Report highlights role of large accountancy firms in tax avoidance

By staff writers
February 7, 2015

A new Public Accounts Committee report highlighting the role of large accountancy firms in tax avoidance is awaiting UK government response.

The fresh evidence was unveiled to Members of Parliament at the end of last week.

At the same time, Anglican Archbishop of Canterbury Justin Welby described tax as "a moral issue" and said that large companies should pay their fair share of tax in the countries where they make their money.

The Public Accounts Committee at Westminster first took evidence on tax avoidance from PricewaterhouseCoopers in January 2013, alongside Deloitte, Ernst and Young and KPMG.

The Committee’s report on the role of large accountancy firms noted that the four firms “insisted that they no longer sell the type of very aggressive avoidance schemes that they sold ten years ago. While this may be the case, we believe they have simply moved to advising on other forms of tax avoidance which are profitable for their clients; such as the complex operating models they offer to major corporate clients to minimise tax by exploiting the lowest international tax rates.”

In light of recent information on tax agreements brokered by PwC between multinational corporations and the Luxembourg tax authorities, the Committee recalled PwC to review that firm’s role in tax avoidance schemes.

Toby Quantrill, Principal Economic Justice Adviser for UK-based churches' global development and advocacy agency Christian Aid commented: “Scandals such as Lux leaks have highlighted the chasm between what is ‘legal’ and what the vast majority of people in Britain regard as morally right.

“Today’s abuse of power by many multinationals is harming the lives of millions of ordinary women and men in poor countries, as well as here in the UK.

“That is why Christian Aid has been campaigning for tax justice for many years and why we have recently joined other UK organisations campaigning for a Tax Dodging Bill.

“We are challenging all political parties to commit to taking action that will help tackle many of the problems highlighted by the Public Accounts Committee and by the Archbishop of Canterbury.”

A ComRes poll for Christian Aid found that 85 per cent of British adults believe that tax avoidance by large companies is morally wrong, even if it is legal. The poll was done in November 2014.

Some 17 NGOs, both faith and secular, have joined together recently to call for a Tax Dodging Bill within one hundred days of a new UK parliament after the May 2015 General Election.

* Tax avoidance: the role of large accountancy firms - full report (*.PDF Adobe Acrobat document): http://www.publications.parliament.uk/pa/cm201213/cmselect/cmpubacc/870/...

* Tax Dodging Bill: Time for Change (report, via Ekklesia): http://www.ekklesia.co.uk/node/21385

* Tax Dodging Bill website: http://www.taxdodgingbill.org.uk

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