PwC faces lawsuit from property developer over ‘negligent’ tax advice
PwC is facing a lawsuit from Revelan, a UK commercial property developer, alleging that the firm provided “negligent” tax advice that caused Revelan to face a £3m tax bill.
Revelan, which was previously backed by US investment manager Ares, is seeking £6.6m from PwC, according to reports from the Financial Times.
The company claimed that PwC had “failed to accurately calculate tax due” over five years, according to court documents seen by the FT.
This is the auditor’s first major lawsuit for PwC in the UK since Marco Amitrano, the firm’s former head of clients and markets, took over as UK senior partner last month.
One letter revealed in the court documents was sent by PwC in March 2023 to HMRC, where the Big Four firm admitted that “the tax affairs of our client are complex” and the errors “were unfortunately missed due to the significant complexity of their tax affairs”.
It added: “We believe that our client took reasonable care historically by taking advice from PwC in preparing the tax returns and they could not have taken any further action to prevent this error from happening.
“We therefore consider the error to have arisen as a result of a mistake made by PwC despite the client taking reasonable care and do not consider it to have been as a result of carelessness on the part of our client.”
The mistakes left Revelan with a bill of around £3m due to outstanding tax liabilities, unpaid interest and penalties for late payment.
In the letter, PwC claimed that because of “historical errors . . . additional indexation allowance has been claimed on various property disposals, which consequently increased capital losses claimed on the disposal of a number of properties,” the FT said.
Revelan argued that “in provision of tax compliance and consulting services, PwC failed to exercise reasonable skill and care, and acted negligently and in breach of the duty of care which PwC owed the companies in the group”.
In a statement, PwC told City PM: “We will be robustly defending this claim.”