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Revisiting the principles of equitable mistake

Simon Davies, Michael Rogers, and Sandie Lyne consider the Guernsey case of Gresh v RBC Trust Company on mistakes as to tax consequences

3 May 2017

In a recent decision, the Royal Court of Guernsey considered whether to set aside a distribution on the grounds of equitable mistake where that mistake led to adverse UK tax consequences. This is the first time that the principles of equitable mistake have been considered in Guernsey since the seminal decision of the UK Supreme Court in Pitt v Holt [2013] UKSC 26.

The facts of Gresh v RBC Trust Company (unreported) can be summarised as follows. Mr Gresh was a member of a pension plan administered by a Guernsey trustee. He had been advised by independent tax advisers that any lump sum distribution made to him would be tax free provided that the distribution was not remitted to him in the UK. When he turned 50, Mr Gresh requested a lump sum distribution from the trustee of his pension fund.

The trustee believed the advice to be accurate and gave instructions for the requested transfers t...

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