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Bhaur: Setting aside a transaction on the grounds of mistake

It was a mistake

Key points

  • Bhaur concerned a tax avoidance scheme involving the establishment of an employee benefit trust.
  • A key takeaway of the case is that the English courts remain receptive to claims to set aside voluntary transactions on grounds of mistake.
  • In Pitt v Holt Lord Walker considered the question of whether there were some types of mistake about tax that should not attract equitable relief.
  • The Court of Appeal held that the Bhaur family had made a deliberate decision to implement the scheme knowing that there was a risk that it might fail to achieve the desired tax benefits and that it may be successfully challenged by HMRC.
  • The court agreed with Lord Walker’s observations in Pitt v Holt that artificial tax avoidance is a social evil.

The recent decision of the Court of Appeal in Bhaur and others v Equity First Trustees (Nevis) Ltd and others [2023]...

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