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In Hossein Mehjoo v Harben Barker [2014] EWCA Civ 358 the Court of Appeal held that an accountant was not negligent for failing to advise his client on the use of a tax planning scheme involving Bearer Warrent Shares (BWS).

The High Court allowed M's appeal, and his advisers appealled.

The Court of Appeal agreed that:

The court held that HB were not negligent in not taking specialist advice or failing to advise him on the use of a tax scheme.

Comment

Mr Mehjoo may not be too happy with the decision. In talking amongst professionals from larger firms today there is some debate as to whether BWS were risk free and Mr Mehjoo might have ended up with more problems with a resultant offshore trust. In the previous High Court hearing the judge, who was not a tax expert, made cavalier, if not quite sweeping remarks about the different tax avoidance schemes on offer at the time; it seems that professional firms may now rest assured that they will not be deemed negligent if they fail to mention tax schemes. Given the present government's clamp down on abusive tax avoidance schemes and scheme promoters that is a welcome result to this case.

Going forward tax planning around a business sale or purchase is rarely straightward for the reason that the terms of any deal may vary and it depends on who you are, what you are selling or buying and the entities involved. It is generally to everyone's advantage to plan ahead so in an ideal world you know your tax position before you sell or buy. If in any doubt take a second opinion, "phone a friend" on our Virtual Tax Partner support line.

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Hossein Mehjoo v Harben Barker [2014] EWCA Civ 358