Insolvency refers to situations where a person or business cannot pay their debts. A business might hire an insolvency accountant to help manage these debts, or a liquidator might oversee the process of dissolving the company.
Allott’s website - which he’s since pulled from the internet - states that he’s been an insolvency practitioner for 30 years and has handled over 600 assignments. That website offered a range of services including insolvency, liquidation and receivership advice, including a promise to help businesses add $50,000 of net profit.
“My aim is to provide you with accounting and business advice to make you more money,” it said.
However, it doesn’t appear as if Allott has been taking his own advice with the accountant earning the scrutiny of the Inland Revenue Department.
The IRD took Allott to the Christchurch High Court in July 2019 in an effort to force him to pay what was then around $500,000 worth of debt.
Since that hearing his debt to the national tax collector has spiralled to over $800,000 and the Disciplinary Tribunal of the NZ Institute of Chartered Accountants have now looked into whether he’s fit to hold a licence.
In a recently released decision the Institute - which sets standards for those in the profession and penalises breaches - said it’s not appropriate for an accountant to be running a practice giving advice on how to pay debts when they can’t pay their own.
“It discredits the profession for a chartered accountant and particularly for an insolvency practitioner to be unable to meet his IRD debts so that proceedings are issued against him claiming a substantial debt,” the disciplinary arm of the Institute said in its decision.
“Further, an insolvency practitioner is trusted to manage the affairs of insolvent companies. Here Mr Allott did not manage his own affairs sufficiently to avoid the question of his possible insolvency.
“In short, a chartered accountant who is an insolvency practitioner cannot place himself in a position where his solvency is questioned.”
Allott, who has been a Chartered Accountant since 1984 and held a certificate of public practice since 1986, told the tribunal although he couldn’t pay his debts, he wasn’t bankrupt and his practice wasn’t in liquidation and a receiver hadn’t been appointed.
As part of the hearing he had to provide a statement of assets to prove what he could pay.
Part of those assets included a 4 per cent shareholding in a US-based company that was estimated to be worth nearly $2.8 million at minimum. However, his evidence was deemed problematic as he’d provided a valuation of shares for the New Zealand-based subsidiary of the company, which he does not own.
Despite this Allott remained confident during the hearing that he could sell his shares and pay his debt.
During the course of the hearing it was revealed Allott owned IRD $565,000. Allot said he didn’t know exactly how much he owed them, but advised the Tribunal there was more debt which was estimated to be a total of $817,000.
“Whatever his position is on his solvency, he has been unable to pay his IRD debt and it appears that he remains unable to do so from his own resources,” the tribunal said in its decision.
The tribunal couldn’t make any findings regarding Allot’s bankruptcy, the purpose of the hearing was purely to establish if there was ground for suspension.
It said suspension should be imposed to protect the public and the credibility of accountants throughout the country. It also said his current clients would be informed of the suspension.
Allott declined to comment to NZME for this article.
