In Mehjoo v Harben Barker (a firm) and
another, the defendant accounting firm was sued by an Iranian
client for failing to refer him to specialised tax advice for
non-domiciles, where such 'non-domicile' status carried
potentially significant tax advantages for the client. The
defendant claimed that it was not obliged to give such tax advice
unless expressly asked to do so and that it was not obliged to
refer the Plaintiff to a relevant specialist for such
advice.
The defendant argued that its terms of retainer, which dated back
to 1999, did not expressly require the defendant to refer its
client to a specialist. The court looked outside the
parameters of the express retainer and considered the parties'
relationship and dealings over a long period of time. From
this it determined that there was a clear and mutually-accepted
understanding that the defendant was at all times required to
consider the Plaintiff's tax position and provide appropriate
advice, even where not specifically sought.
This case should alert all professional advisors to the need to
refer clients to specialists when aware that specialist advice may
be required. Professional advisors should also consider updating
their engagement letters over time in circumstances where client
relationships often tend to evolve beyond the scope of an initial
retainer ("mission creep").
The decision in this case was largely based on its own
facts. Advisors should remain alert to their own particular
circumstances. Advisors might also consider specifying in
engagement letters precisely what it is not
covered by their retainer as well as what is covered. In
doing this, advisors should avoid leaving grey areas open to
interpretation.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.