Reference no: EM13852990
. In 2002 Andrew Adams founded a business known as "Best Home Loans Group" ("BHLG"). BHLG provides various financial services, including the granting of home loans.
. ?In 2009 Andrew purchased a large piece of land in Point Piper. Soon after, Andrew commenced the construction of a new home on that land. Andrew expected that it would take three years to build the home and require $4 million in funding, which Andrew would need to borrow as he had insufficient funds of his own.
. He planned to borrow the $4 million from BHLG. Andrew obtained legal advice from Bob Bailey, a solicitor with an expertise in taxation law, about how to borrow funds from BHLG in a tax-effective way.
. Bob prepared a letter of advice outlining a complex arrangement that he believed would be a tax- effective way for Andrew to borrow $4 million from BHLG. Bob was confident, although not completely certain, that the arrangement did not breach any tax laws.
. The letter was written and signed by Bob. Due to having many other clients demanding his time, Bob worked on the advice on a short timeframe and he did not include in the report the availability of other possible arrangements for Andrew to borrow the $4 million.
. Andrew acted upon the advice and during the financial years ended 30 June 2011, 30 June 2012 and 30 June 2013, he borrowed $4 million from BHLG in the manner proposed by Bob.
. In late 2013, the Australian Taxation Office ("ATO") commenced a review of Andrew's taxation affairs as part of a process of scrutinising the taxation affairs of high net worth individuals. The manner in which Andrew had borrowed from BHLG attracted the ATO's attention. The ATO commenced an audit of his affairs.
The advice that the borrowing arrangement would be tax effective was wrong. This led to a finding of illegal tax evasion by Andrew. Consequently, Andrew had to pay a substantial amount of tax, penalties and interest charges to the ATO.
Advise Andrew about any claims he may have against Bob in tort.
THE 'FIVE STEP' PLAN
KEY FACTS
. RELEVANT ISSUES
. KEY LEGAL PRINCIPLES
. APPLICATION OF THE LAW TO THE FACTS
. TENTATIVE CONCLUSION
USE 2-3 CASES EXAMPLES
MAKE IT AT LEAST TWO AND A HALF PAGE.
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