Tuesday, 6 June 2017

KPMG delivers new bombshell to partners over taxman's unpaid bill



Hundreds of partners at one of Britain's biggest tax advisers have been told that they face bills running to thousands of pounds because of an ongoing row with HM Revenue & Customs.
 
Sky News‎ has learnt that KPMG wrote last week to approximately 500 existing and retired UK partners with estimates of their individual "worst-case" liabilities.


In the most extreme cases, these are believed to amount to tens of thousands of pounds - and could be even bigger once penalties and interest are factored in.


Insiders at the firm said the letter had urged KPMG partners to brace themselves for the most adverse outcome from the firm's dispute with the taxman.


The row with HMRC dates back to 2010‎, and is understood to revolve around issues including the accounting treatment for an existing investment in one of KPMG's Middle East operations; its accounting for acquisitions in the UK, which were undertaken through its LLP firm; and other items where there was disagreement about the scale of eligible tax deductibility.


KPMG, one of the "big four" accountancy firms which dominate the profession globally, sets aside about half of its partners' pay each year to settle HMRC's bill.


That pot often leaves a surplus which is then paid out to the partnership, but one insider said that the tax now due from partners - both current and retired - could be about 10% more than had been retained by KPMG.


Last week's letter comes as the firm's new UK chairman, Bill Michael, prepares to take over the reins from Simon Collins, whose tenure began after the tax dispute had emerged.
 
 
KPMG handles some form of work for virtually every blue-chip company in the UK, and is currently pitching for the lucrative mandate to audit BT Group - which has been facing its own accounting problems.


In a statement issued to Sky News on Monday, a KPMG spokeswoman said it would not comment on the specifics of its tax affairs, but added: "Like most organisations KPMG is in regular discussion with HMRC as to our tax liabilities.


"In keeping with our tax principles, and our published tax strategy, we make full disclosures to HMRC on all tax aspects including those where the tax treatment is not clear either in law or guidance.


"Again, like many large organisations, we will, on occasion, dispute HMRC's interpretation of tax law, particularly where it contradicts previous guidance or practice."


She added that discussions could take years because both HMRC and taxpayers needed to consult with tax law experts in particularly complex areas.


The Sunday Times reported in April that the row between KPMG and HMRC was ongoing.




SKY     News.