Public Accounts CommitteeWritten evidence from Ernst and Young

We refer to your letter of 22 January 2012 and set out below the information requested using your numbering for ease of reference.

In answering your questions we should like to bring to the Committee’s attention that our management reporting systems do not segment clients into multinational companies, high net worth individuals or public sector. Accordingly, it is not possible to directly extract from our financial systems the figures for income received from these segments. We have not been able to perform a detailed analysis given the time constraints, but have used best endeavours to sensibly estimate the numbers requested and we provide some additional detail to aid your understanding.

Due to the global nature of our business, we deal mainly with large and medium sized and/or complex clients. Accordingly, the figures provided below assume that all income earned from corporate clients is in respect of organisations that have an international dimension to their business, ie they will all qualify as “multinational companies”. Similarly, we have not attempted to split our income from individuals into high net worth and others, since high net worth is not a defined term.

For this purpose, multinational companies include UK headquartered or parented companies and UK businesses of foreign headquartered or parented groups. Furthermore, income from multinational companies includes income we earn from those companies in respect of services that relate to their employees, some of whom could be regarded as high net worth individuals.

Income earned from individuals as set out below relates solely to income earned directly from clients who are individuals and not companies.

The income quoted below for UK public sector includes central government departments, local public sector bodies and health trusts.

Responses to your specific questions are as follows:

1. What is the scale of Ernst & Young’s tax practice globally in 2011–12: The following figures relate to the 12 month period ending 30 June 2012

(a) In financial terms: global tax revenues were $6,011 million.

(b) Number of employees: tax employees globally were 29,118. Total employees globally were 151,841.

(c) As a proportion of Ernst & Young’s global turnover: Global revenues were $22,880 million, tax revenues therefore represented 26% of the total.

2. What is the scale of Ernst & Young’s UK tax practice in 2011–12: The following figures relate to the 12 month period ended 29 June 2012

(a) In financial terms: UK tax fee income was £431 million.

(b) Number of employees: UK tax employees were 2,081, plus we have 180 Tax Partners.

(c) As a proportion of Ernst & Young’s UK turnover: Total UK fee income was £1,631 million, tax thereby being 26%.

3. Aggregate UK fee income for the 12 month period ended 29 June 2012 from providing tax advice (we have interpreted this term broadly to include both compliance and advisory services) to companies, the majority of which will have an international dimension to their business: £408 million

4. Aggregate UK fee income for the 12 month period ended 29 June 2012 from providing tax advice to individuals: £16 million

5. How many schemes has Ernst & Young disclosed under the DOTAS rules in each of the last financial years

(a) y/e 31 March 2010–seven disclosures.

(b) y/e 31 March 2011–three disclosures.

(c) y/e 31 March 2012–seven disclosures.

(d) For completeness, since 1 April 2012 we have made two disclosures.

6. What was Ernst & Young’s income from all services it provided to the UK public sector in 2011–12: UK fee income for the fiscal year ended 31 March 2012 was £72.6 million

John Dixon
Partner
UK&I Head of Tax

25 January 2013