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HMRC internal manual

Trusts, Settlements and Estates Manual

HM Revenue & Customs
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Introduction to trusts: claims about error relating to trust: error made by trustees (the ‘rule in Hastings-Bass’)

Where trustees act in error, with the result that they incur more tax than anticipated, the parties involved may then seek to overturn their actions through the Court by invoking the principle in Hastings-Bass. In such cases, the parties may ask whether HM Revenue & Customs wants to be joined as a party to the proceedings.

The Supreme Court decision in the appeals of Futter and another v HMRC and Pitt and another v HMRC [2013] UKSC26 removed the possibility of trustees invoking ‘Hastings-Bass’ merely to get round an error based on incorrect tax advice. If the trustees have taken advice and it turns out to be wrong, that is not enough for the Court to make their action void. It is only if the trustees have acted in breach of fiduciary duty that the Court may consider whether to declare the action void.

Refer any cases involving errors made by trustees/the ‘rule in Hastings-Bass’ to Trusts & Estates Technical Bootle for advice.