards to the new Statement of Recommended Practice (SORP), the above approach becomes mandatory.

If you would like any further guidance regarding charitable reserves, please contact Simon Brown on 0191 285 0321 or email

Charities Beware of Over Egging the Pudding

The Serpentine Trust is a registered charity that ran an art gallery and operated schemes whereby the supporters could make annual payments to assist them.

To make the opportunity more appealing, the contributors received various benefits such as invitations to events, priority booking for events and complimentary exhibition catalogues.

HMRC considered that the sums paid by the supporters were consideration for the standard-rated supply of the benefits. The Serpentine Trust appealed, contending that the gifts were de minimis, meaning that they were not provided ‘for’ the payments; they should be apportioned between the part that was attributable to the benefits (the consideration) and the part that was in excess (a donation).

The tribunal found that the benefits had real value, which was likely to exceed the cost of providing them. There was a single supply to the supporter to partake in exclusive events and receive offers from the Serpentine Trust. That supply was entirely standard rated, therefore their appeal was dismissed.

Charities have a fine line to tread in regards to attracting donors to support their cause. In our competitive world, the third sector is under the same pressures as big businesses and they sometimes strive to go ‘the extra mile’. However, increasing the attractiveness of an offer can create its very own tax problems.

If you are uncertain about the VAT liability of your income streams, please contact our VAT specialist, Nigel Smith for an initial free consultation on 0191 2850 321 or

Gordon Brown revs up for first ever Business Growth Engine event

THE inaugural charity business event, Business Growth Engine, will take place on 18 September at the Jury’s Inn, Gateshead supported by Gordon Brown law firm.

Raising money for the Percy Hedley Foundation – a registered North East charity which provides services for disabled adults and children, including school, college and disability employment – the event will bring together top business experts to set an agenda for economic growth amongst our region’s SMEs.

Fluid Group managing director Oliver Vaulkhard will kick off the proceedings, which are set to feature advice and guidance from a collection of North East business experts in areas such as: finance, funding, accounting, business planning and strategy, IT systems and data centres, employment and HR, business leases and agreements, and marketing and PR.

He will be joined by inspirational guest speaker, Paul Currie, managing director of The Lakes Distillery will also be sharing his journey as he prepares to launch his £5m venture – the first independent whisky distillery in Cumbria.

Taking place from 11am until 2pm, the 12 business advisors will be split into two panel discussions; the first on funding and business strategy whilst the second covers marketing, PR and technology.

Wendy Peffers, marketing manager for Gordon Brown Law Firm, who are helping organise the event for the Percy Hedley Foundation, said: “One of the things always said about the North East is that there is a real sense of community and through the Business Growth Engine we want to use our region’s business success to inspire and help others, whilst also raising money for a local charity.

“Percy Hedley is a cause that deserves endless support and it’s great knowing that through this event we can also give something back to those who really need it. Tickets cost just £5 and all of the money raised will be donated to the charity.”

The Business Growth Engine aims to give power to the North East business sector in the knowledge that starting and growing a business can be difficult without the right support.

For personal advice and sector specific insight on how to expand your business, delegates can also book a free 30 minute consultation with one of the business growth advisors.

Spaces are limited so to book now or find further information, visit


Online marketing to help Northumberland businesses grow – “A great event”

Tait Walker’s Corporate Finance Partner, Michael Smith and Business Services Manager Stuart Moody attended the iNorthumberland Business Support launch event today, here’s what they thought….


Michael said: “I would like to congratulate the iNorthumberland team for running a very entertaining and informative event about the use of online marketing to grow businesses in Northumberland.

“The speakers were excellent at describing how they had applied the technology to make their businesses attract customers from all over the world in the most efficient ways”.

After a programme overview, the first speech came from All in One Company’s Kate Dawson, who spoke about the company’s experiences of trading online. She was followed by Jon Monks from Shepherds Walks who explained how superfast broadband benefits businesses and finally a speech from Joanna Wake of Raw Marketing about social media and search engine optimization.

Stuart commented “It’s great to see how well some businesses have done in Northumberland given the limiting factor of broadband. But at the same time also worrying how the lack of superfast broadband can impact a business.”

“The iNorthumberland program is certainly making a difference to the roll out of superfast broadband in the county and its good to know there is business support available. I would encourage any business that needs assistance growing their online presence to talk to the iNorthumberland team. They have access to funding and more importantly access to the people that can make a difference.”

Increasingly within the Tait Walker client base we are finding businesses who are embracing technology and our response to this is cloud based accounting technologies which are increasingly becoming a viable alternative to desktop accounting.


For further details on what cloud accounting can do for your business contact

Default surcharge – Tribunal accepts poor economic climate as “reasonable excuse”

Scrimsign (Micro-electronics) Ltd succeeded in their argument that the cause of their late VAT returns payment was due to the “insufficiency of funds” caused by the recession. Additionally, the attitude of the banks and existing customers, who were dictating unfair terms and conditions, was also accepted as an explanation.

The tribunal concluded that their temporary lack of funds was not triggered by any carelessness on their own part, but by the struggling economy. This prevented them from meeting their VAT obligations timeously. Scrimsign Ltd believed that the effects of the recession were difficult to predict and could not reasonably be avoided. As all outstanding sums were paid as soon as it was possible to do so, it was accepted that they had a sufficient excuse for their late payment.

This is an interesting decision that could open the door to many similar cases. In this case, Scrimsign Ltd would appear to have been a creditable witness and the Tribunal Chairman has been sympathetic to their genuine trading difficulties.

Whether other traders could present the same strong case remains to be seen. What we can say is that most businesses that have been struck with similar difficulties and have all tried their level best to pay their VAT on time.

If you would like to discuss this or any other VAT issues please feel to contact our experienced VAT Specialist, Nigel Smith, on for an initial free consultation.

What does Geordie Pride mean to you?

Thursday evening’s Great North Run opening ceremony was a truly spectacular event – it made us really proud to be from the region. It got us thinking; what does Geordie Pride mean to our team and friends in the North East business community? Here’s what they said…

“What do I love about the North East? That is easy – the people! We are the most honest, caring and generous, humorous and passionate people. They are definitely what makes make the North East so special!” Paul Shields, Associate at Tait Walker

“I moved to Newcastle over 20 years ago and it has grown to become a vibrant city of great shopping, restaurants, culture and sport and only a short drive from beaches, wilderness and stunning history. When I have to go away on business I itch to get back, it’s my adopted home and I love it.” Kari Owers, managing director, O PR

“I’m proud to be a Geordie – we don’t need a translator to understand Ant and Dec, Jill Halfpenny and Tim Healy…Bravo!” Stuart Moody, Business Services Manager at Tait Walker

“I moved here 42 years ago so think I qualify as an adopted Geordie. It was a fabulous Opening Ceremony on the Quayside for the Great North Run!” Gordon Goldie, Turnaround & Insolvency Partner at Tait Walker

“My wife and I moved from Essex to the North East 10 years ago to be near her family but also to take advantage of living in an area where the people are amongst the friendliest in the country. The North East has some of the most spectacular places to visit – we can’t think of a better area to bring up our daughter.”  Ian Marsh Employee Benefits Consultant at Tait Walker

“Having lived in the North East of England for 37 years, I have always enjoyed the fantastic scenery and great places to visit but this has come to my attention even more in recent months whilst I’ve been carrying out my training for the Great North Run.  It is amazing the different perspective you get when travelling on foot and you truly get to appreciate the wonderful countryside around us.” Ian Gott, Director at Gott Technical Services

“Earl Charles Grey – born in Alnwick, Prime Minister and responsible for the abolition of Slavery throughout the British Empire.” Mark Jeffs, Para Planner at Tait Walker

“The North East? There’s nowhere like it. We have beautiful coastlines and countryside, fantastic friendly people and space to move – but don’t tell everyone! Having lived and travelled abroad it’s easy to appreciate what we have, there’s simply is nothing like ‘coming home to Newcastle’”. Nick Swinhoe, Head of Investment Services at Tait Walker

“The view down the River Tyne when you’re driving over one of the bridges – no matter what time of day, it always looks amazing; and the feeling you get to be home when you land into Newcastle airport, even when the weather isn’t great!” Lauren Hedley, Senior Account Executive, O PR

“I’m a Newcastle girl born and bred – I’ve lived and worked all over the world but nowhere comes close to the Geordie Charm. Friendly, fun and full of surprises, you are in an exciting cosmopolitan city a stone’s throw from a beautiful coast and gorgeous landscapes – what more could you ask for?” Laura Barber, Events and Sustainability Manger on Quorum Business Park



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