In a decision which should reassure professional and their insurers across the board, Plexus Law’s professional indemnity team, led by Peter Court and Alasdair Dick, successfully defended a claim, alleged to be worth nearly £8m, brought against accountants that had given advice in relation to a number of tax planning schemes.
In Halsall & Ors v Champion Consulting & Ors  EWHC 1079 (QB) Her Honour Justice Moulder (as she now is) held that four claimants bringing allegations of negligent tax advice, were time-barred from bringing their claims on three grounds:
- First, she held that they had suffered actual loss at the time they had entered into the schemes as, at that point, they were tied into the ‘commercial straitjacket’;
- Second, she held that the Claimants had sufficient knowledge to cause them to ‘begin to investigate’ the advice more than three years before issuing proceedings; and
- Third, albeit obiter because of her decision on (ii), that a clause in the Defendants’ standard terms and conditions, removing the protection offered by s14A Limitation Act 1980, was validly incorporated into the contract and was reasonable for the purposes of UCTA 1977.
The Claimants sought permission to appeal that decision on the basis that the Judge had not correctly applied the limitation test and sought to overturn her ruling on limitation.
The Court of Appeal refused permission to appeal on each ground. In the Order refusing permission, Lord Justice Patten held that “by 2011 some investigation into the accuracy of the advice they had received was called for” (emphasis added) and that it was sufficient that “the Revenue had notified the three claimants… that there were numerous grounds for challenging the scheme…”.
Views of that nature emanating from the Court of Appeal should embolden tax advisers facing claims in which Claimants have previously received enquiry letters from the Revenue, setting out (even in cursory detail) some of the reasons for which they say they do not accept the relief claimed is legitimately recoverable.
While that should be very encouraging for tax advisers, particularly as these claims continue to age, the decision serves as a wider reminder that the trigger for Claimants’ s14A limitation arguments rests on the date on which it was reasonable for them to begin to investigate whether the advice may have been flawed (rather than having knowledge that they have suffered a loss) and, dependent on the terms of that advice, that may be a very high hurdle for Claimants.
If you would like to find out more about this case, please speak to your usual Partner at Plexus or:
Alasdair Dick, Partner
T: o2o 7220 5832
Peter Court, Partner
T: 020 7220 5808