Top KPMG partners are held over tax evasion

In an embarrassing development for KPMG, it admitted that four senior partners had been placed on “administrative leave” after a raid on the firm’s Belfast office by HM Revenue and Customs on Wednesday, reports The Times.

The four — Jon D’Arcy, Eamonn Donaghy, Arthur O’Brien and Paul Holloway — are the most senior KPMG staff in Northern Ireland. They were arrested yesterday and later released, it is understood. They are likely to earn at least £1 million a year, say City sources. The average partner share at KPMG in the UK was £715,000 this year.

KPMG is a global business with revenues of $25 billion (£16 billion) a year. It has audited scores of Britain’s top companies, including some whose tax affairs have proved controversial, such as HSBC.

It also audited HBOS and the Co-op Bank and is under investigation by a watchdog, the Financial Reporting Council, over the Co-op Bank audit.

While it endeavours to cut tax for its clients, KPMG is also working with the Treasury on reducing the national debt. A note on its website says: “At KPMG we help public sector organisations respond to the government’s unprecedented challenge — how to reduce the public deficit while simultaneously improving public services.”

KPMG said in a statement last night: “We can confirm that representatives of HM Revenue and Customs have advised us that they are conducting an investigation and visited our Belfast office yesterday. We are co-operating with that investigation. It is important to emphasise that we do not have any indication that this investigation relates to the business of KPMG or the business of our clients.”

New criminal offences to deal with tax evasion came in last March. Danny Alexander, who was then chief secretary to the Treasury, said: “If people help a burglar, they are accomplices. Now it will be the same for those that help tax evaders.”

Those found guilty serve about two years in prison on average.

KPMG was founded in 1987 through a merger but dates back to 1870. It employs 160,000 people and regards itself as a leading light in the UK financial services industry.

It has offices around the world and has run into trouble with regulators in several countries. In 2013 Scott London, a partner in the US, admitted to passing share tips about clients to a friend.

In 2005 the firm admitted to criminal wrongdoing in America for creating illegal tax shelters to help rich clients to avoid $2.5 billion in tax, and paid fines of $456 million.

KPMG was accused this year of running tax evasion schemes by the Canada Revenue Agency.

The firm has been leading a campaign to persuade the Treasury to grant Northern Ireland special corporation tax status. Mr Donaghy is KPMG’s head of tax in Belfast and has been involved in the campaign to devolve corporation tax powers to the power-sharing coalition at Stormont. Mr Holloway is the firm’s head of corporate finance in Ireland.

As well as their work for KPMG, the four men are directors of JEAP, a property investment company that suffered heavy financial losses when the property market crashed in 2008. It is unclear if that forms part of the investigation.

A Revenue spokesman said: “HMRC officers arrested four individuals from Northern Ireland yesterday in connection with suspected tax evasion. We can’t comment further.”