Representatives from the UK Big Four defended their role as tax advisors for companies which have successfully avoided paying little or no UK corporate tax, in front of the UK governments House of Commons (HOC) Public Accounts Committee.
The committee triggered its investigation following the revelation that companies such as Starbucks, Google and Amazon paid little or no tax in the UK, which caused public outcry.
In search for a solution to the problem the HOC has asked the Big Four to give their views and KPMG’s head of tax, Jane McCormick, Deloitte head of tax policy Bill Dodwell, PwC head of tax Kevin Nicholson and Ernst & Young (E&Y) head of tax John Dixon all vigorously defended their work.
The committee chair Margaret Hodge said to the Big Four,"it seems to me that you are trying to minimize the tax wealthy individuals and corporations pay," before asking what the firms thought was the difference between efficiency, avoidance and evasion.
Dixon began by saying that EY does not advise customers on tax evasion, as it is illegal, to which Hodge responded with a quote from a judgement in a ruling against E&Y on the Green King Case, which was "it is common ground that the accounting treatment should be adopted in any case is dictated in part by legislation, in part by recognised accounting standards and in part by professional judgements."
Hodge also claimed someone at PwC had told her that PwC would approve a tax product if there is a 25% chance of it being upheld, which Nicholson denied.
As the argument went onto whether the Big Four offered ‘schemes’ for tax avoidance or personal advice to clients, Hodge brought up PwC’s offer to Carlisle European Estate Partners and to Heineken, both of which involved creating complex structures and the use of a Swiss Procurement Supply Chain (SPSC) to minimise tax.
The inquiry went into detail about the Big Fours relationship with the government and HMRC, with it being described as "cosy." Hodge specifically brought up Jonathan Bridges, who took a secondment from KPMG to help develop new Patent laws, and then returned to KPMG, to allegedly help KPMG clients manipulate the law.
McCormick disputed this ascertain, pointing out that, as technical experts in their field, it was only natural that the Government should seek their help in developing new legislation.
The Committee concluded with Hodge suggesting that, in ten years time, the Big Four will have admitted they were acting in a dishonest way, to which, firms disagreed.