Judgment regarding accountants acting as introducers, and considering Manchester Building Society v GT

News & Judgments
24 September 2021

Judgment was handed down this morning in the case of Knights v Townsend Harrison Ltd [2021] EWHC 2563 (QB). Ben Elkington KC and Ben Smiley acted for the successful defendant firm of accountants.

The defendant had introduced the claimants to an investment opportunity and three tax avoidance schemes. The investment transpired to be a Ponzi scheme, two of the tax avoidance schemes were successfully challenged by HMRC, and the third tax scheme is likely to fail also.

In respect of the investment, the claim was advanced on the basis that the defendant had agreed to carry out due diligence on the investment scheme, and had given positive advice in respect of it, and had been negligent on both fronts. In respect of the tax schemes, the primary case was that the defendant had given negligently positive advice in respect of the schemes; in the alternative, it was alleged that the defendant had been negligent in introducing the tax schemes to the claimant.

All the claims were dismissed. The investment claim failed on duty (there was no contract, nor common law duty), breach (the alleged advice was not given) and causation (the fraud would not have been uncovered, and claimants did not prove they would not have invested).  The tax schemes claim failed on duty, breach (the alleged advice was not given), and causation (the claimants did not establish that they would not have participated in the schemes).

The judgment contains an interesting analysis of the duties of accountants acting as introducers.  The judge also considered the principles espoused by the Supreme Court in Manchester Building Society v Grant Thornton UK LLP [2021] 3 WLR 81.

Related areas

Related People

Ben Elkington KC, FCIArb

Call: 1996 Silk: 2012

Ben Smiley

Call: 2009



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