With the Court of Appeals ruling revoking the right of trustees to undo poor tax decisions, a surge in claims from people seeking to sue their adviser could mean a rise in insurance premiums for IFAs.
One legal expert said that trustees could no longer use the Hastings Base rule, which gave them protection and allowed them to go to court and admit they made a mistake but did not realise the financial consequences.
The Court of Appeal has ruled that is wrong for HMRC to lose out on revenue due to poor decisions, provided that the trustees had sought professional advice.
This ruling means that now a trustee will be in the same position as an individual, and cannot reverse the decision as long as they have taken professional advice. This could lead them to suing their advisor.
The ruling he warned could lead to higher premiums for IFAs for their professional indemnity insurance, as the more claims there are then the higher the premiums will be as is the case for other insurances such as car insurance.
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