Media & Resources

The Supreme Court reviewed the case on the “mistakes” of tax consultants

DATE: March 25, 2024 | AUTHOR: AT

Russian Supreme Court has resolved the case of the Novosibirsk firm “Posuda-Center Service” against the Moscow branch of the audit and consulting chain Ernst & Young (EY, since 2022 – B1) recovery of damages for providing improper tax advice. The firm faced additional tax assessments.

The Supreme Court noted that in determining the extent of a consultant’s liability, the degree of his professionalism and the usefulness of the services rendered should be taken into account. In the case, as the SC put it, of the “blameworthiness” (unprofessionalism) of the rendered services of tax consultants, which affected the very essence of the performed obligation and deprived the contract of usefulness for the customer, the contractual exemption clauses should not apply. On the other hand, the Supreme Court of the Russian Federation pointed out, the client’s actions should also be assessed – if he could have minimized the damage but did not do so, it is unfair to impose all liability on the consultant. The SC of the RF sent the case back for a new examination.

The case is new in judicial practice. Such cases are usually resolved in favor of consultants since service contracts provide for the consultant’s liability exclusion.

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