Tax avoidance: the role of large accountancy firms (follow-up) - Public Accounts Committee Contents


Summary

Large accountancy firms advise multinational companies on complex strategies and contrived structures which do not reflect the substance of their businesses and are instead designed to avoid tax. In light of the publication of leaked documents detailing some of the tax advice it has given to its multinational clients, we took evidence from PriceWaterhouseCoopers (PwC). PwC did not convince us that its widespread promotion of schemes to numerous clients, based on artificially diverting profits to Luxembourg through intra-company loans, constituted anything other than the promotion of tax avoidance on an industrial scale. The fact that PwC's promotion of these schemes is permitted by its own code of conduct is clear evidence that Government needs to take a more active role in regulating the tax industry, as it evidently cannot be trusted to regulate itself. In particular, HM Revenue & Customs (HMRC) needs to do more to challenge the nature of the advice being given by accountancy firms to their clients, ensure that tax liabilities reflect the substance of where companies conduct their business, and introduce a new code of conduct for all tax advisers. Unless HMRC takes urgent action, this irresponsible activity will go unchecked, causing harm to both the public finances and the reputations of the companies involved.



 
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Prepared 6 February 2015