Those who have lost money through investing in failed tax avoidance schemes can take comfort from a Court of Appeal ruling that their complaints can be considered quickly and at relatively low cost by the Financial Ombudsman Service (FOS).
A businessman had invested £2.3 million in a scheme which was designed to take advantage of tax breaks granted to the film production industry. The scheme did not yield all of the tax advantages he had hoped for and he complained to the FOS, which accepted that it had jurisdiction to consider the matter.
In challenging the FOS’s power to hear the complaint, the limited liability partnership behind the scheme argued that it could not be viewed as a ‘collective investment scheme’ because its sole objective was the avoidance of tax. It was submitted that those who put their money into the scheme would instead have to pursue their negligence or breach of contract claims in court.
In dismissing the partnership’s challenge, however, the High Court noted that it had clearly given the businessman ‘investment advice’. The FOS did not err in law or act irrationally in accepting jurisdiction and was capable of ruling on the complaint justly, fairly and reasonably.