It is interesting that a number of Professionals and their firms do not consider that they are acting as agents for their clients and thus can be held to account for secret commissions that they choose to make without their clients being informed.
Whilst Accountants are known for this approach whether for financial service referrals or selling tax schemes the high profile case in this area is for a football agent. In Imageview Management Limited v Jack 2009] EWCA Civ 63, it was held that Jack may not in fact have included an express term of fiduciary loyalty in his agency agreement, but that equitable obligation is implied in all agency contracts. So by acting improperly in not disclosing the side deal, Berry effectively disentitled himself to any remuneration even though Jack arguably benefited from Berry’s work.
The Institute of Chartered Accountants of Scotland (ICAS) states in its ethical guideline “The professional accountant in public practice holding the fiduciary position is entitled to retain the commission only with the fully informed consent of the beneficiary. The professional accountant in public practice is therefore legally bound to account to the client for any commission, fee or other benefit received from a third party at any time.”
In FHR European Ventures LLP & Others v Cedar Capital Partners LLC [2014] UKSC 45, the Supreme Court in a unanimous decision led by Lord Neuberger held that bribes and secret commissions are held on trust by an agent for its principal.
So if HMRC are coming after you for a failed tax scheme you may find that you can share the burden with your professional adviser if they were paid a secret commission for introducing you to the scheme providers in addition to any recovery in respect of potential professional negligence involved in the advice provided.
Jeffrey Meek is a Forensic Accountant who has experience of providing Expert reports to support legal action to recover monies lost in cases of professional negligence by professional advisers.
