Since 2014 HMRC appears to have won every single high profile case it brought. Tens of thousands of high net worth individuals who had entered, in good faith, into arrangements that they were led to believe would result in legally enforceable tax mitigation schemes suddenly found, years later, that they are not enforceable. The Finance Act 2014 brought in Accelerated Payment Notices. These have enforced the underlying principle of “pay first, challenge/argue later”. The cases involving tax avoidance have predominantly resulted in decisions that were not favourable to the high net worth individuals. The negative message this has conveyed has discouraged many from not seeking legal advice, either because they believe nothing can be done or the people who actually sold them the schemes have advised them not to seek legal advice.
A 2014 case shows that such individuals are able to seek damages from those that misled them, were reckless as to the dangers, did not undertake their role properly or who were actively negligent. Bieber & Others v v Teathers Limited (In Liquidation) 2014 EWHC 4205 (Ch) is a case that demonstrates that even if the tax avoidance scheme fails, the resulting action from those involved should not despairingly capitulate but with resolve identify those against whom an account should be sought following the benefit of review and discussion with a law firm known for being effective and experienced in this technical field. .
The Bieber case consists of a group of 220 high net worth individuals who invested in a series of film and television production partnerships formed by the Defendant and which were known as the “Take” partnerships. The 220 people invested £20 million. The schemes ultimately invested in the wrong products, made huge losses and did not achieve the tax advantages that were expected, so they all collapsed. The members of the partnerships sought damages from the defendant company that sold them the scheme. That company went into administration.
An agreement was reached between the parties that the claimants would settle for £10 million that the scheme had remaining. It was half of the sums put into the scheme, but it shows that a compromise can be reached and the losses suffered by the individuals that have been advised to invest in such film and music production companies can successfully pursue the company and the people behind such schemes. We often find that there are many potential defendants for such issues including the scheme itself, others who set up the scheme and, more especially, those that actively sold the schemes. As noted here, in appropriate cases where there is a real commonality of fact and legal issues it is even possible to bring multiple claimants together to mitigate some of the costs of litigation.
berg has been at the forefront of litigation for 35 years. berg’s litigation team is highly experienced in financial claims litigation including issues in relation to tax avoidance.
If you are or were a party to schemes that you believe have been over-turned or are being challenged by HMRC we recommend that you speak now to a member of berg’s litigation team. We work in partnership with tax advisors and can assist you if you receive an APN or if you are faced with the possibility that a scheme you are a party to is being challenged by HMRC. We can assist you in reaching a practical and commercial outcome with HMRC and consider a claim against the provider of the scheme or your financial advisor.
To find out more about the issues raised in this post, or to discuss any queries regarding banking and financial disputes please call +44 (0) 161 829 2599 email firstname.lastname@example.org
The information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by berg or any of its partners or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.