Christmas is fast approaching and for a number of companies this is their busiest time of the year.
It is also a time of opportunity. Or at least that’s what brothers Henry and Victor Mears thought was the case. In terms of legality and ethics though their business plan left a lot to be desired.
Two years after their ill fated Christmas business collapsed within days of opening they are currently in court facing a number of charges.
The background to the case is that they established a Lapland-style theme park in the New Forest region of the UK.
Their business plan indicated that they would make in excess of £1 million. With thoughts no doubt of the success of other theme parks around the world such as Disneyland and Lego Land they got hard to work on the Lapland-style park.
Promotional materials for the park advertised Christmas festivities including a bustling Christmas market, real log cabins and a variety of real “Christmas animals”.
All in all it promised to be a true Christmas spectacle for the parents and their excited children that planned to visit the park.
The promotional materials were so successful that nearly 10,000 advance bookings were made online.
Unfortunately for the crowds that turned up the reality of the park left a lot to be desired.
The ice rink didn’t have any ice in it. Instead of ice skaters gliding over the ice there was a muddy puddle. The real Christmas animals were pet husky dogs that were in such a bad condition that they were reported to the RSPCA (Britain’s animal welfare charity).
The other “real animal” on show was a plastic toy polar bear which had been placed a distance away in amongst the trees.
All in all it was a spectacular failure.
Businesses fail for a variety of reasons but this one never really got off the ground.
There’s a big difference between having a couple of pet dogs, a puddle and a plastic Polar bear compared with a Christmas extravaganza Lapland theme park.
The park was only open for 6 days before closing. The company behind it was subsequently liquidated with creditors owed £850,000.
Some people may feel that the only real highlight of the 6 days that the park was open was the far from traditional Christmas scene where some of the parents started fighting with a number of Father Christmas’s elves.
The end result is that the brothers have been charged with 8 counts of misleading customers. The brothers deny all charges against them.
The ExP authors will be taking a break from this blog for the festive season but we all hope that you have a fantastic holiday break and we’ll be back blogging in January!
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2010-12-13 15:56:132010-12-13 15:56:13'Tis the season to be jolly (plus of course to fight with elves...)
When small businesses choose their business name, the reasons are often personal. Business names are often a homage to somebody or something special to the business owner.
A fish restaurant, for example, could well be named after a boat that the owner is sentimentally attached to.
This all seems reasonable, but it’s best to choose a boat that isn’t called something like “TGI Friday”, or “McDonald”.
Scott Matthews, aged 24 and from the south coast of England, recently learned this. His restaurant is called “Relentless”, apparently after his father’s sturdy fishing boat.
He says that the logo was simply made up by typing “Relentless” into his word processing software, using an old English script. He chose a black background because he likes black backgrounds.
Recently, he heard from the Coca-Cola company, who have an energy drink with a similar brand name and similar logo.
Mr Matthews claims that his first contact from Coca-Cola came in the less than cosy form of a seventeen page legal document demanding that he change the name and signage of his business.
His reaction appears to have been rather assertive and rather shorter than 17 pages. He’s not saying entirely what he said, but we’re guessing it could pithily be summarised in two words.
This is an example of the civil wrong of “passing off”. If a product has a similar name to another product and is likely to imply endorsement or some other form of customer confusion, then it’s possible to petition a court for an order to mandate the party who got the name second to change their name.
Of course, the court does not necessarily grant such an order. There has to be some evidence of customers being likely to be confused by the similarity.
It’s hard to imagine somebody opening a can of energy drink and being crestfallen at the non-emergence therefrom of a steak and lobster dinner, for example.
However, it’s possible to imagine somebody being attracted to a restaurant because of an apparent association with a better known product, such as an energy drink.
It seems that both Mr Matthews and the Coca-Cola company intend being somewhat relentless in this case. We will let you know what happens if we’re able to find out.
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2010-11-08 05:25:412010-11-08 05:25:41It's a Relentless exercise to choose the name of your business...
When you speak with your lawyer, you can say almost anything and be confident in the knowledge that the lawyer will be able to preserve the confidentiality of your discussion.
Most people probably assume the same thing when having discussions with their accountant, especially in the context of discussing tax planning opportunities with a tax advisor.
Unfortunately, English readers should pay careful attention to the decision in a recent case, R (on the application of Prudential PLC) v HMRC, EWCA Civ 1094 if you would like the full legal citation.
This Court of Appeal decision stated that client privilege only extends between a lawyer and a client. This means that any discussion between a client and an accountant cannot be guaranteed to be confidential.
This is an English legal case, which is binding in England and Wales only, but the judgment is based on common law, so is likely to be highly influential in jurisdictions based on the English system globally.
As the accountancy and legal professions increasingly compete, especially in the area of tax advice, this gives a significant advantage to the legal profession over the accountancy profession.
Who would you rather seek advice from: a lawyer who you are confident cannot be compelled to reveal the content of your discussion, or an expert accountant who is unable to promise confidentiality?
If you talk to a lawyer about this then they may well say they were pleased that they had this advantage over accountants.
Note of course though that if they felt like it they wouldn’t have to disclose what was said in your conversation…
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2010-11-01 01:54:192010-11-01 01:54:19Who can really be trusted to keep a secret? Accountants or lawyers?
Yesterday, the so called “Rogue Trader”, Jerome Kerviel, whose unauthorised trades cost his former employer Societe Generale vast losses was sentenced.
Whilst this has got a serious element to it (he was jailed for 5 years) it also has a certain element of farce. As well as the jail sentence he was ordered to pay compensation to his former employer.
Now, this wasn’t any “normal” compensation we’re talking about here. It was the princely sum of €4.9 billion. Yes, Mr Kerviel was told that he has to pay nearly €5,000,000,000 to his former employer.
Based on his annual earnings before going to jail it would take him nearly 180,000 years to pay that amount! Societe Generale have sensibly announced that they will not be pursuing the money.
Control environments don’t generally strike students as the most scintillating area of their studies. A number of ACCA and CIMA Papers however place considerable emphasis on controls, using Sarbanes-Oxley and the COSO frameworks.
Respecting controls might slow down an employee’s daily work routine and may feel sometimes like a constraint on innovation and enterprise. Sometimes, it may be tempting to circumvent controls, especially if it generally appears to result in making quicker profits.
Anybody tempted to do this might be interested to note the Paris court’s decision to sentence Mr Kervie. Although the hapless gentleman alleged that the bank had been complicit in allowing him to trade beyond his authority limits, this seemed to be little defence in either showing innocence or getting a more lenient sentence.
The lesson seems to be fairly clear. Even if the tone appears to be one of disregarding controls because management don’t take them seriously, if anything then goes wrong, management will most probably not agree that controls were considered to be unimportant!
The safest thing to do is to assume that any controls are meant to be respected, even if it doesn’t feel that way.
It could literally be your “get out of jail” card.
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2010-10-06 10:43:262010-10-06 10:43:26That's some obligation - it will take 180,000 years to repay it...
On Saturday Apple officially launched the iPhone 4 in China. They also opened up two new flagship stores in Shanghai and Beijing.
China is the world’s largest mobile market with more than 800 million subscribers so it would seem to make sense that Apple sell their products there.
Why has is taken them so long to launch the iPhone 4 in China though? After all, the iPhone 4 was originally launched in the US back in June and in countries such as Australia, Netherlands and Singapore in July.
The handsets themselves are manufactured in China so it’s not as though they haven’t had any experience of doing business in the country.
There are various reasons why companies have phased product roll outs in different countries. The sheer scale of a “global launch” for a company like Apple would be extremely challenging. Having sufficient inventory in stock on global launch day would not only be a logistical nightmare but would probably be physically impossible.
An additional challenge for Apple is that they need to agree matters with their strategic communication service providers in each territory (in other words, the mobile phone operator they will be partnering with in each particular country). This also takes time.
Anyway, from now onwards we’ll be seeing the iPhone 4 in China but anyone that has been to China recently though could be forgiven for thinking that the iPhone 4 has already been in the country for a while.
A significant issue for Apple is the increase in the number of iPhone clone companies.
As well as clone companies that produce illegal fake copies of the phone there are also businesses that produce reasonable quality phones which are very similar to the iPhone. They are designed so that they try not to break any patent protection that Apple has set up. I’m sure though that Apple’s patent lawyers are monitoring these products very closely!
A quick search on the internet for example shows websites selling products such as the HiPhone, the Ephone and the Ciphone. With prices starting at less than $100 there will be a significant number of people opting for these items.
Oh, and in case you were wondering the photo above is of the Hiphone.
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2010-09-27 03:35:162010-09-27 03:35:16Do you own a iPhone or is it a Hiphone, an Ephone or a Ciphone?
Toys R Us is one of the largest toy store chains in the world.
It’s very successful and has nearly 1,300 stores around the world. What it didn’t have though was a strong internal control system in their UK purchase ledger department.
Between 2006 and 2008, married father of two and accounts payable manager Paul Hopes made over 20 illegal payments ranging from £100,000 to £300,000 to bank accounts of fictitious toy suppliers in the Far East which he had set up himself.
The £3.7 million of illicit money was then spent on various items. One of Mr Hopes favourite methods of spending the money was on Wednesday nights when he would regularly entertain 2 prostitutes at luxury hotel suites.
As well as paying for their time and energy he also bought them a string of luxury cars including a Bentley, Toyota Land Cruiser and a BMW M3 (incidentally, his wife was at the time driving the family Ford Mondeo).
In total he spent nearly £2.5 million on the two prostitutes.
It all came to a sticky ending for Mr Hopes though as he was sentenced to 7 years in jail.
What is interesting about the sentencing is that under the Proceeds of Crime Act the Judge ordered Mr Hopes to repay £3.4 million of the £3.7 million stolen. If he fails to repay the £3.4 million then an additional 10 years will be added to his 7 year sentence. At the end of the 17 year sentence he will still be obliged to repay the £3.4 million.
Now, remember that Mr Hopes is an Accountant so I’m sure he’s an expert in double entry but even the best bookkeeping skills won’t be able to make “income” of £3.7 million minus “expenses” of £2.5 million equal a balance of £3.4 million.
I guess he’s hoping that these two particular ladies are now desperately trying to find him every Wednesday evening to give him the money back.
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2010-09-06 02:59:052010-09-06 02:59:05Look out for two prostitutes, £3.7 million of stolen cash and a 58 year old accountant at your local Toys R Us store.
The internet telephone company Skype is planning on raising $100 million via an IPO (Initial Public Offering) on New York’s NASDAQ later this year.
Skype is probably the best known “internet telephone company” and users can make free Skype-to-Skype calls. Paid for calls to mobiles or landlines can also be made.
$100 million however is a significant figure and the filing documents submitted on Monday show that in 4 of the last 5 years the company lost money. In addition, the proportion of Skype’s customers that use the paid for services is also relatively small (8 million out of total registered Skype accounts of 560 million) so arguably there’s a real risk that it may be a significant time before the company is well into profit making territory.
The IPO submission documents must also show any identified risks and there is an interesting one present with Skype.
If you look at page 30 of the IPO submission document it was revealed that BSkyB, the owner of Sky TV in the UK, is in a long running dispute with Skype over the use of various trademarks. There is a view that Sky and Skype could be confusing for certain individuals especially given that BSkyB are promoting their telephone services alongside their Sky TV services.
It’s a case of watch this space to see what happens next.
Of course, free phone calls are one thing but if Skype ever started showing free television programmes then that’s when things would get really exciting.
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2010-08-13 04:16:492010-08-13 04:16:49If you’re going to buy shares in Skype then watch out as the Sky could be the limit.
It seems that not all accountants are 100% honest.
Whilst the vast majority of accountants are trustworthy there were two court cases in the UK this week that resulted in jail sentences for accountants.
Gary Gordon, who previously worked for the Big 4 firm PricewaterhouseCoopers, stole £45,000 from his employer UK Mission Enterprises. He rather unimaginatively simple diverted the cash into his own accounts.
He apparently had a gambling habit and didn’t appreciate the amount of money that he had stolen. He’s been jailed for 16 months.
£45,000 however pales into insignificance when compared with £1.3 million which was the amount that Tracey Laws stole from her employer Inchcape Limited.
Inchcape Limited is the parent company of a number of motor trading companies in the UK and for nearly 10 years Laws wrote 75 fraudulent cheques totaling £750,000 to her own horse riding school (which she had set up with money that she had already been stolen from her employers). She had also fraudulently transferred over £500,000 to her husband’s decorating company.
Despite having a maximum annual salary of £26,000 during her time with Inchcape she managed to buy a horse riding school, a holiday home, luxury holidays and a brand new Range Rover.
It wasn’t these mis-matched spending habits that caught her out though. Her crime was uncovered by accident when one of the motor trading companies was changing payment systems and two employees noticed a cheque made out to West Acres Stables (the stables owned by Laws).
These two observant individuals noticed that the handwriting looked very much like the handwriting of Tracey Laws. It turned out that it was her hand writing and the end result was that Laws was jailed for four years last week.
No doubt there are new internal controls in place at Inchcape and looking on the bright side for Laws she will at least save her annual accountancy membership fees going forward and she will also have her bed and breakfast supplied free of charge by Her Majesty’s Government for the next few years.
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2010-07-23 07:46:202010-07-23 07:46:20How can you make a salary of £26,000 stretch to buying a horse riding business, a holiday home, luxury holidays and a Range Rover costing £45,000?
There was an interesting court case in Germany this week. Not only for people that follow employment law but also for people that have to wear certain outfits to work.
German Policeman Martin Schauder was awarded an extra 7 days of holiday a year after arguing that the time he spent changing into his uniform each day was part of his job. He therefore claimed that this time was part of his work time.
He stated that it took him 15 minutes every day to get his police outfit on and 15 minutes to take it off. These extra 30 minutes a working day amount to an extra 45 working hours every year.
The court in Germany agreed with the policeman and told his employers to either pay him the overtime or to give him holiday.
The police force have unsurprisingly said that they are going to appeal against the decision.
Now, if this case is upheld then it raises some interesting opportunities for me. As an accountant who meets clients then I am expected to be dressed smartly. My personal choice of clothes for the office however would be shorts and a t-shirt so the fact that I have to wear a tie surely means that the time it takes me to do my tie up is overtime.
This varies from a sleepy 1 hour plus on a Monday to a speedy sub 1 minute on a Friday. Adding this all up will amount to a significant sum of overtime money and this is before I take into account the time taken to tie up my shoelaces instead of slip on my preferred choice of footwear of flip flops.
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2010-07-16 13:52:312010-07-16 13:52:31If you wear a business outfit to work then surely getting dressed in the morning is overtime?
It’s one year since Michael Jackson died. In the year since his death, his estate has made earnings of £670 million.
Given that he was allegedly in serious financial trouble at the time of his death, this must be the source of a certain amount of posthumous frustration to Mr Jackson. His ability to spend the money has been significantly impaired in the period since the money started to roll in, on the grounds of his no longer being alive.
This is a quandary well known to many pop stars. The murder of John Lennon in 1980 sparked a sudden and deep revival of his career.
I can’t help but wonder why none of Michael Jackson’s advisors pointed him in the direction of the Bowie Bond.
David Bowie issued bonds in 1990 that were secured on the future income to be earned from songs that he had written up until that date. This is a simplification of course, but that’s the big picture. By doing this, David Bowie was able to get the benefit of some of his post death earnings while he was still alive. He is a smart business operator as well as enormously popular song writer, it seems.
The Bowie bond has been influential in business since it was issued. In practice, I personally used it as the backbone of market data to help in the divorce settlement of another well known musician.
Its influence amongst accountants is significant, though less so with the pubic at large. Rock stars probably don’t shout about it because valuation and securitisation of intellectual property isn’t really very rock and roll.
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2010-06-28 08:30:222010-06-28 08:30:22Should Michael Jackson have had more of a bond with David Bowie?
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