Francisco Alvarez & Shofiq Miah on the importance of bearing in mind the taxation consequences when dealing with damages
- A recent High Court decision has underlined the importance that any assessment of damages should always include an analysis of the tax consequences.
- An adviser’s failure to identify the relevance of taxation in the calculation of damages and advise their client accordingly could come back to haunt them.
The recent case of Mathieu v Hinds and another [2022] EWHC 924 (QB), [2022] All ER (D) 66 (Apr) is a valuable reminder that in an action for damages—whether before a judge, an arbitrator or in settlement negotiations, and whether you are the claimant or the defendant—it is important to give serious thought to how taxation may affect the outcome.
It may seem odd to think of tax in a case where the underlying subject matter has nothing to do with tax, but in fact tax should almost always be a consideration. This is because the exercise of calculating damages is an exercise of addition and subtraction in seeking
