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MPs attack ‘big four’ accountants over tax avoidance schemes

Margaret Hodge

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.”

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Comments

There are 9 comments at the moment, we would love to hear your opinion too.

  1. Last time I looked solicitors, accountants and financial advisers have a duty to their clients not society.

    You never hear of solicitors or QC’s being taken to task over who they represent in court.

    It would also be interesting to know how many MP’s have taken advantage of these schemes over the years!

  2. She really is a mindless moron!

    Beneath contempt!

  3. so why do successive governments keep wasting millions of pounds paying these guys for “Consultancy”

  4. “Accountancy firms attacked for helping clients reduce tax bill”

    “Pope under fire for preaching Catholic doctrine”

    “Bears in clichéd toiletry behaviour shame”

  5. I often drive for miles trying to find the petrol station with the most expensive fuel so that I may pay more tax.

    Maybe MP’s should be asking why companies transfer profits they may find that these tax mitigation schemes exist because our taxation system is too complicated and uncompetitive in comparison with other countries such as Switzerland. Add in the fact that Government consistently wastes tax payer money then you may have the reason why.

    Strange how Switzerland has a better standard of living but lower taxes.

  6. You really wouldn’t credit it! I am almost (almost!) lost for words both at the stupidity and hypocrisy.

    1. It is well documented that Margaret Hodge’s family firm has some very cute schemes in place.
    2. What in the name that’s holy do MPs think people employ accountants for – to collect their tax so that they can increase their salaries? Accountants prime purpose is to show customers how to reduce their tax liability – without that they are just another bunch of useless bureaucrats.

    What use are these complete numbskulls in Westminster? Guy Fawkes come back- quickly – you are needed like never before!

  7. I’ve yet to see HMRC waive the rules when they unfairly discriminate against the taxpayer.

    If MPs don’t like it, why don’t they change the bloody rules?

  8. Hodge worked 9 years at Price Waterhouse,
    in market research from 1966 to 1973, and from 1992 to 1994, she was a senior consultant to Price Waterhouse. She left when Labour got into power.

  9. @ Harry
    Hodge was questioned, on TV about her family firm. She obviously did not have a clue that her accountant was doing the very (legal) thing that she is banging on about.
    On another note;
    E&Y should have sent Ms Nicoll, she would have laughed off the accusations.

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