03 April 2025

Tax mistakes and rescission: lessons in disguise

Pitt v Holt remains the leading modern case on the law of rescission, although the established principles have been subject to subsequent judicial comment and refinement.

Ben Elliott and Arthur Wong‘s article for Tax Journal looks at recent cases such as JTC Employer Solutions v Garnett confirm that, where a taxpayer has entered into a transaction but has been mistaken as to its tax consequences, the attitude of the courts and tribunals is generally sympathetic to claims that the relevant disposition should be set aside.

However, the distinction between a mistake and a misprediction may require careful analysis, evidence of a conscious mistake (rather than mere ignorance) will be essential, and a contestable issue may need to be identified before embarking upon such a claim.

Furthermore, Bhaur v Equity First Trustees suggests that rescission for mistake is likely to be refused where the taxpayer deliberately ran a risk and, where the transaction constitutes artificial tax avoidance, such claims will prove significantly more challenging.

You can read a copy of the article here.

This article first appeared in Tax Journal in April 2025.