KPMG Offshore 'Sham' Deceived Tax Authorities, CRA Alleges

A Canada Revenue Agency investigation into a "grossly negligent" KPMG tax avoidance scheme involving untold wealthy Canadians has been stalled in court for more than two and a half years, CBC News has learned.

In February 2013, a federal court judge ordered KPMG to turn over a list of (as yet) unidentified multimillionaire clients who placed their fortunes in an Isle of Man tax shelter scheme that the CRA is arguing is a "sham."

The CRA hoped to learn the scope of KPMG's "Offshore Company Structure" in order to identify potential tax cheats, as well as recoup millions in unpaid taxes and penalties.

But KPMG filed a court motion to quash the judge's order. For 30 months, the case known as Minister of National Revenue (MNR) vs KPMG has sat dormant before the court with no signs the top-tier accounting firm has handed over any list of wealthy clients. Neither the government nor KPMG has requested a court date to resolve the outstanding order of Justice Noel.

Dennis Howlett, executive director of Canadians for Tax Fairness, says the long delay in the case is troubling.

"My big worry is that it may indicate the government is trying to negotiate an out-of-court settlement -- which would be a real shame, because the danger is that would cover up the whole story of what's going on," Howlett told CBC News.