Negligence claims rise following tax avoidance crackdown

Professional negligence claims have rocketed following the launch of a HM Revenue and Customs clampdown on promoters of tax avoidance schemes, City law firm RPC has claimed.

Tax: crackdown on evasion schemes

According to a statement by the firm yesterday, the increase is fuelled by individuals who took part in tax avoidance schemes dating from 2005 – 2005 which are being challenged by HMRC.

Negligent advice

Many of these individuals have agreed to pay out the disputed taxes and then attempt to recover losses by making claims against scheme promoters for giving negligent advice, RPC reports.
RPC partner Robert Morris said: ‘HMRC is poring over many of the tax avoidance schemes that were set up before the financial crisis. It is taking a very aggressive approach towards individuals and is frightening many of them into paying the disputed tax, without having to show that the tax is lawfully due.

'Shaky at best'

‘Rather than challenging HMRC and saying that the tax scheme worked, many individuals are deciding to pay up and then trying to recover their money with a negligence claim.
‘A lot of professional indemnity insurers are concerned that some of the negligence claims they are being notified of are shaky at best. We urge them to consider defending the growing number of claims robustly.’

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