This post was originally published on this site
Victims of extravagant claims made by sales personnel can take encouragement from a case in which an accountant who was duped into ploughing money into a disastrous tax avoidance scheme won back more than £230,000 from a saleswoman who convinced him with her slick Power Point presentation.
The accountant, a high earner, had put more than £190,000 into the scheme after being promised substantial tax savings on investments in film productions. He had attended a smart presentation at which the saleswoman painted the scheme as ‘a unique low risk, high return investment proposition’.
After the accountant sued, the High Court found that the saleswoman had made fraudulent misrepresentations on which she intended those present to rely – she claimed that she was a specialist in film tax investment schemes and that investors in the scheme were guaranteed a return on their money.
Following a lengthy investigation, HM Revenue and Customs (HMRC) had decided that the scheme was entirely ineffective and the accountant had to repay a substantial rebate that he had previously received. The saleswoman, who was a partner in the firm which had promoted the scheme, was ordered to pay him a total of more than £230,000 in damages and interest.
On appeal, her lawyers argued that the accountant had left it too late to sue her in that his claim was not filed until after the expiry of the six-year limitation period that applies to claims in deceit. They argued that that period should be measured from the date of the presentation at which the false representations were made.
However, in dismissing her challenge, the Court of Appeal agreed with the trial judge that the accountant had not acquired the requisite knowledge that he was a victim of fraud until HMRC began a ‘serious investigation’ into the validity of the scheme. The Court rejected the saleswoman’s plea that he could, with the exercise of reasonably diligence, have discovered earlier that her statements had been fraudulent.
