The judges found that there were legal errors in the statements which had been used to support the applications for warrants targeting Eamonn Donaghy, KPMG’s then head of tax, Jon D’Arcy, chairman of the firm’s Belfast office, Paul Hollway, KPMG’s head of corporate finance in Ireland, and Arthur O’Brien, an audit and advisory partner.
The errors included a failure to identify the articles that were the objects of the searches.
However, the judges rejected claims that HMRC had provided misleading information to the judges issuing the warrants and that the department had organised the tax raids as a publicity stunt.
Lawyers for the four men had told the court that bosses at HMRC were “gleeful” before they raided the partners’ homes. They argued there was no justification for taking the “nuclear option” of an intrusive operation that also involved trawling through children’s school bags, particularly as none of the partners had been charged.
But, according to the Irish News, in dismissing their arguments, Lord Justice Treacy said that it was clear from the information presented in the statements of complaints that the judges were “justified in finding that the statutory grounds for issuing a search warrant had been satisfied in each case”.
The focus of the tax investigation is a property investment vehicle of which the four partners were directors, which made heavy losses following the property market crash in 2008.
Welcoming the court’s decision to declare the warrants unlawful, the solicitor for the four partners reiterated the fact that they had all cooperated with HMRC. “The decision to grant these warrants has had a devastating impact on each of my clients, both personally and professionally,” he added.
All four partners were placed on administrative leave following their arrest in November 2015 and in February 2016 KPMG announced they had retired.
The firm declined to comment on the court’s decision.