Should promoters of tax schemes refund investors if their schemes don’t work? And what is the secret to growing your accountancy firms during an economic downturn?
These were two of the conundrums discussed by Giles Mooney and Tim Good in the February issue of TAXtv.
In Horner v Allison (and Adrian Ross) which was heard in the High Court, Mr Horner, a chartered accountant, and at the time a managing director of Atos KPMG Consulting, sued a promoter of a failed tax scheme he had invested in.
Horner said that the promoter of the scheme, Trisha Allison, had guaranteed that if he invested in a film scheme he would save 20% off his tax bill. Horner said that the scheme’s promoter had said that it had been reviewed by HMRC and accountancy firm BDO Stoy Hayward. The promoter of the scheme had implied that it was an approved film scheme, Horner said.
Horner paid money into the tax scheme and received a £168,000 refund from HMRC relating to his tax bill. However, HMRC then investigated the scheme and decided it did not work and that Horner was not entitled to relief. It demanded that Horner should refund the money and pay penalties and interest.
The judge decided that the promoter of tax scheme should pay Horner’s bills because the promoter had “guaranteed” that that the scheme would work. Had the promoter only said that it thought the scheme would work it probably would not have had to pay the customer’s bills, Mooney said.
“If it looks too good to be true it probably aint true,” Good said. He said that it would be interesting to see if other people who used the scheme get their money back.
Bucking the gloom
The accountancy sector has, overall, weathered the economic downturn better than other sectors of the economy.
Robert Marsden, director, at Myers Clark, a Watford-based chartered accountant, is one example.
Marsden told Mooney in an interview featured in the same TAXtv episode about how his firm had managed healthy growth in a tough economic environment.
It all started when Marsden received an email giving tips on running an accountancy firm from a US expert, Marsden told Mooney in an interview. The expert said not to do what rivals are doing - networking meetings are a waste of time, for example.
What you should do is improve your services for clients and then encourage them to recommend other clients to your firm, Marsden said.
Most of Myers Clark’s clients are from referrals, Marsden said.