{"id":21083,"date":"2013-06-06T08:28:32","date_gmt":"2013-06-06T07:28:32","guid":{"rendered":"http:\/\/www.taxresearch.org.uk\/Blog\/?p=21083"},"modified":"2013-06-06T08:28:32","modified_gmt":"2013-06-06T07:28:32","slug":"the-high-court-rules-that-accountants-have-a-duty-to-undertake-tax-abuse","status":"publish","type":"post","link":"https:\/\/www.taxresearch.org.uk\/Blog\/2013\/06\/06\/the-high-court-rules-that-accountants-have-a-duty-to-undertake-tax-abuse\/","title":{"rendered":"The High Court rules that accountants have a duty to undertake tax abuse"},"content":{"rendered":"

The Times (firewall) has reported<\/a> this morning that:<\/p>\n

The accountancy profession was thrown into turmoil yesterday after a High Court judge appeared to rule that practitioners had a duty to advise wealthy clients to avoid tax.<\/p><\/blockquote>\n

The case is bizarre. It revolves around\u00a0Hossein Mehjoo, an Iranian refugee. He sold a fashion business in Britain and has now successfully sued his local accountancy firm for \u00a31.4 million \u00a0claiming that it had failed to advise him of an offshore tax avoidance scheme. As the Times notes<\/p>\n

Mr Justice Silber found that a \u201creasonably competent\u201d accountant would have recognised that, as a \u201cnon dom\u201d, Mr Mehjoo was eligible for tax schemes not available to ordinary UK citizens.<\/p><\/blockquote>\n

And it adds:<\/p>\n

Mr Mehjoo, 53, should have been advised to enter a scheme called the Bearer Warrant Scheme (BWS), the Judge said. Until it was shut by Revenue & Customs in 2005, a BWS allowed wealthy non-doms to transfer ownership of a company to an offshore trust, which could then sell the company while avoiding capital gains tax.<\/p><\/blockquote>\n

Astonishingly it was said:<\/p>\n

\u201cThe defendants had a contractual duty to advise the claimant that non dom status carried with it potentially significant tax advantages,\u201d Mr Justice Silber found. The judge described the BWS as a \u201ctax mitigation\u201d scheme, noting that \u201cthe main reason for creating the trust would be to enable the client to receive the capital ... tax free\u201d.<\/p><\/blockquote>\n

And:<\/p>\n

The duty to refer a client to a tax specialist was comparable to a GP\u2019s duty to refer a patient, the judge said. \u201cSurely if the GP knows that there might possibly be types of treatment known only to specialists ... that should trigger a duty to advise,\u201d he said.<\/p><\/blockquote>\n

As the times note:<\/span><\/p>\n

Richard Murphy, head of Tax Research UK, said: \u201cThe time has come for the Government to protect ethical accountants. These bearer warrant schemes were based on an incredibly dubious premise \u2013 it was a load of make believe.\u201d<\/span><\/p><\/blockquote>\n

I know: I knew of it. KPMG, at least, marketed it.<\/p>\n

But the real point is that just when it is agreed that tax avoidance can be abusive and that it is morally repugnant the Court has now real it is a legal requirement for an accountant to undertake this anti-social activity, or they can be sued.<\/p>\n

Three things follow: first, honest accounatnts nbeed legal protection. Second the scope of the\u00a0general anti-avoidance rule needs to be extended to protect\u00a0accountants\u00a0and\u00a0third\u00a0it has to be made\u00a0explicitly\u00a0clear in law that no\u00a0accountant\u00a0has a legal duty to abuse the spirit of the law.<\/p>\n

If we want an honest accountancy profession (and some of us do) then the\u00a0government\u00a0has to act.<\/p>\n","protected":false},"excerpt":{"rendered":"

The Times (firewall) has reported this morning that: The accountancy profession was thrown into turmoil yesterday after a High Court judge appeared to rule that
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