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26.04.13

MPs attack accountancy firms’ ‘ridiculous conflicts of interest’

Parliament’s powerful public accounts committee has attacked the ‘big four’ accountancy and financial services firms for having a “cosy” relationship with the Treasury and HMRC, sometimes helping to write the tax rules that they then help their clients benefit from.

Speaking as the committee’s new report was published, its chair Margaret Hodge MP said: “They second staff to the Treasury to advise on formulating tax legislation. When those staff return to their firms, they have the very inside knowledge and insight to be able to identify loopholes in the new legislation and advise their clients on how to take advantage of them. The poacher, turned gamekeeper for a time, returns to poaching.

“This is a ridiculous conflict of interest which should be banned in a code of conduct for tax advisers, as we have recommended to the Treasury and HMRC.”

She also attacked the way the firms help other companies avoid tax. “The firms declare that their focus is now on acceptable tax planning and not aggressive tax avoidance. These protestations of innocence fly in the face of the fact that the firms continue to sell complex tax avoidance schemes with as little as 50 per cent chance of succeeding if challenged in court.”

The ‘big four’ – PwC, Deloitte, KPMG and Ernst & Young – earn around £2bn a year from their tax work alone, and employ nearly 9,000 people.

All four strongly disputed the contents of the PAC report.

Kevin Nicholson, head of tax at PwC, said: “We strongly disagree with the PAC’s conclusions about the role of large accountancy firms which seem to be based on a misunderstanding both of what we do and how we do it.”

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