Poorly advised investors told to act now

Investors who have previously used tax schemes which are now being scrutinised by HMRC only have six years from the date of investment to claim that they were 'badly advised'.

Once a claim becomes 'statute barred' after the six year limit, it becomes very difficult to claim against an investor, even though HMRC are only now resurrecting historic investments.

In February 2015 the Court of Appeal unanimously ruled against the Eclipse Film Partners No.35 tax-planning scheme, resulting in every investor having to pay all the tax due, as well as interest on top.

However Dominique Dolman, a lawyer at Irwin Mitchel, has said that in certain circumstances, a claim can be pursued after the cut-off period.

'Section 14A of the Limitation Act 1980 allows the investor three years to pursue a claim from having 'knowledge' of the negligent act. The investor must have knowledge of the 'factual essence of the act or omission' which caused his loss', she said.

'He does not need to know the precise details of the alleged negligence but he does have to have enough information to make it reasonable to begin investigating a potential claim against the financial advisor.'

Financial advisers have a duty to use reasonable skill and care when advising clients and setting up tax planning structures.

The more intricate and complicated the investment scheme is, the more exposed the adviser becomes to claims, as the lay investor is unlikely to have such sophisticated knowledge.

It is extremely likely that investors in similar Eclipse schemes will be issued with 'follower notices' and subsequent accelerated payment notices by HMRC, which could further increase claims against advisers.

Binyamin Ali is assistant editor of Private Client Adviser