Bring in an Expert

Tax is complex and the financial consequences of a mistake can be catastrophic. Deciding where the legal liability for the consequences of such a mistake lies itself calls for high levels of professional knowledge and judgement, and those who specialise in litigation cannot be experts in revenue law and practice.

The court, in reaching its decisions in such cases, must form a judgement on many matters requiring professional experience in the practice of taxation. In cases concerning negligent tax advice, the litigator and the court require the aid of an expert.

The courts have heard expert evidence at least since the sixteenth century (see Buckley v Rice Thomas (1554) 1 Plowd 118).

An expert witness falls into a special category governed by Part 35 of the Civil Procedure Rules (CPR) and the Practice Direction ‘Experts and Assessors’. Guidance on their application is given by the Civil Justice Protocol for the Instruction of Experts to give Evidence in Civil Claims.

An expert witness will owe a contractual duty to the party engaging his services under normal contractual principles, but his overriding duty is to help the court in matters within his expertise.

Under CPR, Part 35.1, ‘expert evidence should be restricted to that which is reasonably required to resolve the proceedings’. Without the court’s permission an expert cannot be called to give evidence and an expert report cannot be put in evidence (see CPR 35.4 (1)). Even if the evidence is admitted, R v Rivett (1950) 34 Cr App Rep 87 determined that the weight attached to it is a matter for the court.

However, in Samson v Metcalfe Hambleton & Co [1998] 26 EG 154, it was held that a court should be ‘slow to find a professionally qualified man guilty of a breach of his duty of skill and care towards a client… without evidence from those who are in the same profession as to the standards expected on the facts of the case and the failure of the professional qualified man to measure up to that standard’.

More Information

Determining the Law

It is the court’s task to determine the effect of the law of England and Wales in respect of the fact s relevant to the case.…

Duty

In the Example, did the accountants BJS, have a duty to give correct advice in respect of the consequences of the proposed transaction for the EIS…

Breach of Duty

If BJS did have a duty to advise on the EIS consequences of the property transaction, should BJS have warned Mr Glucose that if the transaction…

Causation

BJS’s litigating solicitor will want to examine closely the question of reliance on the advice. If Mr Glucose would have proceeded with the transaction even if…

The Income Tax Liability

Quantifying the damage suffered if the advice was negligent and Mr Glucose relied on it is rather more complicated than it looks. One might think that…

A Deferral, not an Absolute Liability

BJS might argue (see TCGA 1992 Sch 5B para 3 (1)) that relief under s. 150C only defers liability until a later disposal of the shares.…

Carbon's Remuneration

The really interesting issues as to quantum, however, arise in respect of the prior transaction with Carbon. Any transaction with Carbon, which would be a return…

The Replacement of Value

Paragraph 13B provides that where there has been a return of value, the return of value is reduced to the extent that the value is replaced…

Example case

Mr Glucose is a director and owns the entire share capital of two companies, Industrial Cider Limited (ICL) which manufactures industrial cider, and Glucose Properties Limited…
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