When Tax Schemes Go Sour

In this podcast episode, barristers Paul Mitchell KC and Ben Smiley focus on the position of professionals who recommend tax avoidance or mitigation schemes or who adapt the contractual documentation necessary to give effect to these schemes. They will also be touching on a very recent claim against the architect of one such scheme, a tax Silk.

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This episode looks at the factors that determine what a court will find was the role of the professional advisor in tax schemes and, in particular, what advisory obligations they might have had to their clients.

It is worth reminding ourselves that all claims like this are effectively negligent misrepresentation claims; the claimant is alleging that, as a result of things said by the professional, he or she took a step which resulted in loss.  So what the court is ultimately seeking to understand is:

1) What can one say the claimant actually believed was the position having regard to the advice given by the professionals?

2) Did the claimant take the step that caused loss as a result of the state of mind created by the professionals’ advice?

3) Did the professional advice cover all those factors that the court considers ought reasonably to have been covered having regard to: firstly, the nature of the transaction proposed; and secondly, the particular attributes of the claimant?

Ben looks at the impact of the material that shows what the professional represented to the claimant about the work he or she would be undertaking.  He will discuss the actual wording of the retainer, including the exclusion clause and any disclaimer, before analysing a recent good illustration in Knights v Townsend Harrison. Ben will also consider the lessons to be taken from the very recent decision of Mr Justice Zacaroli in Thornhill.

Paul’s section explores the forensic tools the court can use to discern what advice the professional might be expected to give the claimant having regard to, or perhaps despite, the terms of the retainer and having regard to the attributes of the claimant.