Housing association sues firms over corporation tax advice

A HOVE-BASED housing association which paid more than £100,000 in tax unnecessarily has launched a legal battle against its former accountants.

Porthove Housing Association paid a total of £103,918.90 to the taxman without realising that as a charity it was exempt from corporation tax.

Now the association is suing its former accountants Keymer Haslam and Co, of Burgess Hill, and Lewes based Maxwell-Gumbleton and Co, branding the firms negligent.

The housing association, which provides 44 units for older people to rent, was set up in 1965 and originally retained Hove firm Robinson Knott & Co to advise on its tax affairs.

In 2002 Robinson Knott & Co was taken over by Keymer Haslam, according to a High Court claim.

Porthove Housing Association says it paid an unknown amount of corporation tax between 1965 and 1992, but that between 1993 and 2005 it paid £103,918.90 as a result of advice given. The tax it paid between 2006 and 2008 has been refunded by HM Revenue and Customs, who cannot repay any more because of a three year retrospective limit.

In 2008 the association changed to chartered accountants Wilson Sanford, who told the association that it enjoyed tax exempt status as a charity, and did not need to pay corporation tax.

The housing association then realised it had received negligent advice over the need to pay tax for many years, according to the claim.

If Keymer Haslam and its predecessor had acted with reasonable care and skill, it would have advised it not to pay corporation tax, and would have advised it to claim refunds from HM Revenue and Customs, the claim alleges.

The writ was issued by Mark James of solicitors Rix and Kay.