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Tax avoidance: MPs to quiz big four accountancy firms on 31 January

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Representatives of the big four accountancy firms are set to be quizzed by the Commons public accounts committee at the end of this month, as MPs continue their investigation into tax avoidance.

No formal announcement has been made yet on the parliamentary business pages but a PAC spokesman confirmed that the hearing has been scheduled for 9.45am on 31 January.

Witnesses will include Jane McCormick, UK head of tax at KPMG; Kevin Nicholson, head of tax at PwC; John Dixon, head of tax at Ernst and Young; and Bill Dodwell, head of tax policy at Deloitte.

The hearing is likely to focus on the issue of corporate tax avoidance. Last weekend the Labour leader and the shadow chancellor called for an end to ‘tax secrecy’ while backing efforts to strengthen international tax standards.

Tax campaigners insist that only a complete overhaul of the international tax system will effectively tackle the ‘shifting of profits’ to low-tax jurisdictions and reduce unfair competition.

During last week’s House of Commons debate David Gauke, the exchequer secretary recognised ‘concerns about whether the current corporate tax rules adequately capture the profits generated by multinational companies in the jurisdictions where the economic activity is located’.

He added: ‘We take those concerns seriously. Reform in this area will require concerted international action. This is an issue that all countries face. We need to work with others to develop the appropriate solutions.’

The big four

The big accountancy firms have ‘led the charge’ in devising tax ‘schemes’ that benefit some multinationals, Liberal Democrat MP Ian Swales said as he opened last week’s debate.

PAC chairman Margaret Hodge told the BBC’s Today programme last month that accountancy firms ‘supporting anybody in trying to avoid tax in an aggressive way’ should be denied access to government contracts. The big four ‘maintain a significant presence in jurisdictions recognised internationally as tax havens’, the programme reported.

However, the firms stressed ‘their global role and their requirement to respond to the needs of their clients’. Mary Monfries, head of tax policy at PwC, told the programme: ‘We help companies that are looking at tax as a cost but we have some clear principles about the way we work.’

As Tax Journal has reported, tax academics have drawn a distinction between the aggressive tax avoidance schemes that the government’s proposed general anti-abuse rule is designed to tackle, and the use of tax havens and low-tax jurisdictions to manage a multinational’s effective tax rate within the law.


Much of the recent controversy has concerned tax-deductible payments between group companies. Vince Cable, the business secretary, claimed in a BBC interview last November that a lot of what he called ‘subterfuge’ concerned royalty payments.

But in last week’s debate Conservative MP Nigel Mills warned that the UK was an international economy and needed to remain one: ‘One of the things we are focused on is trying to encourage exports – we want people to invent and design things here, and then export and license them and get royalties and sales back. However, we will not win if we start an international war to see who can clobber royalties the most or put up the biggest barriers to trade. That would be a suicidally stupid thing to do.’

Mark Field, Conservative MP for the Cities of London and Westminster, expressed concern that ‘investors will begin to sense that UK policy on tax and regulation is becoming ever more arbitrary, governed more by sentiment and the news cycle than by the strict rules that should be enforced by HMRC and ultimately by the courts’.