Share this content
22

Interesting case

https://www.bailii.org/ew/cases/EWHC/Ch/2019/1505.html

Didn't find your answer?

Search AccountingWEB

Showing generally you can only sue an advisor for negligence for a failed tax avoidance scheme if there is a loss and (ignoring penalties) a loss only usually arises if the tax advisor should have recommended a different "successful" avoidance scheme (as in Mehjoo) (since if the scheme otherwise fails there is no loss as you just pay the tax due in the absence of the scheme).

https://www.bailii.org/ew/cases/EWHC/Ch/2019/1505.html

Replies (22)

Please login or register to join the discussion.

avatar
By AnnAccountant
09th Sep 2019 14:06

Does that put you in the clear on a lot of your past work?

Thanks (3)
Replying to AnnAccountant:
avatar
By Justin Bryant
09th Sep 2019 15:23

Typically you've missed the point, which is that you can be sued for not recommending a good tax avoidance scheme (that was what happened here and in Mehjoo) or for failing to implement one properly (e.g. that deathbed BPR share rights issue scheme case). Thus presumably you could be sued quite heavily!

Thanks (0)
Replying to Justin Bryant:
Hallerud at Easter
By DJKL
09th Sep 2019 15:50

Which begs the question how can the accountant discern the future interpretation of said schemes by the courts? A working crystal ball now looks obligatory.

Recommends and it fails, get sued, does not recommend and it does not fail, sued.

Frankly any self respecting accountant ought to be seeking a safer job on the Asda checkouts, accountancy is becoming a mugs game.

Thanks (0)
Replying to DJKL:
avatar
By Justin Bryant
09th Sep 2019 16:50

Fortunately the ratio in Mehjoo is that basically only advisors who hold themselves out as tax experts (e.g. top 50 firms and the like) are vulnerable for not recommending a good tax avoidance scheme, and I assume most Awebers know next to nothing about high level tax planning (most seem to know little if anything about low level tax planning), so should be safe on that basis!

Thanks (0)
Replying to Justin Bryant:
Hallerud at Easter
By DJKL
09th Sep 2019 17:11

I know what to avoid- I had vast swathes of it peddled to us circa 2000-2005, from all forms of tax planners, scheme marketers etc.

The one thing one needs to know is if it looks like XXXX sounds like XXXX, the advisers act like smary xxxxx then like the real substance better to not tread in it; anyone for a cunning dodge with AIM shares and a charity, second hand endowments suit you sir, the mysterious Green Box (oh, a non disclosure agreement, how intriguing, akin to Victorian medicine peddlers- make it smell strong and the patient believes more in its benefit) or the ingenious financial juggling of a partnership in film but not in crime.

Thanks (1)
Replying to DJKL:
avatar
By Tax Dragon
09th Sep 2019 18:58

You left out "we'll lend you your pay... you'd have to repay us if we asked you to but we'd never do that. What? You want that in writing? Don't be daft... it wouldn't work then!"

Thanks (1)
Replying to Tax Dragon:
Hallerud at Easter
By DJKL
10th Sep 2019 10:25

We had a very large trading profit to "consider" re the sale of a decent size site we had received planning for so we were looking at manufactured sideways losses, accordingly I never got to meet the wonderful and charming sales staff extolling the virtues of loan schemes.

Thanks (0)
Replying to Justin Bryant:
Psycho
By Wilson Philips
09th Sep 2019 16:22

I don't think the point has been missed at all. I now understand why you have such a jaundiced view of HMRC.

Thanks (1)
Replying to Wilson Philips:
avatar
By Justin Bryant
09th Sep 2019 16:52

Eh? This post has nowt to do with HMRC. They are never a party to these lawsuits.

Thanks (0)
Replying to Justin Bryant:
Psycho
By Wilson Philips
09th Sep 2019 16:56

No, but it has to do with failed tax avoidance schemes, which leads me to ...

Thanks (0)
Replying to Wilson Philips:
avatar
By Justin Bryant
09th Sep 2019 16:59

HMRC does not decide if a tax avoidance scheme fails or not (not yet at least). That's what a judge in court does.

Thanks (0)
Replying to Justin Bryant:
Psycho
By Wilson Philips
09th Sep 2019 18:39

Yes but it's often HMRC that asks that judge to decide. And it's not beyond the realms of possibility that an adviser who has promoted an avoidance scheme might be less than grateful to HMRC for (being successful in) asking a judge to rule the scheme to be a dud. And harbour a grudge ever since.

Thanks (0)
Replying to Justin Bryant:
avatar
By AnnAccountant
09th Sep 2019 19:43

Justin - Has there been a decision on Mehjoo since the CoA result overturned the High Court decision which, by the way, was made by a judge with no tax knowledge/understanding of the difference between tax planning options clearly intended by statute and abusive "schemes"?

Thanks (0)
avatar
By Tax Dragon
09th Sep 2019 16:59

Do you ever read the cases that you post about?

Or is that why you post... to save yourself the bother by getting us to read them for you and point out what they actually mean?

Thanks (0)
Replying to Justin Bryant:
avatar
By Tax Dragon
09th Sep 2019 17:10

Whatever.

Do you ever read the cases?

Thanks (0)
avatar
By johnhemming
09th Sep 2019 19:45

I read this as being about amending pleadings. It is a curious process where paperwork can be rejected for having text in the wrong colour.

Thanks (0)
Replying to johnhemming:
avatar
By Tax Dragon
09th Sep 2019 21:31

johnhemming wrote:

....paperwork can be rejected for having text in the wrong colour.

In contrast to tax avoidance schemes, the efficacy of which is never determined thus.

Justin, you don't need to answer my question. John has confirmed what I thought. (And sportingly saved you the bother of reading the case for yourself... your plan worked again.)

Thanks (1)
avatar
By unearned luck
10th Sep 2019 01:51

Justin

As TD and John Hemmings have pointed out the case you link to doesn't support your contention.

It is an interlocutory hearing to determine if the claimants' claim should be thrown out because the claimants took to long to begin the case (no), if the claim can be amended (yes), if the defendants can amend their claim (also yes) and to agree directions for progression of the case.

Also what you say is wrong, regardless of there being an alternative 'successful' avoidance scheme the claimants are out of pocket by the fees paid for the negligent advice and interest on late paid tax. They no doubt seek damages for these elements even if the claim for the tax fails.

To repeat TD's question: did you read the case before posting?

BTW I note that you can't spell 'adviser'.

Thanks (0)
Replying to unearned luck:
avatar
By johnhemming
10th Sep 2019 07:12

unearned luck wrote:

BTW I note that you can't spell 'adviser'.


In defence of Justin

https://www.benefitspro.com/2014/12/01/theres-a-difference-between-advis...

On the substantive point the case makes reference to the principle that you cannot make a claim for losses that you have not made, but that the date upon which you make the losses is the date applicable for the Limitation Act 1980.

However, it is mainly about suing the wrong legal entity. It makes reference to the case which did not allow amended pleadings from a defence that the claimant had sued the wrong legal entity after the point at which the limitation act applied.

Hence it was a really interesting judgment in a number of ways and I thank Justin for posting it.

Thanks (0)
Replying to johnhemming:
avatar
By Tax Dragon
10th Sep 2019 09:18

johnhemming wrote:

I thank Justin for posting it.

I've no problem with him posting it, though I'm not sure there's anything for the average advisor to take from any of these cases beyond making sure that s/he has (up to date) contracts/letters of engagement in place.

You there, atlea?

Thanks (0)
Replying to unearned luck:
Hallerud at Easter
By DJKL
10th Sep 2019 10:29

Walking into quicksands in your postscript, there is also your "to" rather than "too"

"the claimants took to long"

Thanks (0)
avatar
By justsotax
10th Sep 2019 11:11

why would we care....we didn't push any of this rubbish as we haven't got the skill set apparently.....

If you want someone to blame look closer to home....erm I mean in the mirror....you can always tell your colleagues what they think a loan means....as oppose to say a gift....

Thanks (1)
Share this content