Press Room

14 Jun 2022

Professional Negligence Decision in Favour of A Thornhill QC


Tax Investigations Partner, Andrew Park, examines the professional negligence decision in favour of A Thornhill QC.

Participators in marketed tax avoidance arrangements have had a dismal time of late.  Further to landmark cases – like RFC 2012 Plc (in liquidation) (formerly The Rangers Football Club Plc) v Advocate General for Scotland – and a more purposive and arguably equity-based change in the judiciary’s approach, HMRC’s current success rate in litigating avoidance cases now stands north of 90%.

Given the spectacular success of HMRC in litigating against schemes it is little wonder that many participators now feel they were mis-advised at the outset. Having lost their battles with the taxman some are now seeking recompense against advice they feel they should have been entitled to rely upon. However, the latest professional negligence case against Andrew Thornhill QC – D McClean and Others v A Thornhill QC [2022] EWHC 457 (Ch) – has not gone the way the claimants hoped. Indeed, the High Court gave them short shrift.

In any negligence claim, against a professional or otherwise, claimants must demonstrate four fundamental things:

  1. duty of care – a duty of care was owed by the other party to the claimant;
  2. breach – such a proven duty was breached;
  3. damages – a loss was suffered by the claimant as a result of the breach;
  4. causation – the loss suffered was a direct one sufficiently proximate to the breach.

Even where the four tests are met, complex limitation rules also apply which can leave claimants time-barred from obtaining redress.

In this instance, the 110 claimants who had invested in the Scotts Atlantic Distributors film schemes via Independent Financial Advisers, argued with 10 sample claims that Mr Thornhill’s consent in 2003/04 to allowing a copy of his opinions to the sponsor of the schemes to be made available to potential investors amounted to an assumption of a duty of care to them and that he breached that duty, causing them to lose the majority of their investments when HMRC later rejected the schemes.

The claimants were found to fail all the tests – even the first one. The Judge found that it was not reasonable for investors to rely upon Mr Thornhill instead of their own professional advisers, and it was not reasonably foreseeable by Mr Thornhill that they would do so. Even if a duty had been owed, the Judge held that such a duty would not have been breached.

What is more, many of the claims would have failed anyway on limitation grounds. The Judge rejected the argument that causation had not arisen until the claims were rejected by HMRC (on the basis that they were only contingent until that point) and he rejected arguments that any continuing duties kept the window open.

On a broader point – beyond the specifics of this case, the saga and that of so many other schemes similarly advised upon by so many other eminent Counsel, serves as a salutary reminder that even the most distinguished QCs can only seek to interpret the vagaries of the law like everybody else.  Their intellect, knowledge and experience of the courts make them more likely to be right in their conclusions more often. However, they are not magic divining rods. This is particularly so where many marketed avoidance arrangements are concerned in light of the recent sea change in the collective mindset of the judiciary against anything they regard as contrived or designed to rely on narrow literal statutory interpretation to achieve outcomes judges might find morally perverse.

For good or ill, in the current environment taxpayers and their advisers must now consider before embarking on any arrangement to avoid, mitigate or defer UK tax whether it deserves to succeed as well as whether it technically should.  If not, and QC’s opinion or not, they must accept a realistic likelihood that the judiciary will look for a way to make the arrangement fail were it to come before the courts.

Please contact Andrew M Park for additional information with respect to this article.


Andrew Park

Andrew is the Tax Investigations Partner at Andersen LLP. He specialises in providing solutions to tax problems and resolving investigations and voluntary disclosures with HMRC.

Email: Andrew Park