UK and US
The business and background
This investigation related to several cases involving tax schemes created by Barclays Bank plc and KPMG, that were sold to US Banks to generate tax losses.
What we did
As a result, five US banks were unable to reclaim billions of dollars of tax losses that they had presented to the US tax authorities. The Courts found the schemes lacked any business purpose or “economic substance” beyond tax avoidance.
Our team provided the US Department of Justice with an Expert Witness who challenged the legitimacy of the accounting treatments that underpinned the schemes. Our involvement required an enormous amount of work to describe the mechanisms of the scheme and show how the economic realities of the money transfers compared to the accounting treatment.
Our Forensic Accounting & Investigations team worked with our testifying expert to prepare him for depositions and ultimately an appearance before a US court. After a month-long trial, the court ruled that the bank claiming was not entitled to the tax benefits and imposed $112 million in penalties.
The court concluded that the conduct of the bank, the designers and marketers of the STARS transaction and the law firm that provided tax advice supporting the transaction was “nothing short of reprehensible” and that the considerable effort put into the transaction was a “waste of human potential”.