The Thelwell case, recently decided by Boyle J. of the Tax Court of Canada ("TCC"), should caution taxpayers to be careful when seeking tax advisory and dispute resolution services. Boyle J. excoriated both the Thelwells' tax preparer / advisor, Rudolfo Terracina, and the agent who represented them before the TCC, Peter Tindall. It is an open question whether the Thelwells could have succeeded in their TCC appeals, but; Boyle J.'s comments suggest that they may not have been helped by their advisors.
The substance of the case was straightforward. The Thelwells operated a courier service. In 2007, they engaged Mr. Terracina to help with their tax filings. Mr. Terracina operated a tax preparation and advisory service under the name "Doctor Tax". Apparently, the Thelwells were unaware that he had previously pled guilty to tax evasion and been sentenced to three years in federal prison in connection with fraudulently prepared tax returns on behalf of his clients.In Boyle J.'s words, Mr. Terracina was using the term "Doctor... as a verb, not a title" and he "appear[ed] to have returned to his old ways... just because one holds oneself out as a tax professional does not make it so".
Boyle J. also minced no words in relation to Peter Tindall, the agent who represented the Thelwells in their TCC appeal, commenting that he compounded the Thelwells' predicament. According to Boyle J., Mr. Tindall did not seem to understand basic principles of litigation before the TCC, and that he did not have "any legal or paralegal training, experience or status [and] [h]is previous employment was in an unrelated area."
Further, Boyle J. stated pointedly that "Canadians are free to choose whomever they wish to represent them in informal tax appeals, and the right to choose includes the right to make poor choices. Unfortunately for the Thelwells, apparently as a result of their choice, there has been entirely insufficient evidence to allow me to conclude... that the underlying expenses were even incurred". He then observed that the Thelwells were not entirely blameless, since they chose the advisors whose approach led to the failed appeals to the TCC.
The Thelwell case is obviously a sobering and cautionary tale. The moral of the story may be that saving money on tax advice can be costly in the long run.