An experienced solicitor has been cleared of any wrongdoing over his involvement with three stamp duty land tax avoidance schemes.
The Solicitors Disciplinary Tribunal rejected a number of allegations made against Jonathan Mounteney, saying he had made enough checks to make sure he was not in breach of regulatory obligations.
He had carried out reasonable due diligence into the schemes and their promoters, who had been involved in hundreds of transactions previously with no apparent difficulty. He did not know one of the schemes would turn out to be bogus and had no reason to believe it was so. He had weighed up the risks, spending days scrutisining and analysing the schemes, and taken counsel's advice to ensure compliance.
Mounteney was charged with a number of allegations, including failing to carry out diligent enquiries into the schemes or their providers, failing to respond to concerns about the schemes and subordinating the interests of clients by receiving payment for his promotion of the schemes.
A solicitor for more than 25 years, Mounteney was a director of Cheshire practice Hargreaves Mounteney Ltd since 2008 and the firm’s compliance officer. He was approached 10 years ago to act for trustees of trusts created in conveyancing transactions: in one scheme he would go on to act in total on 625 transactions and receive fees of £262,700. In another scheme, he acted for a ‘partnership’ made up of the purchaser and a special purposes vehicle company, receiving £12,375 in fees.
In cross-examination, Mounteney denied promoting or facilitating any scheme. He relied at the time on advice from counsel which seemed to confirm there was no regulatory breach from acting on the schemes.
The SRA said initial counsel advice had been compromised because Mounteney did not disclose all the information, and as a whole the advice demonstrated the inappropriateness of his conduct. The tribunal heard submissions that Mounteney promoted the schemes without making checks or responding to ‘red flag’ warnings. The firm had produced the individual scheme documents, drafted by Mounteney, and the SRA argued he ‘deployed the prestige of the profession’ to promote the schemes.
Mounteney told the tribunal he had taken care to work through one scheme and had no reason to believe it was fraudulent. Another scheme came with an 80-page opinion from counsel and was entirely genuine.
Both parties made applications for costs, with Mounteney arguing that the SRA’s case had been ‘prolix and lacked clarity’. This submission was rejected by the tribunal, which ruled that each side pay their own costs but no more.