Patrice de Camaret, a former executive at Grupo BTG Pactual, sued Ernst & Young LLP over an unsuccessful bid to reduce his taxes using charitable donations of about 6.8 million pounds ($11.2 million).
De Camaret said in a lawsuit that British revenue officials rejected his bid for tax relief after E&Y mishandled his 2010 and 2011 returns. Her Majesty’s Revenue & Customs investigated De Camaret and intends to “impose penalties,” according to the suit filed Dec. 6 in London and released last week.
De Camaret left BTG in 2010, the year after the Brazilian bank bought his London-based hedge fund firm Lentikia Capital LP, which managed about $700 million. Lawyers from De Camaret’s law firm, Macfarlanes LLP, contacted his tax advisers at E&Y in 2009 saying he wanted to set up a charitable foundation, according to an e-mail cited in his claim.
“He hopes to be able to reduce significantly, or if possible eliminate, his income tax liabilities for 2008/09 and 2009/10 by means of gift-aid payments,” Macfarlanes said in the e-mail.
Under a British tax break called “gift aid,” high-income taxpayers can pay lower rates for the value of any donations to charity. The charities also benefit as they can reclaim money from HMRC based on the taxes paid by the donor.
Simon Brooks, the Eversheds LLP lawyer representing De Camaret in the E&Y lawsuit, didn’t respond to calls and e-mails seeking a comment. Vicky Conybeer, an E&Y spokeswoman in London, declined to comment.
E&Y didn’t warn De Camaret that he wouldn’t be able to claim relief if he missed a Jan. 31, 2010, filing deadline, and put the donation in the wrong section while preparing the tax return, according to the lawsuit.
De Camaret’s ABCD Charitable Trust received about 8 million pounds in the year ending April 2011, spending about 540,000 pounds, according to the U.K. Charity Commission register. Most of its funds go to educational projects in Brazil for people with dyslexia, according to the commission. Last year it received about 26,500 pounds and spent more than 800,000 pounds.
The case is Patrice de Camaret v. Ernst & Young LLP, High Court of Justice, Chancery Division, Case No. HC13C05306