KPMG case reaffirms duty of care principle

The High Court has reaffirmed a long-established principle as to whether a duty of care is owed by accountants towards third party investors.

The Arrowhead Capital Finance v KPMG case has also provided further guidance on how to determine the point from which damage accrues in a negligence claim alleging financial loss.

Dragon Futures traded mobile telephones and appointed KPMG to ensure it would be able to claim input VAT. It was vital for Dragon’s business to be able to recover from HMRC the VAT charged on the purchase price of the mobiles.

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Comments

Q:How 2 get a written HMRC statement in advance?Or risk trans...

dstickl | | Permalink

Can any helpful AWEB reader advise me that IF "It was vital for Dragon’s business to be able to recover from HMRC the VAT charged on the purchase price of the mobiles", THEN how could Dragon Futures have got a written HMRC statement in advance of getting finance from firms like Arrowhead Capital Finance etc, confirming that Dragon Futures "would be able to claim input VAT" ? 

Or is this an example of a case of risk transfer from HMRC to private industry, like - shall we say - IR35 etc etc ?

Tom 7000's picture

Missing trader

Tom 7000 | | Permalink

Sounds like theres a missing trader somewhere, probably sat overseas in his castle driving his Bentley

MTIC FRAUD

Earmuff1 | | Permalink

It sounds like MTIC fraud and courts have found in the favour of the HMRC and denied Dragon's Future the input tax they were claiming. Please note that I am not a qualified accountant. To claim the input tax it is necessary to jump through loads of hoops to satisfy the HMRC.

Although companies like Dragon Future state that the will be able to claim back the input VAT, the caveat is dependent on them making sure that all the necessary paperwork was completed to the satisfaction of HMRC. If this is not done, then HMRC will refuse the claim of Input VAT.

Can the innocent third parties, in this case Arrowhead Capital Finance issue proceedings against the accountants KPMG? If it were me, I would want to know what did Dragon offer to entice investors to ensure them their money was safe? Were KPMG aware that investors would rely on them to do the work to a high standard? Have you read the court ruling of Dragon v HMRC? The ruling can be very detailed and may reveal that you have a case against KPMG.