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Raids on KPMG partners' homes carried out to coincide with tax evasion crackdown announcement, court told

Published 14/10/2016

Lawyers argued that raids were for the
Lawyers argued that raids were for the "collateral purposes" of a publicity stunt

Raids on the homes of four partners at Belfast accountancy firm KPMG were improperly carried out to coincide with the British Chancellor's announcement of a crackdown on tax evasion, it was claimed on Friday.

Lawyers for the executives argued at the High Court that they were targeted for the "collateral purposes" of a publicity stunt.

The allegations were made during an ongoing challenge to the legality of the process to obtain warrants to search their homes and offices.

Eamonn Donaghy, Jon D'Arcy, Paul Hollway and Arthur O'Brien claim HM Revenue and Customs misled judges into authorising the trawls as part of an investigation.

All four men were arrested last November, but have not been charged with any wrongdoing.

At the time KPMG said it was cooperating with the inquiry and had placed them on "administrative leave".

In February this year the company announced the partners in its Belfast office subject to the HMRC probe had retired.

KPMG stressed the investigation related solely to the executives' personal affairs and was unrelated to the company's business or its clients.

Mr Donaghy, Mr D'Arcy, Mr Hollway and Mr O'Brien are now seeking to judicially review the steps taken to search their homes and business premises.

In court today their legal team pressed for further disclosure of a range of documents to help prepare their case.

Barrister Barry Macdonald QC set out details of a statement of complaint relied on by HMRC in its applications for the warrants.

It claimed: "This case provides an opportunity to arrest and prosecute four high-profile individuals who are involved in (an)... attack on the revenue system."

According to Mr Macdonald that sentence was omitted, without explanation, from the application for a warrant to search his clients' offices.

He contended that it had been deliberately taken out because it reflected "an improper, collateral purpose".

The barrister continued: "Namely, seizing an opportunity to publicise this investigation in relation to high-profile individuals for the purpose of deterrence."

He also queried the alleged motivation for raids coinciding with a major speech by the Chancellor at the time, George Osborne.

"Why the search was scheduled to take place on the same day as the Chancellor's Autumn statement which featured reference to a crackdown on tax evasion?" he asked.

Paul McLaughlin, representing HMRC, stressed that the legal challenge was taking place during an ongoing criminal investigation.

He acknowledged that no-one has been charged, but said all four accountants were interviewed under caution on two separate occasions.

"This is a judicial review of the decision to apply for and obtain search warrants, it's not a judicial review of the investigation as a whole," he said.

"It's important that the judicial review proceedings are not used in a way which gives improper advantage to persons currently under criminal investigation."

Following submissions the court went into closed session to examine the material being sought by the four executives' lawyers.

The three-judge panel, chaired by Lord Justice Gillen, later confirmed some further documents will be disclosed in advance of a full hearing later this year.

Outside court the four former partners' solicitor, Paul Pierce of KRW Law, claimed the tax authorities took "drastic" steps against his clients.

He added: "There was no evidence they were not co-operating with HMRC, but instead this intrusive course of action was taken which will now be the subject of more detailed scrutiny by the High Court."

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