Leading accountancy firms challenge license fees

Battle with government heads to court

Five leading accountancy firms have banded together to challenge government’s attempts to collect potentially millions of dollars in fees under the Trade and Business Licensing law.

BDO Cayman, Deloitte and Touche, Ernst & Young, KPMG and PwC have jointly applied for judicial review of government’s decision to dismiss their appeals that a $2,000 annual fee for every accountant on staff should not be applied to them.

The Cayman Islands Institute of Professional Accountants has 1,110 registered members, meaning the fees would be worth at least $2 million annually to government if they were universally collected.

In a court filing with the Grand Court, the five firms are seeking a declaration that they should not have been required over the past decade to pay the $2,000 per accountant on top of the “per-firm” fee, which the filing argues already takes into account the number of accountants working at each firm.

They are also seeking “a declaration that the applicants are not required to pay any additional fees and are entitled to refunds for the overpayment of any per accountant fee paid in respect of their trade and business license renewals between 2002 and 2012.”

It is not clear from the filing whether the firms have been paying the fees each year and are now seeking to be reimbursed, or if they have not paid the fees and are seeking to resist government’s attempt to collect outstanding debts.

According to a schedule of fees for professionals attached to the Trade and Business Law, accountancy firms are required to pay a per-firm fee, ranging from zero charge for firms with less than five accountants, to $20,000 for firms with between six and 10 accountants and rising to $400,000 for firms with more than 50 accountants.

The filing does not seek to dispute this charge, but argues that a second fee, on the same list, of $2,000 per accountant amounts to a double count of their employees and should not have been applied to them.

Minister for Financial Services Wayne Panton declined to comment on the application for judicial review. He has previously stated in the Legislative Assembly that government is seeking to collect unpaid trade and business fees from various companies.

The court filing refers to letters sent to the accountancy firms on or after June 10, dismissing their appeals in relation to the fees.

The five firms argue that government has erred in law by attempting to collect the per-accountant fees.

It states that on the “plain and ordinary meaning of the language” in the law, “the only fee payable in respect of an application for a trade and business license for accountancy firms, such as the applicants, is the per firm fee.”

It cites the fact that the law was changed in 2016 to include an express requirement that the both the per accountant fee and the per firm fee were payable as evidence that the original version of the law did not mandate this requirement.