In Hugh McMahon v Grant Thornton UK LLP [2012] CSOH 50, a firm of chartered accountants were not found to be negligent in failing to recommend some Entrepreneurs’ Relief planning in the event of a share sale. Such ad hoc advice was not listed within the scope of their personal tax compliance services and had not been requested by the client.

The Scottish Court of Session found that:

Judgement was found in favour of the advisers.

Comment

It is often difficult for clients to grasp that ad hoc tax planning advice is not automatically part of day-to-day accounting and tax compliance. The case shows how important it is for an LOE to contain a really accurate scope of services and how important it is to explain to the client the exact scope of what you are offering and if necessary remind them to take advice in respect of any transactions that are beyond the scope of normal activities. Clearly, the way to avoid unexpected tax bills is to plan in advance. 

Our practical tax guides

Entrepreneurs' Relief: Start here
What types of disposal may qualify for relief

Entrepreneurs' Relief: Company sale
Disposal of shares in a personal company and tracker of all the recent changes to the rules.

Virtual Tax Partner© ER share disposal toolkits
Work through the complex ER qualifying conditions in a matter of minutes.

Virtual Tax Partner© ER disposal of a business & its assets toolkit
Save at least three hours. Fully check the Entrepreneurs' Relief conditions for the disposal of the whole or part of a business or assets used by the business when it ceases.

Capital gains tax: reliefs
Overview of the different CGT reliefs which may apply when an individual or company replaces or disposes of a business asset, or a business, or shares in a company.

External links

Hugh McMahon v Grant Thornton UK LLP [2012] CSOH 50