PwC sued by Matalan founder over Monaco move tax advice
The founder of U.K. discount retailer Matalan Plc is suing PricewaterhouseCoopers over claims he lost as much as 135 million pounds ($165 million) by relying on advice the accounting firm gave him when he moved to Monaco 20 years ago.
John Hargreaves says in a London lawsuit that U.K. revenue officials rejected his bid to take non-resident status and avoid most taxes in the country. He said in a court filing this week that he “placed his complete trust and faith” in PwC as his tax advisers during the period.
The lawsuit is the latest bit of unwelcome scrutiny for one of the so-called Big Four accounting firms, which have been bombarded with criticism over the quality of their auditing and advice in recent years. Earlier this month, the administrators of now defunct Carillion Plc asked for documents from KPMG to prepare for a negligence lawsuit against the accounting firm.
Around the turn of the century, Hargreaves decided to permanently move to Monaco and to become a non-resident in relation to his taxable status in the U.K. with effect from April 2000 onwards.
But several years later, HM Revenue & Customs decided the steps he had taken were not effective and that he was still a U.K. resident and thus remained taxable.
PwC, which is seeking to throw out aspects of the case, said in a statement it believes the lawsuit will ultimately fail. Hargreaves declined to comment. The Financial Times reported on the lawsuit earlier.
A large part of the case, which was originally filed in 2012, is focused on the loss Hargreaves believes he suffered when selling part of his shareholding in Matalan in 2000, the net proceeds of which amounted to 237 million pounds. He intended to sell the stake as a non-resident and PwC actively encouraged him to do so, his lawyers said at a court hearing this week.
If HMRC’s assessment of what Hargreaves owes in tax is correct, his loss in relation to that tax year will be around 135 million pounds, including interest to date, his lawyers said.