Miki Travel claims E&Y misadvised it over the Tour Operators Margin Scheme, a scheme used to account for VAT.
The company claimed that E&Y’s VAT supervisor, David Bearman, gave incorrect advice on whether the company could remain within TOMS or operate its business outside it.
But the advice was given negligently and in breach of contract, says a High Court writ, and E&Y advised Miki Travel without investigating the VAT position in EU states and without checking the resources available to them. As a result, Miki Travel chose to stay within TOMS and did not recover excess VAT until 1995.
Additionally, E&Y did not correct its advice until 18 July 1996, which was also in breach of contract, the writ adds.
An E&Y representative said: ‘We do not believe these proceedings have any substantive merit and will be defending them.’
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