Accounting firms stir anger over
‘reducing tax’ advice

Margaret Hodge, chairman of the Commons Public Accounts Committee.
Margaret Hodge, chairman of the Commons Public Accounts Committee.
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The UK’s “big four” accountancy firms came under sustained fire from an influential committee of MPs yesterday over their work in minimising the tax paid by multinational companies.

Margaret Hodge, the chairwoman of the House of Commons Public Accounts Committee, told the heads of tax at KPMG, PWC, Ernst & Young and Deloitte that certain activities to reduce tax liabilities were “shocking”.

Companies which deliberately advise wealthy firms and individuals on how to cut the tax they pay to the Treasury should be barred from receiving lucrative public contracts worth hundreds of millions of pounds a year, Ms Hodge said.

But the accountancy firm executives rejected claims that they were marketing “aggressive” tax avoidance schemes to clients and insisted their work benefited the UK by encouraging companies to locate and recruit here.

The four heads of tax appeared for a grilling lasting almost three hours at the House of Commons in the midst of huge public controversy over the low tax bills paid by multinationals like Amazon, Google and Starbucks.

In his speech to the World Economic Forum in Davos last week, Prime Minister David Cameron said there were “some forms of avoidance that have become so aggressive that I think it is right to say these raise ethical issues” and warned he would use Britain’s presidency of the G8 to press for action from the world’s most powerful governments.

Ms Hodge said PWC reported income of £162m from public sector contracts, Deloitte £159m, KPMG £94.5m and Ernst & Young £72.6m. “You all get a not insubstantial amount of money from the taxpayer, and yet your main purpose in your tax businesses is to cut the tax paid to the Treasury for the common good,” she said.