A legal action has been launched against PwC by a UK-based property developer amid accusations of negligent tax counselling, leading to a hefty bill of £3 million (€3.5 million) from the UK’s tax body. Revelan, an erstwhile Ares-supported commercial property developer, is set to claim roughly £6.6 million (€7.8 million) as compensation for losses and damages — the consequence of the consultancy firm’s alleged miscalculations of the group’s tax over half a decade, as revealed through court papers procured by the Financial Times.
PwC, part of the elite Big Four, conceded making mistakes in the tax advice given to Revelan in a letter to HM Revenue & Customs, which accordingly led to a bill amounting to approximately £3 million for outstanding tax liabilities, delayed interest payments, and late payment penalties for Revelan.
The scenario brings attention to a line of legal suits faced by Big Four consultancies concerning their tax advisory services. Its competitor, EY, recently settled a lawsuit with the HMRC over claims of false assertions during tax settlement discussions.
Admitting the mistakes in its advice provided to Revelan in a March 2023 dated letter to the HMRC, disclosed as part of the court papers, PwC cited the intricate nature of its clients’ tax matters led to the unfortunate overlook. The firm asserts that despite the company taking reasonable care to follow PwC’s instructions in preparing the tax returns, it could not have prevented the errors from occurring. PwC accordingly characterized the error as a consequence of its own mistake and not due to negligence on its client’s part.
In a 64-page court filing complete with eight appendices, a case against the professional services provider PwC has been laid out. The case focuses on PwC’s purported misjudgement of the tax responsibilities and inaccurate indexing of ‘tax written down value’ of Revelan’s assets while providing advisory services.
In a communique dating back to March 2023, PwC confessed its previous mistakes had led to claims of additional indexation allowances on property transactions, subsequently amplifying capital loss claims on certain property disposals.
The group, Revelan claimed that PwC fell short in delivering their duties with adequate skills and care while providing tax compliance as well as consulting services. The firm is allegedly liable for acting carelessly and breaching the duty of care owed to several group companies.
This is the inaugural significant legal challenge faced by PwC’s UK operations under the new senior partner’s leadership. Marco Amitrano, previously the firm’s consulting head, took over the top position in July.
PwC, which has not yet submitted its defence to the court, communicated that it would firmly contest the accusations.