Watson Burton hit by LLP fine after miners fiasco delays accounts” />North East firm Watson Burton’s 2007 limited liability partnership (LLP) accounts are over a year late because of how much cash the government would demand back following the firm’s role in the miners compensation scheme saga.
Watson Burton has currently accrued a fine of £1,000 from Companies House for its overdue LLP accounts.
The fine will only be payable once the firm submits its latest accounts but it is understood that Companies House would have sent a letter to Watson Burton within a month, threatening the firm with striking it off the companies register and Watson Burton’s partners with prosecution.
Watson Burton’s senior partner Rob Langley explained that it was a deliberate decision to file the accounts late due to ongoing disputes about the fees charged by the firm in the miners’ compensation scheme.
Langley explained: “We assumed as a matter of prudence that we would have to pay a large number of fees to the government but we didn’t want to close down with a provision that was very high.”
Watson Burton therefore asked its auditors to delay finalising the accounts until the final court decision informed the firm how much it would have to pay back to the government in November 2007.
The court ultimately decided Watson Burton should repay £1.8m in fees gained from representing sick miners, which was “far less than we expected”, said Langley, as the exposure could have been several times that amount.
He explained that the firm had been reluctant to make a large accounting reserve before the court case had been decided, which would have had an adverse impact on the 2007 accounts.
However, the troubles look set to be resolved soon. Langley said: “As I understand it our accounts have been approved by our auditors and are literally days away from being filed.”
If a firm fails to submit its LLP accounts by the deadline date, an automatic fine of £100, a daily default fine and a separate fine for the LLP itself are levied.
It is generally deemed the responsibility of two designated members of the LLP – usually the managing partner or the senior partner – to oversee punctual delivery of account information but every partner in the partnership could potentially be prosecuted and fined up to £5,000.
The miners’ compensation saga became a hot political issue last year when The Lawyer revealed that law firms had scooped over £1bn from acting for sick miners (9 April, 2007).