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Controversy over QCs who give 'deliberately misleading' tax advice

Thursday, 14 August, 2014

A claim that some barristers make a practice of giving misleading opinions about the validity of tax-planning schemes has provoked controversy. It has also brought a defensive reaction from the Bar Standards Board.

Jolyon Maugham, who is a leading tax junior at Devereux Chambers, made the accusation against unnamed 'Boys Who Won't Say No' in his Internet blog. Maugham notes that promoters of tax-planning schemes must get QC approval of any new scheme they develop before they can sell it to clients, because prudent clients always want independent expert corroboration that the scheme will work.

A promoter can make GBP100 million from a successfully marketed scheme, so they are prepared to offer very high fees for a favourable opinion – up to hundreds of thousands of pounds, says Maugham. This, he says, has created predictable temptations for the Bar. He alleges that there are 'slightly under half a dozen' QCs who are prepared to sign off as valid virtually any new tax-planning scheme thought up by a promoter, in return for a generous fee.

Many of the schemes, however, are bound to fail, probably costing the taxpayers concerned a lot of money. But, says Maugham, the regulation of barristers' ethics is so weak that there is little comeback on them. Even if he is successfully sued for providing a misleading opinion, the first GBP2.5 million of the damages are paid by the Bar Mutual Fund set up for the purpose, and underwritten by all practising barristers.

Maugham claims that everyone in his business knows who the offending QCs are – indeed, he regularly sees their formal opinions, one of which he describes as 'at best incompetent, at worst criminally fraudulent.'

Maugham's tirade caused a stir in the industry, and prompted a comment by Richard Moorhead, director of the Centre for Ethics and Law. In his own blog, Moorhead says 'there cannot be much doubt that a barrister giving opinion of the sort outlined above would be breaching their core duties to act with honesty and integrity, to maintain their independence and to not behave in a way likely to diminish trust and confidence the public places in the profession.' He urged the Bar Standards Board to investigate Maugham's allegations, and to announce publicly that they are doing so.

This in turn brought a response from Vanessa Davies, chief executive of the Bar Standards Board. She cited the new BSB handbook that came into force on 6 January this year, and which contains a new requirement for barristers to report serious misconduct by themselves or others.

'Any barrister who genuinely believes that they have evidence of colleagues breaching the Code should report it to the Bar Standards Board so we can consider whether enforcement action is necessary', she wrote on Moorhead's blog page.

However, she has not confirmed whether the BSB has indeed opened an investigation into Maugham's claims. Maugham himself is worried that reporting his concerns to the BSB might be a breach of his duty of confidentiality to his clients, through whose instructions he sees the QCs' opinions.

He also wonders whether the BSB is the best tribunal to resolve these issues, given the profession's self-policing nature. He suggests that a legislative solution should be developed instead, and says that a leading professional institute is planning a 'high level round table' at which ministers and representatives of the professional bodies will discuss the matter soon.

Sources