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Negligent Tax Advice Claims

Duncan Lewis Professional Negligence Solicitors – Negligent Tax Advice Claims


Individuals who use a tax advisor and receive negligent tax planning advice can find themselves both out-of-pocket and out of favour with HMRC.


A tax advisor has a duty of care towards a client when giving tax planning advice – and usually seeks tax advice from other tax professionals such as accountants and independent financial advisors (IFAs) to find the best products to minimise a client’s tax liability.


It is not a criminal offence to avoid tax using legal investment schemes which are tax efficient – but it is a criminal offence to deliberately or intentionally evade paying tax, including schemes which constitute money laundering or tax fraud.


Tax avoidance is defined by HMRC as:


A tax avoidance scheme is a set of arrangements that try to use tax legislation to gain a tax advantage that is not intended by the legislation.


HMRC decides on what is permissible in minimising tax liability – including setting out guidelines on allowable expenses for businesses and individuals, those in partnerships, and also trusts which may seek to minimise tax liabilities.


Buying financial products always has a risk attached – and tax advisors must make sure clients are fully aware of the risks attached to an investment product, as well as the legality of an investment scheme.


Pushing the boundaries of what is permissible is not uncommon. However, financial advisors and fund managers often work on bonuses and commission and it is also not uncommon for financial products and investment schemes to be mis-sold or misrepresented, causing an individual or business financial loss, as well as penalties such as late payment notices and interest – not to mention the stress and worry of dealing with HMRC to sort matters out.


Have you received a Follower Notice or Accelerated Payment Notice?


HMRC can request taxpayers who have used a tax avoidance scheme to make what is known as an accelerated payment to compensate for the tax which was not paid as a result of the scheme.


HMRC may also issue a follower notice in some cases of tax avoidance.


Under the Financial Bill 2014, accelerated payment notices requesting payment can be issued as part of a tax compliance enquiry by HMRC if:

  • there is a current compliance check into a tax return or claim, or
  • there is an open appeal re a tax return or claim, or
  • the appeal is made on the basis that there is a tax advantage from the avoidance scheme used


and one or more of the following applies:

  • HMRC has issued a follower notice (explained in HMRC fact sheets CC/FS25a and CC/FS25b)
  • A taxpayer has used arrangements disclosed under the Disclosure of Tax Avoidance Schemes (DOTAS) legislation
  • A taxpayer is subject to a counteraction notice under the General Anti-Abuse Rule (GAAR).


Accelerated payment notices mean that a taxpayer who has avoided tax cannot continue to benefit from the tax advantage while the matter is being investigated or dealt with by HMRC.


If a taxpayer does not pay an accelerated notice promptly, HMRC may impose a penalty of up to 15% on the monies owed, which can represent a substantial additional loss to a business or individual, unless a tax advisor agrees a time-to-pay arrangement with HMRC.


Duncan Lewis professional negligence solicitors can advise those whose tax advisor has been negligent – or has given negligent tax planning advice – on how to make a claim for compensation.


Making a Claim for Negligent Tax Advice


Clients who suffer financial loss as a result of negligent tax planning advice from a tax advisor should first make a complaint through the accountancy firm’s own complaints handling procedure (CHP).


Complaints about tax advisors and negligent tax planning advice can be made to the Taxation Disciplinary Board (TDB), or the Federation of Tax Advisors (FTA), or the Chartered Institute of Taxation (CIOT), if the tax advisor is a member of one of these professional bodies.


Clients considering suing a tax advisor for professional negligence have six years from the date of the event constituting negligence – or three years from the date they first realised negligence had occurred – in which to make a claim.


Because of the complexity of suing a tax advisor– and proving that they failed in their duty of care towards a client or acted negligently in carrying out their duties – Duncan Lewis professional negligence solicitors advise clients whose tax advisor has given them negligent tax planning advice to get in touch as soon as possible for an assessment of their case.


Funding Claims for Tax Advisor’s Professional Negligence


Duncan Lewis offers Conditional Fee Agreement (CFA) funding to clients making professional negligence claims, with a fixed fee for the initial client meeting and assessment of the claim, so our clients know in advance what they will be paying.


If you are a business or private individual whose tax advisor has given wrong advice leading to financial loss or provided a negligent tax advisory service, call Duncan Lewis Professional Negligence Solicitors for more information about making a compensation claim for tax advisor negligence on 020 7923 4020

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