Public Accounts CommitteeSupplementary written evidence from KPMG


On several occasions members of the committee seemed to think that there is no clear ground between tax avoidance and evasion. There also seemed to be some confusion over the legal consequences of a tax case being lost in court. Some members of the committee thought this meant that the taxpayer, and by inference the advisor, had acted in an unlawful manner.

There is a clear line between avoidance and evasion. Evasion involves deliberately concealing or misrepresenting facts and is a criminal offence. It would be a breach of the ICAEW’s Code of Ethics, KPMG’s Global Code of Conduct and our own tax principles.

If a tribunal or court finds against a taxpayer it means that the scheme in question was ineffective but not unlawful. The only consequence is the intended tax benefits do not arise. If, of course the position taken was negligent, tax geared penalties may apply. However, losing a court case does not mean the taxpayer or the advisor has been engaged in unlawful conduct.


I stated at the hearing that we had approximately 40 people in our transfer pricing group. This was the London based team. Across the UK there are six partners and 54 staff.


In relation to Q218, KPMG believes that issues are best resolved through openness and our policy is to provide information in response to reasonable requests from HMRC. We do not therefore see “legal advice privilege” as a common problem in practice.

We would always seek client consent before releasing our advice and any other client confidential information. The only exception to this is if we were under a clear legal obligation to do otherwise.

February 2013

Prepared 23rd April 2013