Mehjoo v Harben Barker: duty of an accountant confined to the terms and limits of its retainer
This judgment of the English Court of Appeal considered whether an accountant who had been retained to provide general accounting services was under a duty to advise its client about possible tax-saving schemes or of the need to take specialist tax advice.
The background is briefly summarised as follows. The claimant, Mr Hossein Mehjoo, was born in Iran to Iranian parents. He moved to the UK in 1971 and, having claimed asylum in 1981, was granted indefinite leave to remain in the UK. In 1996, Mr Mehjoo became a British citizen.
Harben Barker (an unincorporated practice), which subsequently became Harben Barker Ltd, is a firm of chartered accountants that acted for Mr Mehjoo and provided him with accountancy services and general tax advice. Mr Purnell, a partner at Harben Barker, acted for Mr Mehjoo from 1980 onwards (prior to the merger of his own firm with Harben Barker and from 1991 onwards as a partner of Harben Barker). In 1999, Mr Mehjoo signed an engagement letter with Harben Barker in respect of the general accounting services being provided, such as the preparation of annual tax returns (the retainer). However, on various occasions Mr Purnell gave Mr Mehjoo tax planning advice outside the parameters of the retainer without being asked to do so…
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