MPs have hit out at the “big four” accountancy firms over their use of tax avoidance schemes on behalf of large corporations.
The head of tax from KPMG, Pricewaterhouse Coopers, Deloitte and Ernst & Young all faced questions this morning from the Public Accounts Committee over tax advice they have given.
Labour MP and PAC chair Margaret Hodge highlighted cases where the accountants had advised companies to devise complex structures to limit their tax liabilities in the UK.
She pointed to one example where PwC advised a firm to spread its offices through the Cayman Islands, Jersey, Luxembourg and Switzerland.
She said: “You have deliberately taken firms offshore so they don’t pay their fair share of tax in the UK and that stinks. Are you giving the best advice to them or to the collective good?”
MPs focused on “transfer pricing”, a practice used by companies to transfer profits to another tax jurisdiction, as used by Starbucks.
PwC, KPMG, Deliotte and E&Y revealed they all have around 50 staff working in their transfer pricing divisions. HMRC has just 65 in total.
Hodge said: “They’re getting 20 more so it’s a David and Goliath battle.”
Conservative MP Richard Bacon said: “You have three to four times as many staff as HMRC has in total, which is interesting.”
PWC head of tax John Nicholson denied the firm creates tax avoidance schemes and said there are legitimate reasons firms may be based outside the UK.
He highlighted the inadequacy of international treaties, the competition for tax revenues between countries and the global nature of modern companies.
Nicholson said: “In simple terms if a company wishes to globalise then one of things it will take into account is where is the most tax efficient place to hold financing and procurement.”