- William Kanaan
Court finds QC not liable to third parties for tax-avoidance advice
The case concerned claimants who were a group of wealthy individuals who had invested in excess of £100 million in tax-avoidance schemes to offset £40 million of tax liabilities. They brought claims in negligence against a tax barrister who had acted as adviser to the promoters of the schemes (QC). The QC had not advised the claimants but they argued that he had owed them a duty of care because his advice had been referred to in the information memoranda and made available to potential investors on request.
Judgment was handed down in March 2022, and the judge rejected the claims at almost every level, holding that there was no duty, no breach and no causation of loss. The claimants appealed to the Court of Appeal.
The Court of Appeal dismissed the appeal on all grounds. In considering the case, the court applied the conventional principles that for a professional to assume a duty to a non-client recipient of advice, it must have been: (a) reasonable for the recipient to rely on the advice; and (b) reasonably foreseeable to the professional that the recipient would rely on that advice. Such cases are determined on their facts and require a consideration of the relationship between the parties, the circumstances in which the recipient obtained the advice, the communications which surrounded the sharing of the advice, and whether it was reasonable for the third party to rely on the advice without independent enquiry.
McClean and others v Thornhill  EWCA Civ 466