PwC slammed by MPs for ‘promotion of tax avoidance on an industrial scale’Comments Off on PwC slammed by MPs for ‘promotion of tax avoidance on an industrial scale’
PwC’s head of tax, Kevin Nicholson, was summoned to face Ms Hodge’s powerful Public Accounts Committee following reports last month that multinational corporations advised by PwC Luxembourg had saved millions in tax by channelling money through the grand duchy.
In a report the PAC said the tax arrangements PwC promoted in Luxembourg bear all the characteristics of a mass-marketed tax avoidance scheme.
It went on: “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 response PwC said it stands by the evidence it gave to the committee, but disagrees with its conclusions about the work we do.
“But we recognise we need to do more to explain the positive role we play in the tax system and in helping businesses to operate successfully,” it said in a statement.
The PAC recommended that HMRC kept closer tabs on the nature of the advice handed out by accountancy firms to corporates and introduce a new cost 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,” it said.
However, law firm Pinsent Mason’s has argued that such proposals would be a distraction from HMRC’s core responsibilities and relate to tax schemes from pre-2010, before international initiatives aimed at limiting the scope for corporate tax avoidance were introduced.
Heather Self, Partner at Pinsent Masons said: “Unfortunately, by dwelling on historic tax matters, the Public Accounts Committee has come up with a solution to yesterday’s problem.”