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Company directors whose businesses have suffered financial losses as a result of errors by HM Revenue & Customs (HMRC) should be able to sue for damages, as part of a landmark court ruling announced on Thursday.
The High Court ruled in 2006 that Neil Martin could not claim £50,000 in damages incurred due to numerous mistakes and delays by HMRC, because it has no duty of care when negligence occurs.
But the Appeal Court ruled last week that a duty of care does exist. The judges said that because one of the errors went "beyond an administrative mistake made in the ordinary course of processing" it was "fair, just and reasonable" that Mr Martin should seek compensation.
The ruling could open the way for taxpayers who have suffered losses as a result of administrative errors by HMRC, to sue the department for damages.
John Brazier, managing director of the Professional Contractors Group, told Tax News: "This is a complex judgment and like Neil, we are studying it closely to work out its exact implications.
"But in the meantime we can say that it seems to be, at the very least, a step in the right direction."
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