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Associate Director Camila Carvalho explores Centrica v HMRC and the utility of Tax Insurance

Associate Director Camila Carvalho explores the recent Supreme Court ruling in Centrica v HMRC, and discusses how businesses can utilise tax insurance to safeguard themselves in such disputes.

Camila’s comments were published in City A.M., 26 July 2024, and can be found here.

“With Centrica’s appeal unanimously dismissed by the Supreme Court, after a long and costly litigation, businesses should be aware of how they can safeguard themselves in tax disputes. Namely, tax insurance could have provided protection against the risk of HMRC disallowing the deduction of the £2.5 million expenditure and mitigated the financial impact of the Supreme Court’s decision.

“Tax insurance would have allowed Centrica to have a more accurate financial planning and budgeting, reducing the uncertainty and potential financial strain resulting from the dispute with HMRC and the subsequent legal proceedings. With this ruling showing the impact of such tax disputes on businesses, we expect to see an upsurge in the usage of such products by corporates.

“Centrica could also have sought insurance coverage for legal costs associated with disputes and litigation. This could have helped cover the substantial legal fees incurred during the appeal process, alleviating the financial burden and enabling Centrica to pursue their legal challenge without additional financial stress.”