Tax Disputes Briefing: Court Of Appeal Refuses To Reverse Artificial Tax Avoidance Scheme On Grounds Of Mistake.

• Published date: 18 August 2023
• Law Firm: Travers Smith LLP
• Author: Ms Emily Clark, Robert Fell, Kaleem Khan, Rachel Kitchman, Sophie Lloyd, Claire Prentice, Sarah Roman, Elena Rowlands, Mahesh Varia and Ian Zeider

In the recent case of Bhaur and others v Equity First Trustees (Nevis) Ltd and others [2023] EWCA Civ 534, the Court of Appeal (CoA) had to consider whether to allow taxpayers to undo, on the grounds of mistake, a voluntary disposition of their assets entered into as part of a tax avoidance scheme.

1 Background

Courts can set aside voluntary dispositions entered into by mistake. Caselaw distinguishes between mistakes (which can be set aside) and mispredictions (which cannot), with the former pertaining to the present or past circumstances at the time of entry into an arrangement and the latter to some possible future event. However, the distinction between the two can be fine.

Even if there has been...