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Margaret Hodge, chair of the PAC, said there was “a ridiculous conflict of interest” in seconding accountants to the Treasury to advise on formulating tax legislation. She also voiced scepticism about the firms’ “protestations of innocence” in declaring their focus was now on acceptable tax planning, not aggressive tax avoidance. Ms Hodge also said the tax system was “too complex” and should be simplified so companies cannot give advice on strategies for avoidance, gambling that HM Revenue & Customs are “so poorly resourced they won’t challenge it”.
Advisers rejected the criticisms aimed at them. Kevin Nicholson, head of tax at PwC, the professional services firm, said: “We strongly disagree with the PAC’s conclusions about the role of large accountancy firms which seem to be based on a misunderstanding both of what we do and how we do it".
The MPs said that although firms might have stopped selling very aggressive avoidance schemes, they believed they had moved on to advising on other forms of tax avoidance, such as helping big clients adopt complex operating models that exploit the lowest international tax rates.