THE SUPREME COURT has criticised PwC over its role in two high-profile residency cases.
Robert Davies and Michael James were found to be non-resident in the 2001/02 tax year as part of the same ruling that found against Robert Gaines-Cooper. The issues hinged over whether they were resident according to the Inland Revenue’s IR20 guidance.
The Lord Justices criticised the Revenue for the lack of clarity in the guidelines. However, Lord Wilson, the lead judge in the case, drew attention to the sentence in the guidance that said: “If you have any difficulty in applying the rules in your own case, you should contact an Inland Revenue Tax Office.”
Wilson added there was “no sign” that Gaines-Cooper’s professional advisors contacted the Revenue. “Nor did [Davies & James], who were at all material times advised by PricewaterhouseCoopers, seek such advice,” he said.
Lord Walker went further in his criticisms. “The appellants had expert professional advisors, and it was well known to them that a large amount of tax was at stake. The guidance of IR20 is far from clear,” he said.
“Yet there is no suggestion that any attempt was made to seek clarification from an office of the Inland Revenue, still less that any specific guidance or assurance was given on the particular course of action proposed by the appellants. It seems possible that the preferred strategy was to let sleeping dogs lie, despite the obscurity of parts of IR20” he said.
However, Lord Wilson praised Davies’ and James’s approach in applying for judicial review before taking the case to the first-tier tribunal.
PwC declined to comment on the issue.
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