London-headquartered firm, PricewaterhouseCoopers (PwC), has come under fire for allegedly promoting tax avoidance “on an industrial scale”.
A Public Accounts Committee (PAC) report, published today, accused the firm of advising multinational companies on “complex strategies” which were “designed to avoid tax” by diverting profits through Luxembourg.
Addressing long-standing concerns from PAC, the report said evidence provided by PwC did “not convince” the committee that its promotion of schemes “constituted anything other than the promotion of tax avoidance on an industrial scale”.
“Cannot be trusted”
As well as introducing a fresh code of conduct for tax advisers to prevent them selling avoidance schemes, PAC said HM Revenue & Customs needs to do more to challenge advice given by accountancy firms.
“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.
PAC also recommended that the government takes a more active role in regulating the tax industry, because “it evidently cannot be trusted to regulate itself”.
The report is based on a committee hearing which took place in December last year after PwC’s previous evidence was found to be “inconsistent” with the leaked documents published by the International Consortium of Investigative Journalists (ICIJ).
In January 2013, PwC told the committee it did not mass-market, produce or promote tax products, but instead it was “just producing a clever idea and distributing it out”.
However, during December’s hearing, the head of tax for PwC in the UK, Kevin Nicholson, reacted to criticism by saying the government had encouraged offshore financing structures in its reformation of corporation tax.
“Parliament has looked at this area and decided that they want British businesses to be able to compete internationally,” he said.
“Politicians cannot duck the responsibility.”