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SRA playing for the headlines? | SRA Barrister

A review of a number of recent SDT cases shows the SRA increasing its profile. Commentators are asking if this is the SRA preparing to make a case for separation from the Law Society.

At a recent seminar held at the Law Society on 16th November, Jeremy Barnett reviewed a number of recent SDT decisions and concluded that the SRA have clearly been investigating classes of cases, and called for more transparency as to how some of the priorities are selected.

The recent cases deal with the following types of allegations:

Stamp Duty Land Tax Avoidance Schemes

 These continue to feature before the SDT at Farringdon, following initial interest in an area of practice that was clearly high on the agenda of HMRC, as the majority of cases talk about ‘the amount of SDLT that was avoided’ as a benchmark of seriousness. Although some initial cases ran into difficulties following the service of expert evidence, there has been a continued trickle of decisions including:

  • Dixon Law (Leeds) which related to 47 transactions, where two SDLT schemes were used, resulting in £2m SDLT avoided. In this case a regulatory settlement was reached, where a rebuke was issued.
  • Healey, 11th November where a senior partner brought in fees of £52,000 from 158 transactions which cost HMRC £3m in lost tax. He was fined £1500 and agreed to pay £14,000 costs in a regulatory settlement which avoided referral to the√جª¬ø√جª¬ø √جª¬øSDT.

See for example the recent decision of Chan Ali and Abode, covered on this blog on 30th September 2015

Axiom Legal Financing Fund√جª¬ø 

A number of cases were brought following the collapse of the Caribbean based Axiom Legal Insurer, which lent money to ‘no win no fee’ law firms to fund cases in the hope of higher returns when their cases were successful. When the fund collapsed, receivers, Grant Thornton, recovered £12.3 million of the £120 million held by the fund at the time of the collapse.√جª¬ø

Cases were brought against solicitors, some involved in the scheme, some close to the scheme, and some who demonstrated that they were innocent victims.Richard Barnett. This is a 112 page ruling concerning the ex Law Society Council Member and his firm Barnetts, who signed a litigation funding agreement with Axiom Legal Financing that was for payment of disbursements, but had been sold to cover general case funding.

There was a catalogue of findings including dishonesty, conflict of interest, failing to act in the clients best interests, providing false information on an indemnity renewal form. His partner Anthony Swift, was cleared of many charges and suspended. There was a claim by the SRA for £408,000 in costs.

√جª¬øThe case was that they knew that Tangerine (the agents) made no proper assessment of the Firm’s ability to pay, that they knew the agents were not prudent and they were aware of the huge fee that Tangerine was entitled to which made the loan too risky and was suspicious in nature.

-Sanction: Mr Barnett was struck off as dishonesty and other allegations were made out, even though it was not motivated by personal gain. The Tribunal found that prospective and actual clients reading about solicitors behaving in such a way were likely to think again before taking legal advice.

√جª¬ø‘If it sounded too good to be true it almost certainly was too good to be true’, as both Respondents had found to their cost.√جª¬ø

Lindsays from Liverpool [Rehab4Life] 3 partners were struck off. They drew down £3.1m from a £15m facility, claiming that the agreement had been varied orally to allow the finance to be used for general funding. The Tribunal found that they should have spotted a fraud as the lender didn’t ask for security.√جª¬ø

-Christopher Hale [Roher and Co], where 60% had been owned by Tim Schools (who was also struck off) – Hale allowed some money to go to non solicitors of questionable integrity and whilst on notice that Axiom’s investment manager was dishonest√جª¬ø.

– Drake Legal  – Jason Libby used £456k from a £3m facility but the SDT believed his case that he thought he was entitled to do so. They also accepted his case that he wouldn’t have used the money if he had thought it was wrong. He had to pay costs  of £46k (reduced from £80k) even though he had to pay the sum of £215,000 back to Axiom.√جª¬ø

√¢‚Ä쬙      WE Solicitors: David Wingate and Stephen Evans were also cleared – as they relied on Richard Barnett who was at this stage acting for Axiom!

High Risk Investment Schemes/Use of client account as escrow

This is the most interesting area of recent case law, which coincides with a recent warning on the SRA website, issued on 21st September 2016, which refers to an earlier warning dated September 2013.

The warning ‘that those operating dubious schemes seek the involvement of solicitors to give their scams an impression of credibility or security’ was followed up by a press release that said These scams were a particular issue in the late 1990s to early 2000s and are now again becoming increasingly common. We have seen an increase in reports of such scams, with initial analysis showing reports having approximately doubled in the last eighteen months.

The SRA also issued a press release on 21st September 2016. Despite causing a firestorm of interest from the national press in a number of recent cases, there was no mention in the press release, of the confusion around the use of escrow accounts by solicitors.

The current rule
















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