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From 2012 to 2014 there was public outcry following revelations that many rich and famous people had participated in complex tax avoidance schemes. Celebrities such as Gary Barlow and Jimmy Carr, it was widely reported, had succeeded in avoiding millions of pounds of tax.However, what many people failed to consider at the time was that those named had often only been acting on the advice of professional tax advisors and, in some cases, may have had very little to do with the details of the arrangements. All of which raises the question, if a client of a tax advisor receives negligent advice and is then found to owe money to HM Revenue and Customs, should he or she be entitled to compensation?
Tax avoidance, knowing the limits
'Tax avoidance' is a charged phrase, it is not, however, necessarily illegal. Nearly everyone, regardless of their level of wealth, will seek to minimise their tax bill. Problems arise only when efforts to minimise tax are undertaken too aggressively or without consideration for the law.For example, many of those who participated in the scheme that Gary Barlow was party to may simply have believed that they were investing their money in a arrangement which brought benefit to the arts in Britain as well as their personal finances. It is too much to expect laypeople, to understand all the vagaries and technicalities of tax law; this, after all, is why professional tax advisors exist.Indeed, ever since the celebrity tax avoidance scandal hit the media there has been an increase in the number of claims for negligent advice made by artists against their tax advisors. This is only reasonable: if the tax advisor has failed to perform his or her duties to the required standard, the law provides steps for remedy. Valid reasons for a claim include the following:
- recommendation of an unsuitable scheme
- recommendation of a flawed scheme
- recommendation of an illegal scheme
- a failure to provide sufficient advice or information
Bringing a claim for negligent tax advice
All tax advisors should have professional indemnity insurance in place in order to provide compensation to clients in the event of a claim for negligent advice.Generally speaking, claims should be made within six years of the date of negligence occurring or, in some cases, three years from the date on which client first became aware of it.
Healys LLP, professional negligence lawyers
Whether you have been given unsuitable advice or your tax advisor has failed to submit documents on time, mismanaged a trust or caused you to invest in an illegal tax avoidance scheme, if you have suffered financial loss as a result, it is worth seeking legal advice.Our professional negligence lawyers in London and Brighton offer clear, efficient and cost-effective advice and can provide you with the knowledge you need to make an informed decision about proceeding with litigation.Call 020 7822 4106 for more information.