Lendlease accused by sacked tax specialist of tax avoidance around its retirement village purchase and contracts

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In documents filed with the Federal Court, a former senior Greenwoods & Herbert Smith Freehills tax specialist claims he had attempted to raise concerns about a number of related issues during his time working on Lendlease matters, including the $192m full takeover of the Primelife retirement group in December 2009.

Anthony Watson, a partner at Greenwoods & Herbert Smith Freehills and part of the firm’s management committee until 2007, also alleges in the court filings that the company’s aggressive approach to taxation meant the “financial statements prepared and published by Lendlease were materially incorrect”, The Australian reported.

On one occasion, Mr Watson claims he raised the issue of the tax arrangements relating to the purchase of Primelife, previously Babcock & Brown Communities, with Lendlease’s head of tax Paul Hooper in a meeting in early 2013 and was told he should “drop the topic” and “get on board”.

Mr Watson said he had formed the view that the tax treatment applied to the Primelife business “was enhancing (Lendlease’s) profit by recognising tax deductions from its retirement business whilst not raising a deferred tax liability for the increased tax which would arise on the sale of the retirement villages”.

Lendlease in November disclosed it was being audited by the Australian Taxation Office.

Mr Watson, who said he had dealt with senior Lendlease figures over many years, is suing Greenwoods & Herbert Smith Freehills for $13 million.

A Lendlease spokeswoman told The Australian it was “confident our tax treatment is consistent with the law and the ATO’s tax ruling on the taxation of the retirement living industry”.

The company has previously said that it had undertaken a full review of its tax and accounting positions using independent advisers and was satisfied Mr Watson’s claims were “without merit”.