The UK Parliament’s Committee of Public Accounts (CPA) has condemned PwC UK for "the promotion of tax avoidance on an industrial scale", urging British tax authorities to challenge the role of large accountancy firms in the area of harmful tax practice.
The damning report entitled "Tax avoidance: the role of large accountancy firms" was published today by the House of Commons and makes reference to the evidence of harmful tax planning published in November 2014 in the context of the Luxembourg leaks scandal.
Describing the tax arrangements suggested by PwC in Luxembourg as bearing "all the characteristics of a mass-marketed tax avoidance scheme", the report states: "The fact that PwC’s promotion of these schemes is permitted by its own code of conduct is clear evidence that Government needs to take a more active role in regulating the tax industry, as it evidently cannot be trusted to regulate itself."
In particular, the report also criticised the evidence provided by PwC to the CPA in January 2013 on the matter, labelling "misleading" statements provided by its head of tax Kevin Nicholson such as "we are not in the business of selling schemes" and "we do not mass-market tax products, we do not produce tax products, we do not promote tax products".
In the report, the CPA also criticised the UK taxman, HM Revenue and Customs, for not doing enough to challenge the advice given by firms to clients and said the body should "take a more active role in challenging the advice being given by accountancy firms to their multinational clients, with a particular view to the mass marketing of schemes designed to avoid tax."
Responding to the publication of the report, a spokesperson for PwC UK said although the firm stands by the evidence provided in January 2013, it does recognise the need to "do more to explain the positive role we play in the tax system and in helping businesses to operate successfully."
The spokesperson added: "We agree the tax system is too complex, as governments compete for investment and tax revenues. We take our responsibility to build trust in the tax system seriously and will continue to support reform."
As PwC grilled over Lux Leaks by UK gov’t fresh cases emerge
Leaked documents show aggressive tax planning practices in Luxembourg