SDT: High-risk area of work
A solicitor accused of misconduct in his advice on three stamp duty land tax (SDLT) avoidance schemes has been completely exonerated by a disciplinary tribunal.
Jonathan Peter Mounteney only advised corporate clients on the tax element of each scheme, rather than the underlying conveyances, and the Solicitors Disciplinary Tribunal (SDT) rejected the argument that he had not conducted adequate due diligence.
The solicitor had followed the advice of counsel on each, although it turned out that the opinion on one of them – which was purportedly provided by specialist tax counsel – was in fact a forged document drafted by a struck-off solicitor.
Mr Mounteney’s firm, Hargreaves Mounteney Ltd (HML) in Cheshire, received fees of almost £12,400 for acting on that scheme.
But the tribunal accepted the solicitor’s evidence that he had “no reason” to doubt the opinion’s authenticity.
“The opinion had appeared to be genuine on its face, and was provided to him by another solicitor. The scheme was coming through a firm he had dealt with before and he had no reason to be suspicious,” it said.
The solicitor was admitted in 1994, and was a director, COLP and COFA of both HML and Hargreaves Mounteney Trust Company Limited.
He faced a string of allegations over his conduct, but the SDT found the two genuine schemes had worked as intended.
It was not satisfied that Mr Mounteney had failed to follow the Solicitors Regulation Authority’s (SRA) warning notice on SDLT schemes; rather, “when the regulatory risk of working in this sort of scheme became too high”, he ceased his involvement.
“The tribunal found that this was evidence of [him] weighing up the risks and making decisions based on that risk assessment.”
The SDT noted too that those taking advantage of the scheme were “all clients of other solicitors buying houses of a value large enough to attract large sums of SDLT which they wanted to avoid, and they had their own solicitors to advise them about their purchases, whose remit extended to dealing with the legalities of completing the transactions, including submitting relevant SDLT forms”.
The solicitor told the SRA during its investigation he considered that other solicitors involved in the schemes were “flying very close to the wind”, but it “wasn’t our concern that they are independent solicitors with independent clients”.
Rejecting the SRA’s application for costs, the SDT said there was nothing to justify the “exceptional step” of ordering Mr Mounteney to “pay some or all of the costs of bringing a case against him that had failed”.
However, the tribunal said the SRA “had properly brought the case” and made no order for costs.
It said: “The tribunal had found the allegations not proved, but noted that the respondent had, by his own admission, engaged in a high-risk area of work.
“In that environment, a solicitor could expect to come under regulatory scrutiny, particularly when one of the schemes turned out to be bogus.
“In those circumstances the tribunal found that the [SRA] had properly brought the case and it was right that the tribunal had heard all the evidence and been able to make a determination.”