Negligent advice about tax avoidance scheme leads to compensation award
Jan Samuel
In a case decided at the end of 2017, Baxendale Walker Solicitors were found to have been negligent, as they had not told their client that a tax avoidance scheme had a significant risk of failing.
Giving a client a "general health warning" about a tax avoidance scheme was not enough - the court was clear that a specific warning to the clients should have been given, of the risks associated with the particular tax avoidance scheme that the client was involved in.
The court said that solicitors should tell clients that each case is fact sensitive and the court might interpret the viability of a scheme differently from the solicitors. Even if a solicitor is correct about a scheme, an appropriate warning may still need to be given.
It is always difficult for solicitors to strike a balance between giving clear and confident advice to clients, and giving the appropriate warnings about that advice. This case serves only to illustrate how difficult that balance can be. However, advising about tax avoidance schemes seems like an area where solicitors would be wise to be especially vigilant, as there will be pressure for those schemes to be overturned, for obvious reasons.
The principles established in this case, will probably be extended to apply to other types of advice given by solicitors. For example, solicitors will not (and never have been) able to get away with generic advice about the boundaries of properties in a conveyancing transaction. They have always had to give advice that is specific to that particular property. In addition, a solicitor drawing up a will for someone would be required to give very specific advice to their client about the terms of the will, rather than just "one size fits all" generic advice about how wills should be drawn up.
If you are worried that your solicitor has given you generic advice, rather than specific advice tailored to your matter, you should seek a second opinion today to put your mind at rest.
At Samuels Solicitors, based in Devon, we have decades of experience in assisting clients with a wide range of professional negligence claims against tax advisors, accountants, solicitors and surveyors. We can help you claim compensation if your solicitor has missed crucial aspects of your particular case, which has caused you financial loss.
If you think that you have had bad tax advice from a solicitor, or if you have been let down by any other type of professional, contact us today for a free initial discussion about what you can do.
