The high street billionaire Sir Philip Green has sparked a legal battle with regulators over a probe into the audit of BHS’s accounts during the year before the now-collapsed chain was sold for £1.
Sky News can exclusively reveal that Sir Philip’s company Taveta Investments has made an urgent application for a judicial review aimed at forcing the Financial Reporting Council (FRC) to amend its report on the issue.
A hearing is understood to have been scheduled to take place at the High Court on Friday, but has been postponed after lawyers for the FRC requested more time to prepare their case, according to insiders.
Taveta, which is the parent company of Sir Philip’s Top Shop-owning Arcadia Group, is also thought to have applied separately for an injunction to prevent the watchdog from making public its detailed findings on the tycoon’s empire.
The development will raise questions about the content of the FRC’s final report on BHS and Taveta.
It is the latest in a series of legal fights arising from the demise in 2016 of BHS, which crashed into administration with the loss of about 11,000 jobs.
Earlier this week, the regulator confirmed a Sky News report that it was fining PricewaterhouseCoopers (PwC) £10m and imposing a lengthy ban and financial penalty on Steve Denison, the audit partner responsible for the BHS and Taveta accounts for the year to August 30, 2014.
The imposition of what effectively constitutes a lifetime ban for Mr Denison – who also chairs Yorkshire County Cricket Club – has sent shockwaves through the UK’s accounting profession.
Sources said that the FRC had intended to publish its full enforcement report simultaneously with the announcement of the sanctions but that that plan had been derailed by Taveta’s legal challenge.
The absence of a detailed document sparked fresh criticism of the under-fire FRC.
Frank Field, the Labour MP who chairs the work and pensions select committee, wrote to the watchdog’s chief executive, Stephen Haddrill, to demand an explanation.
“In the absence of any published explanation other than ‘misconduct’ for why the fines were levied, it is difficult to establish whether they were appropriate,” Mr Field asked.
The FRC, which declined to comment on Friday, said in its enforcement announcement this week that both PwC and Mr Denison had admitted misconduct.
Mr Denison was among the witnesses called to give evidence to an inquiry by MPs into BHS’s collapse in 2016.
He told a hearing in May that year that there had been valid reasons for signing off BHS’s accounts with a “going concern” opinion shortly before Mr Chappell bought the retailer.
“The existing management team was trying to turn the business around, and had some success in driving costs down and reducing cash requirements; the cash requirements were lower than the losses shown; and there was a deal which would bring extra cash from the vendor and new cash from the purchaser.
“Compared with the plans, there was no material uncertainty.”
The record penalties came almost two years to the day since it launched its probe into the audit of BHS, which itself came two months after the department store chain’s collapse.
Sir Philip had sold BHS for £1 to Dominic Chappell, a three-times bankrupt, barely a year earlier.
The scale of the punishments for PwC and Mr Denison has raised questions about the FRC’s motives at a time when its future is being scrutinised as part of a Government-commissioned review.
Greg Clark, the business secretary, asked Sir John Kingman, the former Treasury mandarin, to examine whether the FRC is fit for purpose following growing disquiet about apparent conflicts of interest and the pace.
The regulator has responded by issuing a wave of announcements from its enforcement division, including a £4.5m fine against KPMG for its audit work on Quindell, the insurance software group.
It was unclear exactly what had prompted Sir Philip and his lawyers to mount a legal challenge to the FRC, although one City source suggested that they were challenging the accuracy of some of its content.
Such a move is rare, although not unprecedented, with Deloitte having sought a judicial review against the FRC in 2015 over its auditing of MG Rover.
Sir Philip agreed last year to pay up to £363m into BHS’s pension scheme to end the threat of action against him by the pensions watchdog, and has faced no further action from the Insolvency Service.
Mr Chappell and other directors of his vehicle, Retail Acquisitions, are still mired in regulatory probes and legal proceedings brought by various bodies, including the Insolvency Service and Pensions Regulator.
A spokesman for Taveta also declined to comment on Friday.