6th February 2015
Accountancy giant PricewaterhouseCoopers (PwC) has been slammed by MPs for aiding clients with ‘industrial scale’ levels of tax avoidance.
In a Public Accounts Committee (PAC) report into the role large accountancy firms play in tax avoidance, PwC is accused of helping clients to avoid corporation tax by setting up company shells in Luxembourg.
PAC chairman Margaret Hodge said: ‘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.’
She said PwC had denied its tax arrangements were designed to aid tax avoidance but that ‘diverting profits to Luxembourg through intra-company loans bear all the characteristics of a mass-marketed tax avoidance scheme’,
Hodge said evidence given to PAC by PwC in January 2013 was ‘misleading’, including its assertion that it was ‘not in the business of selling scheme’ and that it did ‘not mass-market tax products’.
In November journalists uncovered 548 letters between PwC and the Luxembourg tax authorities that related to 343 of the accountancy firm’s multinational clients.
Hodge demanded HM Revenue & Customs do more to challenge accountancy firms over the advice they give to their clients, including the introduction of a new code of conduct for tax advisers.
‘Unless HMRC takes urgent action, this irresponsible activity will go unchecked, causing harm to both the public finances and the reputation of the companies involved.’
In a statement PwC said: ‘We stand by the evidence we gave the PAC 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.’