An experienced solicitor has been cleared of misconduct by the Solicitors Disciplinary Tribunal over his involvement in tax avoidance schemes. Jonathan Mounteney had been accused by the Solicitors Regulation Authority of facilitating and promoting three stamp duty land tax (SDLT) tax avoidance schemes – one of which proved to be non-genuine and was described in the Tribunal proceedings as bogus.
Mr Mounteney advised clients on the tax implications of the schemes, which were designed to reduce the amount of stamp duty purchasers paid on high value residential houses. All the purchasers had their own solicitors to advise them on their purchases and to submit the SDLT forms.
He was charged by the Solicitors Regulation Authority with failing to carry out adequately diligent enquiries into the schemes and their providers, failing to respond to indications raising concern about the genuineness of the schemes and receiving payment for promoting the schemes.
The Tribunal heard that Mr Mounteney had undertaken detailed due diligence, spending days scrutinising and analysing the schemes, and had taken counsel’s advice on all three. Two of the schemes were genuine and worked as intended, but the third scheme was bogus. It turned out that the advice provided by the supposed ‘specialist tax counsel’ for the bogus scheme was in fact a forged document drafted by a struck-off solicitor.
Mr Mounteney told the Tribunal he had no reason to doubt the opinion’s authenticity, which had been provided to him by another solicitor.
The Solicitors Disciplinary Tribunal cleared Mr Mounteney, concluding that he had made sufficient checks to ensure he was not in breach of regulatory obligations. However, the Tribunal accepted that the Solicitors Regulation Authority had been right to bring the case and therefore ordered both sides to pay their own costs.
“This case clearly shows the danger to solicitors of working in high-risk practice areas,” said James Burgoyne, Director – Claims & Technical, Brunel Professions. “It is not only the regulator that will carefully scrutinise firms’ activity, but also professional indemnity insurers, who are wary of high-risk activities and the costs that even successful defences may require. Law firms who take up these types of work must ensure that their due diligence and risk management procedures are of the highest order.”
Brunel Professions is a leading provider of PII insurance broking to the legal profession. To find out more call Mark Sommariva on 0203 475 3275.