Upbeat KPMG reports revenue growth

KPMG's UK turnover and profits rose by 6% in the year to 30 September 2004, the firm has reported.

KPMG LLP, the UK member firm of KPMG International, reported operating profits of £247m and turnover of £1,066m. The average operating profit per partner was £451,500, up almost 9%.

Mike Rake, UK senior partner and chairman of KPMG International, said investment was delivering significant growth: "KPMG remains committed to being a multi-disciplinary firm offering audit, tax and advisory services.

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richard.murphy's picture

KPMG - maybe not as responsible as they'd like to claim

richard.murphy | | Permalink

The Advocate General of the ECJ offered opinion in the VAT case of RAL Holdings Limited on Thursday. They found the scheme unaccetpable. Who invented it? KPMG.

And what did KPMG say to their client when cold calling them with the proposal? The following is a word for word extract from the VAT Tribunal:

22. On 15 June 2000 KPMG presented a 16 page report to the board of Holdings. The "Executive summary" was as follows:

"1.1 The restructuring recommended in Section 2 of this report could result in a gross saving of the VAT on the machine takings estimated to be £4,200,000 per annum based on current trading patterns.

1.2 The net saving will be less due to a number of factors including the cost of the restructuring and the ongoing cost of the new structure.

1.3 In our view HM Customs & Excise ('Customs') will regard these planning arrangements as 'unacceptable tax avoidance' and will seek to challenge the arrangements. However, a similar concept for telecommunications ran for nearly four years in most Member States of the EU before the UK, French and German Governments secured the unanimous agreement of all 15 Member States to amend the primary legislation and stop the concept.

1.4 Since at the moment we are not aware of any widespread use of these planning arrangements, and the fact (sic) that some EU Member States do not charge VAT on gaming machine income, unanimous agreement to amend the EC legislation could be difficult to achieve.

1.5 The proposed arrangements are sufficiently flexible to allow the restructuring to be modified to include any acquisitions the Company may make in the future, thereby increasing the savings.

1.6 However prior advice from KPMG must be taken on VAT and direct tax issues before new sites or businesses are acquired to ensure the benefits of the new arrangements are not prejudiced.

1.7 It should be possible to unwind the arrangements if the idea is subsequently blocked or successfully challenged by Customs. The cost of unwinding the arrangements should not be significant."

So that's acting responsibly is it? And KPMG is a good corproate citizen is it? I'm sorry, but I beg to differ.

KPMG

premsikka | | Permalink

KPMG does not explain why it went into aggressive tax avoidance selling, how much money it made, whether any of it has been returned to the citizens and countries which suffered and why it started it in the first place. It may be just money and higher fees but how many people had to go without adequate education, healthcare, housing and other necessities?

A 2003 US Senate Report titled "The Tax Shelter industry: The Role of Accountants, Lawyers and Financial Professionals, including Four KPMG case Studies" shows that the firm was aggressively selling tax avoidance shemes.

Committee Chairman Senator Carl Levin said that there was "a culture of deception inside KPMG's tax practice"
(http://levin.senate.gov/newsroom/release.cfm?id=217068).

He condemned KPMG and other Big firms*
www.pbs.org/wgbh/pages/frontline/shows/tax/interviews/levin.html

Subsequently, KPMG claimed to have curbed some of its practices, but newspapers reported otherwise ( http://www.iht.com/articles/535878.html ).

Perhaps, KPMG would like to more informative.

*Editor's note: Link text edited to preserve page layout