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A British real estate developer has sued PwC in the High Court in London. The allegation is that the company, one of the four largest accounting firms, provided “negligent” tax advice, which resulted in the company having to pay the British tax authorities a bill of three million pounds.

Revelan, a commercial property developer formerly backed by US investment manager Ares, is seeking around £6.6 million in damages, claiming the consultancy failed to correctly calculate the tax owed by the group over a five-year period, according to court documents seen by the Financial Times.

As a result of the errors, some of which PwC admitted in a letter to HM Revenue & Customs, Revelan was left with a total bill to the tax authority of around £3 million, consisting of outstanding tax debts, unpaid interest and penalties for late payment, the documents show.

This is the latest case against one of the Big Four tax advisory firms. Last month, rival EY reached an agreement with HMRC over alleged misrepresentations during negotiations with the tax authority.

In PwC’s case, the company admitted in a letter to HMRC in March 2023 that it had made errors in its advice to Revelan, which was disclosed in court documents.

The Big Four firm said that “our client’s tax affairs are complex” and that the errors were “regrettably overlooked due to the significant complexity of its tax affairs.”

It continues: “We consider that our client exercised reasonable care in the past by seeking advice from PwC in preparing its tax returns and that it could not have taken any further steps to prevent this error.”

“We therefore believe that the error was due to an error made by PwC despite the client exercising reasonable care and not to the negligence of our client.”

The case against PwC, set out in a 64-page court document with eight appendices, revolves around allegations that the firm, while acting as adviser, miscalculated Revelan’s tax liabilities and failed to properly index the so-called “tax residual value” of the group’s property.

In the March 2023 letter, PwC explained that due to “historical errors… additional indexation allowances were claimed on various property disposals, which subsequently increased the capital losses claimed on the disposal of a number of properties.”

Revelan argued that “PwC failed to exercise due skill and care in providing tax compliance and advisory services and acted negligently and in breach of the duty of care owed by PwC to the group companies.”

This is the first major lawsuit against PwC’s UK business since Marco Amitrano, the former head of management consulting, took over as senior partner in July.

PwC has not yet filed its response with the court and said: “We will vigorously defend this action.”