KPMG Expert Evidence fielded by HMRC: The Need to Respond

As all appellant traders will be aware, Her Majesty’s Revenue & Customs (“HMRC”) have since early 2008 deployed KPMG LLP as consultants to provide evidence of ‘indicators’ of fraud. The types of evidence deployed has shifted remarkably since the first use of such experts when they would rather simply attempt to show that there was no legitimate grey market in the goods in question. Needless to say this was an argument which was easy to counter and in respect of which expert evidence in response was barely necessary.

Matters have advanced remarkably since then having learnt from their earlier mistakes in the Tribunal, HMRC and KPMG (the latter using a new consultant of the day), have moved on to provide complex and seemingly sophisticated expert evidence. This does not simply state that there is no grey market, but instead admits the obvious and then studies the grey market in some detail providing information about how and why the grey market operates together with classifications of grey market trading and apparently matter of fact detailed regional sales figures.

Some VAT advisers appear to have, at least initially, considered this evidence to be innocuous believing that it simply proved the existence of the grey market and did not specifically attack their appellant trader. We have long considered that the current folder of expert evidence produced by KPMG must be responded to. Members of this firm represented the first major appellant trader who attacked this evidence before the Tribunal.

What this new evidence seeks to do is provide an expert opinion with a backdrop of information, figures and other data which counsel in cross examination and/or closing argument will use to argue that whilst there is a grey market the appellant could not have been a legitimate participant. If your legal team have not sought to attack the veracity of such evidence by the advancement of your own expert opinion then you will have considerable difficulty in responding to HMRC’s arguments which may simply end up being accepted by the Tribunal.

We advise all appellants to consider very carefully the need to instruct an expert to respond to the KPMG expert evidence.

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