Words and Phrases - "at any time"

Mr Baxendale-Walker, the sole equity partner in a law firm specializing in advising on tax-avoidance schemes, charged the taxpayer (Mr Barker) a fee of £2.4 million in advising on a scheme which Mr Barker implemented with a view to avoiding capital gains tax and inheritance tax respecting his shares of a private company. More than a decade later, HMRC assessed Mr Barker on the basis of a construction (the “post-death exclusion construction") of s. 28 of the Inheritance Tax Act 1984 which considered “that the words ‘at any time’ meant exactly what they said” (para. 93). Mr Barker settled with HMRC for £11.3 million and issued a claim in negligence against the two respondents (Mr Baxendale-Walker and his since-defunct firm). Roth J below had found that Mr Barker would have proceeded with the scheme if he had merely been given a “general health warning” (i.e., that any tax avoidance scheme was subject to a risk of successful challenge), but not if he had been given a specific warning of the significant risk of the potential post-death exclusion construction.

The Court reversed the finding of Roth J that the post-death exclusion construction was likely incorrect. Turning to the negligence issue and in setting the stage, Asplin LJ stated (at paras 59 and 61):

…The question is whether in the light of all the circumstances no reasonably competent solicitor in the position of the Respondents would have failed to give the specific warning that there was a significant risk that the EBT arrangement would fail to be tax effective because of the post-death exclusion construction. …

…[I]t is perfectly possible to be correct about the construction of a provision or, at least, not negligent in that regard, but nevertheless to be under a duty to point out the risks involved and to have been negligent in not having done so … .

In allowing the appeal, Asplin LJ found (at para 71):

… [T]here was a significant risk that the … arrangement would not work as a result of the post-death exclusion construction which was centrally important to its structure and the likelihood that the promised tax advantages would be delivered. In all those circumstances, despite the fact that it is not alleged that the Respondents' view of the construction of section 28 was itself negligent, they should have given the specific warning. There was a significant risk that their advice was wrong and in all the circumstances, a reasonably competent solicitor would have gone beyond his own view and set out the risks.