TAX heads at the big four accountancy firms clashed with MPs yesterday over their role in helping large companies to reduce their tax bills.
Margaret Hodge, who chairs the public accounts committee, called for PwC, KPMG, Deloitte and Ernst & Young to be banned from doing work for the government in light of the loopholes they find for corporations.
She added that she was “shocked” to hear claims from a PwC employee that tax products will be approved if there is just a one in four chance of it being cleared by HMRC.
“That means you are knowingly marketing these schemes to clients when you’ve judged that there is a 75 per cent risk of it being deemed unlawful,” she said. PwC’s tax boss Kevin Nicholson said he “did not recognise” the practice.
The four accountants rejected the idea that they made more money from tax advice than other parts of their businesses, and insisted that their advice follows the law and the informed wishes of their clients.
KPMG’s Jane McCormick said there was “no appetite” among customers to create tax schemes outside the law.
The committee has previously grilled bosses from Starbucks and Amazon, both of whom have come under fire for their overseas corporate structures.
The political fight over tax avoidance last week prompted Prime Minister David Cameron to ask individuals and corporations “to pay their fair share”.
WHAT THEY SAID
We don’t mass market tax products, we don’t mass produce tax products, we don’t promote tax products.
We are giving the best advice we can to companies that compete internationally, which is legal, fully disclosable to HMRC and open to challenge.
Tax work is not more profitable than other work. Tax compliance makes up 40-45 per cent of business, which is fundamentally lower margin.
You all choose to focus on working in an area which reduces the available resources for us to build schools, hospitals, infrastructure.
This is a huge industry. In the UK alone, getting on for £2bn. You’re all incredibly well paid people, very sophisticated, very well versed.
I’m not, but it seems to me that the main purpose of what you’re doing is to try to minimise the tax either wealthy individuals or corporations pay.