Jurisdiction(s):
United Kingdom

Assumption of responsibility—Court of Appeal (England and Wales) holds tax barrister owed no duty to film scheme investors; unequivocal advice would have breached any duty (McClean v Thornhill)

Published on: 02 May 2023

Published by a LexisNexis Tax expert

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Article summary

David McClean and others v Andrew Thornhill KC [2023] EWCA Civ 466

The appellants belonged to limited liability partnerships (LLPs) established specifically to obtain and exploit distribution rights in films. Prospective investors were pitched the Scheme by the promoter, as presented on the footing that, as members of an LLP, they would qualify for tax relief on trading losses the LLP was expected to incur, which they could set off against their own personal income or capital gains, thereby reducing their tax liabilities. The Scheme’s promoter retained Mr Thornhill to produce a series of opinions addressing the tax consequences of the arrangements. HMRC disputed the supposed purported fiscal advantages of investing in or participating in the Scheme, contending the LLPs were not conducting trade on a commercial footing with an intention to make a profit. In 2017 the investors concluded a settlement with HMRC. They then pursued a claim in the tort of negligence against Mr Thornhill, asserting that the advice he provided to the promoter, and which was passed on to them, was negligent and amounted to a breach of duty...

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