Lawful mistake

THE POSITION ON the limitation period applicable to claims to recover payments made under a 'mistake of law' has been confirmed by the House of Lords in Deutsche Morgan Grenfell Group plc v CIR and another. The judgment was made in the context of tax payments but it has important general implications for any kind of payments made under a law which is subsequently found to be unlawful.
It also raises interesting questions over the nature of tax payments where a taxpayer structures his affairs under a mistaken apprehension as to which structures can and cannot lawfully be adopted. Can payments made as a consequence of a failure to take steps which would have been lawful really be characterised as payments made under a 'mistake of law'? A majority in the House of Lords indicates that it may be possible to do so but the position is...