Britain's wealthiest financier, Michael Platt, and his hedge fund BlueCrest are suing their former lawyer for professional negligence — a claim filed in September last year against Malcolm Gammie KC, a senior tax barrister at One Essex Court, and now heading toward a Commercial Court trial.

The lawsuit is the latest turn in a long-running dispute between Platt, BlueCrest and HMRC over the tax treatment of earnings for senior traders and partners under a so-called partner incentivisation plan (PIP), a scheme that paid key staff through a structure designed to attract lower tax rates.

What went wrong in the tax fight?

Gammie represented BlueCrest, Platt, and the firm's former chief financial officer and partner, Andrew Dodd, in the First Tier Tribunal in 2017 and again in the Upper Tribunal in 2021. When the case reached the Court of Appeal in 2023, the judges ruled that senior traders and partners at the firm must pay income tax on the incentive plan rather than the lower corporation tax rate BlueCrest had been paying.

The judgment was blunt about Gammie's legal approach. The judge criticised an analogy Gammie drew between the PIP and a partner who withdraws capital from the partnership, describing it as "not exact" and "apt to mislead."

At a case management conference on Friday, the Commercial Court heard issues concerning tax treatment linked to Platt's 2010 decision to move the hedge fund's operational headquarters from London to Geneva for tax purposes.

What does the trial need to decide?

According to BlueCrest's barrister, the trial will assess whether Gammie acted negligently by failing to advise Platt and Dodd to use Swiss tax residency arguments during the HMRC dispute — and whether this failure led to "a lost opportunity" to pursue different legal arguments.

The court must also settle a contested evidentiary question: whether Platt and Dodd's bank and credit card statements dating back 17 years should be used at trial. BlueCrest's barrister warned the exercise would be "both time consuming and could turn into an expensive wild goose chase."

He added that if the documents "can be found, perhaps there will be thousands of pages, which might mean the defendant could make intrusive inquiries" about other matters beyond the core dispute.

Judge Mr Justice Stanley told the court the documents "should be included" but said "it will require careful thought to be given on how the bank statements are disclosed and how they are deployed if they are to be deployed in a public trial." The trial date has not yet been set.

Why this matters beyond BlueCrest

The negligence claim follows a separate landmark ruling in July, when the UK Supreme Court unanimously ruled against the hedge fund run by Platt, finding that partners in a Limited Liability Partnership (LLP — a structure BlueCrest uses) must be taxed as employees rather than as self-employed profit-sharers. BlueCrest now faces a near £200m tax bill as a result.

The Supreme Court rejected BlueCrest's argument that its partners were technically self-employed and therefore not subject to the same income tax and national insurance as normal employees. LLP members are normally treated as self-employed partners, meaning firms avoid paying the 15 per cent employer's national insurance contributions on their pay.

The ruling sent shockwaves through the professional services sector, the vast majority of which use the LLP structure, raising concern that firms could face hefty tax bills from HMRC. City AM has since revealed that the UK tax authority is actively writing to LLPs as firms race to reassess their members' tax status — even as both sides "hold their cards close to their chests."

Gammie and HMRC declined to comment. BlueCrest was contacted for comment.