Being given poor or misleading advice by a tax accountant can lead to serious claims from HMRC. Our team are experts in defending these claims and recovering any losses from the negligent accountants.
The emergence of tax schemes as mechanisms to assist individuals and companies in their tax planning or to avoid tax has in recent years led to the growth of a tax advisory industry dedicated to designing and implementing such tax schemes, often (but not always) legitimately and in compliance with the tax legislation existing at that time.
Some of these tax advisers were accountants, perhaps providing advice and assistance on Employee Benefit Trusts or Employer Financed Retirement Benefit Schemes, whilst other advisers may not have been as tightly regulated, often with experience but with no professional regulatory body for clients to have recourse to.
Regardless as to the status of the adviser, where such advice was given negligently or where the participator has relied on assurances by the adviser that were false, misleading or reckless and which led to a loss, then there may be a right to make a claim against the tax adviser.
Below we set out some examples of the types of claim that could be brought. This is not an exhaustive list and not all may be applicable to your or your company’s circumstances. For more detailed advice bespoke to your personal situation, please do not hesitate to contact us.
Solicitors, accountants and other professionals bear a professional duty under their contract of engagement and in accordance with their regulated professional obligations (and generally under the law), to act in a client’s best interests and provide advice appropriate to their client’s circumstances and within the limit of their professional skills.
In respect of tax advice, such advisers have a duty not to endorse schemes which face the risk of being unwound by HMRC via their anti-avoidance rules. Accordingly, where a scheme is designed solely for the purpose of evading tax and where advice is given and relied on which no reasonable professional would give, there may be grounds to apply for an order that the tax adviser has been negligent (with the appropriate remedies).
Where an adviser provides advice for which s/he is remunerated, but such advice is misleading or designed solely for the purpose of obtaining the fee sought, then there may be a civil claim that the adviser is liable for the losses caused to you by such misrepresentation in respect of the tax scheme, where such advice was solely for his/her benefit in terms of the fees charged.
The tax adviser will usually have entered into a contract with you in respect of the advisory services provided. This is well worth examining as it may provide an indemnity for any incorrect advice or advice which did not provide the results desired. A contractual claim may exist to enable compensation for the cost of the tax advice and consequential losses occurring as a result of such advice.
Claims for damages
As with any duty of care, a tax adviser has a duty to ensure that the advice s/he provides (which usually attracts a fee) is in your interests, is full and is relevant to your individual circumstances.
Where it is not, and as a result you suffer losses (for example where HMRC impose a loan charge), then such losses, interest and costs may be claimable from your tax adviser, in addition to repayment of their fees under the contract as described above.
If your tax adviser was an accountant or other professional, they almost certainly will have professional indemnity insurance which will insure you against such losses. This can provide added comfort where there is uncertainty as to the financial resources of the tax adviser, as the insurer will almost certainly have the resources to pay your claim (if properly brought).
A lot of these tax schemes are old yet legal changes may impose a tax liability arising from such schemes years later. For example, the Finance Acts 2017 extend loan charges to all schemes entered into and still outstanding since 1999.
However, contractual and other civil claims are usually only able to be brought within 6 years since the contract was entered into (which may prejudice your ability to bring such a claim) under the Limitation Act 1980.
However, the limitation rule applies differently in different circumstances and only usually commences to run once the loss is suffered. There are also many other exceptions to limitation and you should always seek legal advice as soon as possible should you consider that you have such a claim.
At Francis Wilks & Jones we can assist with all such claims against professional tax advisers or any connected party who has caused losses to you. Please call any member of our tax disputes team for your consultation now. Alternatively email us and we will call you back at a time convenient for you.