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Interesting penalty case

If you're an unqualified tax advisor your client has no reasonable excuse relying on your dud advice

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14th Nov 2018 14:36

Strange that a piece of paper that says "One day a while ago, I managed to answer hypothetical exam questions at least 50% correct", is held in such high regard.

Said individual could go through their career only getting things half right, and yet the unqualified who always gets things spot on is chastised in court. Hey ho.

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By Ruddles
to Lone_Wolf
14th Nov 2018 15:02

You're missing the point(s).

First of all, the unqualified accountant in this case was not "chastised in court".

Secondly, however inept the qualified adviser may prove to be, is it reasonable for the client to expect that a qualified adviser knows what he is talking about? Generally, I would have to say that the answer is "yes".

Thirdly, the fact that candidates in tax exams may only achieve 50% is largely down to the time available. And also a reflection that marks are generally gained for identifying some, but not all, mark-scoring points (rather than losing marks for getting it wrong). I'd like to think that if I were to face the same questions again with as much time as I needed, and access to all relevant reference materials, to deal with them my scores would be closer to 100%. In real-life, how many advisers would be expected to produce a report setting out every tax implication - corporation, income, CGT and IHT - of a proposed company demerger in 90 minutes?

Tax qualifications are not about knowing the legislation but about demonstrating that you know how to apply the legislation.

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to Ruddles
14th Nov 2018 15:30

I'd say the line "in any event, the Appellant’s advisor had chosen to use an advisor with no formal accountancy qualifications", is a bit of a rebuke. Maybe "chastised" is a bit strong, but the Judge has clearly meant to be somewhat critical of the use of an unqualified adviser.

On your second point, I'd say that it is just as reasonable for the client to expect an unqualified adviser to know what they are talking about. Guy in the pub, maybe not, but someone actually trading as an accountant/tax adviser, then I'd say that the client is still taking reasonable care.

I get what you are saying about the tax exams, but it is still the case that they have only proven that ability on the occasion of the exam. I've worked with a few people who have been pretty successful in the exams and have been rank rotten when it comes to practice.

It's a bit like passing a driving test - it only means you drove properly for 1 day. You might drive like a complete eejit every day after that - but you're still a qualified driver.

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By DJKL
to Lone_Wolf
14th Nov 2018 15:27

Who says 50%.

ICAS in the 1980s never told anyone what the pass mark was and you only got told a grade if you failed the level (level 1 four papers all needing passed in one sitting and level 2 eight papers all needing passed in one sitting, "fail" one fail the level except if close enough re one "fail" to get a referral) If you passed the slip just said pass so no idea what A,B,C combo was ever needed for a level pass.

The were endless debates in the office re what constituted a pass, I somewhere have a level one fail notice that has A.A,B,C

As far as we ever guessed how it worked we suspected, like the actuary exams, that they passed or failed us based on quotas not on raw marks- year before mine fail rate level 1 was apparently near 70%

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to DJKL
14th Nov 2018 15:34

May be more than 50%, I'm just going by the CTA pass marks when I sat them a few years ago (within the last 5 years).

I got 50% on one of the exams and passed. Guy I worked with got 49% and failed. I'm qualified, he isn't. Doesn't make me any better or worse than him, I just did slightly better on the day.

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to Lone_Wolf
15th Nov 2018 12:10

Lone_Wolf wrote:

May be more than 50%, I'm just going by the CTA pass marks when I sat them a few years ago (within the last 5 years).

I got 50% on one of the exams and passed. Guy I worked with got 49% and failed. I'm qualified, he isn't. Doesn't make me any better or worse than him, I just did slightly better on the day.

Based on that rationale we may aswell let people who fail their driving test go out unsupervised.

Also, of course, an unqualified accountant may be someone with no training whatsoever.

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to colinhigginson
15th Nov 2018 13:29

colinhigginson wrote:

Lone_Wolf wrote:

May be more than 50%, I'm just going by the CTA pass marks when I sat them a few years ago (within the last 5 years).

I got 50% on one of the exams and passed. Guy I worked with got 49% and failed. I'm qualified, he isn't. Doesn't make me any better or worse than him, I just did slightly better on the day.

Based on that rationale we may aswell let people who fail their driving test go out unsupervised.


Plenty do and drive just fine. Others do and don't drive so well.

The point is that the little card that says you can drive, doesn't make you a better or worse driver than someone without one - just means you're more concerned with following the law of the land.

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By Ruddles
to Lone_Wolf
15th Nov 2018 13:35

Interesting analogy. Your daughter wants to learn to drive. Would you advise her to seek someone that is with a recognised driving school or otherwise able to demonstrate qualification as an approved driving instructor, or advise her to keep it cheap and go with the bloke down the road that's got a couple of spare L plates to stick on his car?

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to Ruddles
15th Nov 2018 14:36

If the bloke down the road had a track record of getting students through their test then I see no issue in choosing him over an approved instructor.

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By Ruddles
to Lone_Wolf
15th Nov 2018 14:43

Since it's a hypothetical scenario, assume that you don't know anything about either, in the same way that a taxpayer needing help might be looking at two offices next to each other - one for a qualified accountant and one with no qualifications displayed. Which one do you instinctively go for?

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to Ruddles
15th Nov 2018 15:23

The cheapest.

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to andy.partridge
15th Nov 2018 17:25

Seconded. Most will head towards the cheapest.

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By Ruddles
to Lone_Wolf
15th Nov 2018 18:51

I was asking what you would do.

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to Ruddles
16th Nov 2018 09:47

Not knowing anything about either, the I too would opt for the cheapest.

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By Ruddles
to Lone_Wolf
16th Nov 2018 10:19

Interesting. Presumably, faced with a claim for professional negligence, you would also seek out the cheapest lawyer available regardless of qualification and experience?

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to Ruddles
16th Nov 2018 13:44

I'm never negligent so I don't have to worry.

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By Ruddles
to Lone_Wolf
16th Nov 2018 13:48

Cop out

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to Ruddles
16th Nov 2018 15:16

No it's not my flies up.

Ah, you said "Cop". My mistake.

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14th Nov 2018 15:56

The rationale is explained in paras 84 et seq of the case in the link below:

http://financeandtax.decisions.tribunals.gov.uk//judgmentfiles/j10750/TC...

Incidentally, the above case is also interesting re certain computer issued penalties being invalid.

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to Justin Bryant
14th Nov 2018 16:18

Justin Bryant wrote:

Incidentally, the above case is also interesting re certain computer issued penalties being invalid.

Got to love Judge Thomas and Popplewell and there battle against the computer.

I've got an appeal in against £20k of penalties based on their recent rulings. Here's hoping it lands with them if it comes to FTT.

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to Lone_Wolf
15th Nov 2018 09:20

Any chance of some links to the cases you refer to?

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to JCresswellTax
15th Nov 2018 09:39

Take a look at:

Jacqueline Haigh V HMRC (TC06601)
Khan Properties Ltd v HMRC (TC06225)
Expion Silverstone (TC06638)
Paul Smith (TC06639)

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to JCresswellTax
15th Nov 2018 09:51

Here's the ones I've referenced in my appeal:

TC06541 - Peter Groves v HMRC [2018] UKFTT 0311
TC06542 - Nigel Rogers v HMRC [2018] UKFTT 0312
TC06639 - Paul Smith v HMRC [2018] UKFTT 0461
TC06547 - Craig Shaw v HMRC [2018] UKFTT 381
TC06638 - Expion Silverstone Ltd v HMRC [2018] UKFTT 0460

TC06742 - Robert, Adam and Dorothy Thornton Trading as A* Education v HMRC [2018] UKFTT 0568

TC06225 - Khan Properties Ltd v HMRC [2018] UKFTT 830

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By SXGuy
15th Nov 2018 08:38

Given that the tax payer remains responsible for their tax affairs at all times, surely there should be no reasonable excuse to rely on an accountant qualified or not.

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to SXGuy
15th Nov 2018 15:27

That might suggest that it is reasonable to assume the whole industry provides nothing that the tax payer can not do for themselves.

Hands up if you think you are utterly futile.

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By DJKL
to andy.partridge
15th Nov 2018 16:44

It would be pointless putting up one's hand.

Given doing so indicates the perceived lack of worth/value the individual has then their assertion of their own futility has no value given their now acknowledged lack of worth/value.

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to DJKL
15th Nov 2018 20:29

Chicken and egg-white.

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to andy.partridge
15th Nov 2018 17:24

In the grand scheme of things, aren't we all utterly futile. Qualified or non-qualified, it doesn't matter, one day we'll all be pushing up the daisies on this great spinning rock we call Earth, until the sun inevitably blows up and wipes everything we once were from existence.

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to Lone_Wolf
15th Nov 2018 20:31

Leonard Cohen, anyone?

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By DJKL
to Lone_Wolf
16th Nov 2018 16:37

I have grander plans, I need my atoms etc expelled out into space and, eventually arriving in a star factory , I can help to create a new star and then subsequently a new planet; this is, however, a longer term goal.

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16th Nov 2018 16:57

Well if anyone ever wants a split of who is qualified on here and who isn't they need only look at this thread :)

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24th Nov 2018 17:28

What happened to "caveat emptor"?

Then there's John Ruskin: "It's unwise to pay too much, but it's worse to pay too little. When you pay too much, you lose a little money - that's all. When you pay too little, you sometimes lose everything, because the thing you bought was incapable of doing the thing it was bought to do. The common law of business prohibits paying a little and getting a lot - it can't be done. If you deal with the lowest bidder, it is as well to add something for the risk you run, and if you do that you will have enough to pay for something better."

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