ACCOUNTANCY FIRMS are among 90 advisory companies where claims of alleged negligence are currently being prepared over the mis-sale of tax avoidance schemes.
Firms ranging from the provincial to one of the UK’s best known are accused of promoting and mis-selling avoidance schemes and may have conducted activities beyond their regulatory scope. While some of the cases could be brought before court through litigation, many could be dealt with through complaints to regulators.
Avoidance schemes are often mis-sold when the schemes promoted are deemed to be contrived, with little or no chance of functioning. In addition, many firms promoting such schemes to their clients have done so outside the authorisation of the Financial Services Authority.
Avoidance schemes frequently fall within the definition of what the FSA describes as an “unregulated collective investment scheme (UCIS)”. Under its rules, regulated collective investment schemes are those recognised by the FSA, and can be sold to investors in the UK. UCIS are described as unregulated because they are not subject to the same restrictions as a regulated CIS.
Alongside the accountancy firms, independent financial advisors, boutique firms and law firms are also implicated.
Rebus Investment Solutions, which acts for victims of mis-sold schemes, is bringing the claims.
It estimates that the total tax avoidance mis-sale ‘market’ could be worth between £20bn and £40bn, making it larger than the PPI mis-selling scandal.
Rebus’s Richard Rhys said many would likely settle with the parties that mis-sold the schemes out of court. However, due to the six-year statutory limit on making claims, it has been necessary for many to begin to file in court.
He said: “There are accountants approaching us whose clients have been on the receiving end of this and asking to refer them to us. I don’t think the true scale of this is fully understood yet.
“There are firms of accountants that have promoted these products which in some instances are beyond the regulatory authority they have. There are firms that – while they might be exempt in the eyes of the Financial Services Authority and their relative institutes – are actually conducting activities beyond their regulatory scope.”
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