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Mehjoo - The Need To Appoint A Specialist

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Julie Butler - Expert Author

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26 June 2014

The interpretation of case of Mehjoo v Harben Barker [2014] EWCA Civ 358 emphasises that general advisers do have a duty of care to refer clients to specialists where the need arises. If a professional fails to refer to a specialist then there are considerations around the concept they can be deemed to be negligent for not making the referral to a specialist. Advisers run the risk of straying into unfamiliar territory and inadvertently providing inaccurate advice.

In order for a generalist firm to be obliged to refer to specialist advisers where there is good and apparent reason to do so. Where does that leave both the farm adviser and the generalist adviser with a number of farming clients?

Action for farm advisers

With HMRC’s announcement that attacks on the claims for APR and BPR are official combined with increased values and the result of the Mehjoo case, all farm tax advisers must check their position. At the very least they should update engagement letters and ensure warnings are in place where appropriate. There is huge scope for land agents and accountants to refer specialist lawyers to ensure all the correct legal documents are in place, eg partnership agreements, leases, licences, tenancies etc, and all with the appropriate tax advice in place.

The specialist farm adviser must make sure that all the concerns are flagged up. The generalist farm adviser must endeavour to highlight the need for a specialist. The farming client’s reluctance to pay fees should not deter the adviser from publishing the warnings. There should be a review of the terms of engagement to check what the firm undertakes to provide in terms of professional services.

Good and apparent reason

Would a generalist adviser be able to see the tax problems? Let’s consider the role of accountant, solicitor and land agent and a number of circumstances that could need a specialist or would raise concern.

Worked example

Farmer Black, elderly farming client looking to have easier farming life. Land agent suggests and actions that all land (some of which has development potential) around the farmhouse is let out under farm business tenancies (FBT) combined with grazing agreements which do not require the landowner to “grow the crop of grass”.

The landowner dies. HMRC try to deny Agricultural Property Relief (APR) on the farmhouse – not occupied for purpose of agriculture (s 117 IHTA 1984). The District Valuer claims “hope value” on the farm. HMRC try to deny BPR as the farm is now mainly an investment business s 105(3) IHTA 1984.

The land agent had a duty of care to suggest a tax specialist appointed when changing an “in hand” farming operation to a let farm. The lawyer who drafts the FBT/grazing agreement should have also referred to a specialist. Sometimes land agents draft these agreements themselves. It could well be that the farm lawyer did not have sight of the FBT nor the grazing agreement but they were appointed during this time to update the Will and review the IHT position. The lawyer should have requested copies of the agreements and the accounts.

The accountant was absented from the arrangement but produced trading accounts with a majority of investment income profit and had a duty of care to highlight the weakness to the client and recommend a specialist unless it is set out in their terms of engagement that this is not their duty of care.

In practical terms, it is likely that the land agent, lawyer and accountant will all work together on the changes and it is imperative that a “memorandum of understanding” is agreed between the advisers as to who is responsible for what and who leads on different areas of specialist tax advice.


About the Author

Supplied by Julie Butler F.C.A. Butler & Co, Bennett House, The Dean, Alresford, Hampshire, SO24 9BH.  Tel: 01962 735544.  Email; j.butler@butler-co.co.uk, Website; www.butler-co.co.uk

Julie Butler F.C.A. is the author of Tax Planning for Farm and Land Diversification (Bloomsbury Professional), Equine Tax Planning ISBN: 0406966540, and Stanley: Taxation of Farmers and Landowners (LexisNexis).



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Article Published/Sorted/Amended on Scopulus 2014-09-11 09:03:25 in Tax Articles

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