By David Tew Solicitor
A couple have been granted permission to take accountancy firm PricewaterhouseCoopers to court in a professional negligence claim.
Sir Christopher and Lady Anne Evans hired PwC in 2001 to advise them on ways to avoid capital gains tax on the disposal of shares.
They were encouraged to use a “round the world” scheme, which involved the trust becoming resident for part of the tax year in a jurisdiction that did not tax capital gains and later in the year moving back to the UK.
PwC recommended Mauritius as a suitable destination to complete the transactions. However, it later advised Canada would be the better option.
On that basis, a Canadian trust was set up in 2001 and the shares were sold. The couple were then able to claim relief from capital gains tax on the basis of the advice given by PwC.
However, in 2005 HMRC opened an inquiry into the tax return.
In 2013, the Canada Revenue Agency informed HMRC that in fact, the trust, was not resident in Canada for tax purposes during 2001.
In 2014, HMRC notified Sir Christopher that he had an outstanding tax liability from the sale of the shares. In 2016 he paid £3.3 million in respect of the tax owed and statutory interest.
The couple brought a claim of professional negligence against PwC.
The firm applied to have the claim struck out, arguing the couple had no reasonable prospect of success because they were statute-barred under the Limitation Act 1980.
However, the High Court rejected the application. It ruled that the case could go ahead because the couple had a realistic chance of proving that they had no knowledge of any problem until March 2014.
If you would like more information about the issues raised in this article or any aspect of dispute resolution please contact David on 01228 516666 or email him here.