Elysium Law has received a number of requests for legal advice as to what to do in the face of the latest letter sent by Chris Bailey (of Less Tax for Landlords and the Bailey Group) on behalf of OCG Accountants.
The letter sent to their clients – which we are still considering in more detail – raises two points of concern.
Reliance
Given our experience in professional negligence claims, my colleague Ruby Keeler-Williams previously advised that advice from between Leading Counsel was NOT one that could be relied upon by the clients of Chris Bailey, LT4L or any other who sought advice. WE WERE CORRECT.
At the time of writing the article we had not seen any disclaimer. In their letter to their clients, OCG accountants set out extensively the excellent background and qualifications of Leading Counsel. However, we can now confirm that this caveat was provided further in the letter:
“We are writing this letter to you after taking (Leading Counsels) advice. However, (Leading Counsel) has asked us to make it clear to you that he is advising only OCG Accountants Ltd and not any of its Clients and that he cannot, for a number of reasons, himself accept any duty of care to any of you or to any other third party”.
Our previous warning has been proven correct. There is no duty of care between the Clients and Leading Counsel and they cannot rely upon his advice.
Who is advising Clients?
The letter then goes on to say:
“The advice to you in this letter thus comes from OCG Accountants Ltd. If you choose not to follow that advice, then we will need to discuss this with you and potentially ask you to sign a disclaimer that you are choosing not to follow our advice. This has been requested by the insurance broker who deals with our Professional Indemnity Insurance.”
This raises the question – what ‘advice’ are OCG giving their clients and are they insured to give such advice?
Our belief is that nothing contained within the letter amounts to advice, save for one small sentence, which advises Clients to do nothing.
We now ask Chris Bailey, Less Tax for Landlords, OCG Accountants or anyone else connected: What ‘advice’ have you been giving your Clients?
Given neither Chris Bailey or OCG accountants are qualified, regulated legal professionals, any advice given is not subject to legal professional privilege and as such can be disclosed.
The letter sets out Leading Counsel’s view, and Leading Counsel’s view as regurgitated in this letter is NOT advice to their Clients, as the retainer makes clear and CANNOT be relied upon by the Clients at all.
Therefore, every reference to what Leading Counsel has advised is of no consequence to the Clients. Further, OCG are not underwriting the advice via their retainer – the whole thing is arguably a smoke and mirror exercise.
The difference between Advice and Information
In claims of professional negligence, English law distinguishes between advice and information given to a client upon which the client may act if they chose. This is a complex area of law and is beyond the scope of this post.
Here, with one caveat as discussed later in this article, there is no advice given.
OCG are simply rehearsing Counsel’s view to their clients
Whilst Leading Counsel’s qualifications and experience are very impressive, rhetorically why is OCG setting this out to clients who cannot rely upon it.
You can read our previous post for more information on reliance upon Counsel’s advice.
The Caveat – OCG’s advice is to do nothing
Lest it be thought that OCG have not offered any advice to their clients. OCG have offered one piece of advice and that is to do nothing.
That one small piece of advice in the letter that may have significant consequences. It is predicated upon the basis that the client has received a nudge letter re Spotlight 63 (some clients of course having not):
“…we advise you on what should be your general response to such a letter… do nothing in response to HMRCs letter.” (our emphasis)
That advice does not tell you either:
- What to do if you have not received a letter;
and more importantly:
- What the potential consequences are should you not respond either to the letter or to HMRC’s Spotlight 63 registration.
No doubt experienced tax advisers, with whom Elysium Law are currently working, will have far more questions and we are happy to receive them and expand the post.
The Request for a disclaimer – the iniquity of the uniformed choice
In our view, what seems to be iniquitous here is that Clients who are facing unknown consequences have so far received no advice from Chris Bailey, Less Tax for Landlords or OCG Accountants as to the way forward. The Clients are now given a stark choice with uninformed consequences – to sign or not to sign the disclaimer.
Elysium Law assumes (albeit OCG do not specify this) that this is an attempt to bar clients from bringing a claim under OCG Accountant’s Professional Indemnity Insurance should the clients chose not to follow the only piece of advice in the letter; namely to do nothing with regards to Spotlight 63, and should they go to independent and more experienced tax advisers who will give proper, informed, regulated advice.
We ask OCG and LT4L – why only now has this iniquity raised its head and upon what basis is the disclaimer sought?
LT4L and OCG Accountants have been aware of HMRC’s Spotlight 63 since at least 4th October 2023.
They ought to have informed their professional indemnity insurers at that stage of the potential of a claim or claims to be made.
Can they confirm to their clients that they have done so? If it is not the case, then why?
We therefore ask Chris Bailey and OCG Accountant the following questions:
(we invite every client of theirs to copy them and send them to Chris Bailey and the other Directors and demand answers)
- Does the Schedule of Work in the Client Care Letter, which we assume is different to that sent by LT4L, cover work by OCG as regards any investigations/enquiries by HMRC?
- Given that HMRC are aware of the LLPs registered at the office of OCG Accountants, what is the harm (or adverse consequences) to clients in simply registering under the Spotlight?
- Do you accept that registration is not an automatic admission of any tax that HMRC claim to be owed?
- In the event that a Client does not register, will this expose them to issues such as, but not limited to, greater penalties or possibly the unavailability of any settlement facility?
- If more penalties and interest may (or do) occur as a result of OCG’s advice, will OCG’s insurance cover ALL penalties and interest that accrue to each and every affected client as a result?
- Was it a term of any original contract and did you point out that any insurance might be invalid, as we believe you intimate, if the clients did not stay with you in the event of HMRC issues? If not, why not?
- If this is an attempt at variation of the contract or at exclusion for liability in some form of new contract, have you considered the legislation that protects consumers against unfair exclusion clauses and contractual terms? If not, why not?
- Rather the discussing matters with individuals, which may go unrecorded in the event of a dispute, will you set out in clear and unequivocal terms so that your clients can take independent legal advice as to the basis of the disclaimer, its validity and consequences if signed?
- Will you tell your clients that they should take independent advice before signing the disclaimer? If not, why not?
- Acting in the interest of your clients and not your own interests or the interests of a third party such as the insurance broker or the underwriter, have you considered whether there could be a conflict of interest in asking the Clients to sign this Disclaimer? Clearly it would suit OCG and their insurers if the clients had signed such a disclaimer, but is that in the best interests of the clients? As set out at paragraph 12 of the ICAEW’s Guidance on identifying and managing conflicts, in relation to self-interest conflicts, the test is whether: “…the member (OCG) can give, and be seen by a reasonable and informed third party to give, objective advice or service.’
- If you assert that you have considered this and are compliant with it, will you let your clients see your written correspondence with the Broker as to why the disclaimer is sought now and prima facie at least, is not in the interests of the plethora of clients you currently represent?
- Does the Broker have any interest in protecting themselves in making the request?
- Has the Broker told you why this request is being made, or upon whose authority, and pointed out to you under the original PII policy that your clients will be covered only in the event that you continue to act even in the face of a significant and serious conflict of interest?
- Finally, please tell us all now the consequences of not signing the disclaimer as regards your Professional Indemnity Insurance and what you will say to those who want to seek advice elsewhere.
Once again, Elysium Law invite each and every client of OCG/LT4L to reproduce these questions and send them to OCG demanding an immediate response.
Conclusion
The January 31st deadline for registration is upon the users of the planning and we have numerous affected who, rather like a rabbit in the headlines, are caught without knowing the proper way forward.
OCG’s advice, namely to do nothing, cannot seriously be considered as responsible advice such as would be expected from a competent, independent advisor unless they have considered and set out the consequences of following their advice.
We urge their clients to write to them, setting out and adopting our questions. In the meantime, seek independent advice on registration and its potential consequences.
Elysium Law has an outstanding track record of bringing, defending, and settling high-value and complex cases. With a significant number of taxpayers likely to be affected following Spotlight 63, we are looking to advance a group claim. Contact us today for more information and a free consultation.
