The taxpayer made a large capital gain on the sale of some shares acquired under an employee share scheme and declared the gain and paid the tax in accordance with HMRC’s published view at the time. In a subsequent court case (Mansworth v Jelley, CA 2002, 75 TC 1; [2003] STC 53; [2002] EWCA Civ 1829), the Court of Appeal found HMRC’s practice to be incorrect and so the taxpayer made an error or mistake claim under TMA 1970,s33. HMRC rejected the claim on the basis that the tax was declared and paid in accordance with prevailing practice at the time and an error or mistake claim was therefore precluded by TMA, s33(2A). The taxpayer appealed, contending that he was entitled to make a restitutionary claim under common law for recovery of the tax paid by virtue of a mistake in law.
It was held that the taxpayer was not entitled to make an error or mistake claim. It was observed that TMA, s33(2A) was there to protect the public revenue and if there was no control over claims, there was the possibility that substantial claims could be made against the public purse due to subsequent developments in case law “many years after it had been spent”.