Taxation - E&Y facing VAT advice writ

Ernst & Young and Peter Jenkins, its head of VAT, face a writ for damages of at least #500,000 from a client over the firm?s advice on VAT registration.

The Royal College of Obstetricians and Gynaecologists has lodged a writ in the High Court claiming a breach of written contract by the defendants for their work as professional advisers and auditors between 1988 and 1996.

The college?s claim, which has not yet been served, centres on E&Y?s advice – in 1988 or 1989 – to seek an exemption from VAT registration, backdated by Customs & Excise to 1973.

In a high-profile case, the college won an #800,000 refund of VAT after rebate expert Mainprice & Co represented the college bef-ore the VAT tribunal in 1996, and argued successfully that the doctors? body should be VAT-registered and was entitled to a claim.

Accountancy Age understands that the college, which is currently drafting a detailed statement of claim, will seek to reclaim interest and professional fees incurred totalling more than #500,000.

The college declined to comment before the writ had been served, while E&Y said it was ?unaware of any proceedings being served?.