PwC defends tax advice at select committee

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PwC UK’s head of tax has defended the firm’s practices, after MPs accused the company of marketing aggressive tax avoidance schemes.

Kevin Nicholson was recalled by the Public Accounts Committee after previously giving evidence in January 2013.

Committee chair Margaret Hodge accused the former Revenue and Customer inspector of misleading the committee when he previously said PwC does not “mass market tax products”.

Mr Nicholson firmly denied any impropriety by PwC during a heated exchange around Luxembourg tax structures.

The steps taken by PwC on clients’ behalf are “not schemes by any stretch of the imagination”, he said. Luxembourg is competing for tax revenues by making its structure appealing for business, which has resulted in an “attractive” tax regime for financing, he added.

Mr Nicholson said he could not answer questions on particular clients or how PwC’s Luxembourg partnership operated.

Fearghas Carruthers, head of tax at Shire Pharmaceuticals was also questioned. He defended the company, which is incorporated in Jersey and tax domiciled in Ireland, with most of its 5,600 staff in the US.

It employs two staff in Luxembourg to manage intra-group loans totalling $10bn (£6.4bn). Mr Carruthers said the structure allowed the company to “invest cash properly and efficiently”.

The committee session follows the leak of thousands of pages of documents, which were analysed by the International Consortium of Investigative Journalists.

A report identified 343 clients on whose behalf PwC had written 548 letters to the Luxembourg authorities to approve structures that often resulted in favourable tax rates.

The companies included Ikea, HSBC, Aviva, Axa, Burberry, Amazon, Citigroup, Coca Cola, Reckett Benckiser and Guardian Media Group, the committee said.