The Overpaid Tax Litigation: Roadblocked

Abstract

AbstractOver the past two decades, English courts have construed section 32(1)(c) of the Limitation Act 1980 to extend the time for pleading a cause of action in mistake of law until a decision of a final court authoritatively resolves the point of law at issue. The Supreme Court in Test Claimants in the Franked Investment Income Group Litigation v Revenue and Customs Comrs held that this interpretation was illogical and erroneous. In construing section 32(1)(c), the focus of attention should not be on judicial decisions, but on the claimant's ability to discover that they had a worthwhile claim. Limitation begins to run once a reasonably diligent person in the position of the claimant could have known that there was a real possibility that a mistake of law had been made. This welcome reinterpretation obviates the former mischief of judicial developments of the law extending causes of action for an indefinite period of time.