Accountancy firm PricewaterhouseCoopers promoted tax avoidance “on an industrial scale”, according to a damning report by MPs.
In a report on the role of large accountancy firms in tax avoidance by the Public accounts committee, PwC is accused of helping hundreds of clients avoid corporation tax by setting up bases in Luxembourg.
Public accounts committee chair Margaret Hodge says: “It is only right that companies pay their fair share of tax according to the profits they make from their economic activity in the countries in which they do business.
“We believe that PwC’s activities represent nothing short of the promotion of tax avoidance on an industrial scale.
“Contrary to its denials, the tax arrangements PwC promotes, based on artificially diverting profits to Luxembourg through intra-company loans, bear all the characteristics of a mass-marketed tax avoidance scheme.”
The report says that in November, journalists disclosed 548 letters between PwC and the Luxembourg tax authorities, relating to 343 of the firm’s multinational clients.
Hodge says evidence given to the committee by PwC in January 2013 was “misleading”, including its assertions that “we are not in the business of selling schemes” and “we do not mass-market tax products”.
Hodge argues that HM Revenue & Customs needs to do more to challenge the advice being given by accountancy firms to their clients, and should introduce a new code of conduct for all tax advisers.
She says: “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.”
In a statement, PwC says: “We stand by the evidence we gave the Public accounts committee and disagree 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. We agree the tax system is too complex.”