Margaret Hodge attacks PwC on tax avoidance

MP Margaret Hodge has accused accounting firm PwC of “selling tax avoidance on an industrial scale”.

Margaret Hodge attacks PwC on tax avoidance

|

Speaking at a public accounts committee (PAC) in the House of Commons yesterday, MPs claimed the firm had allowed companies to benefit from Luxembourg’s low tax rates by devising financing structures for clients.
 
The committee was held following the release of so called Lux Leaks documents revealing that hundreds of companies had saved billions in tax by channelling profits through the Grand Duchy. 
 
One of the 340 companies exposed in the leaked documents was pharmaceutical company Shire which was also heavily criticised for using avoidance schemes. 
 
Labour MP Hodge, who chaired the committee, said: “The way in which you conduct your business is outrageous,” before suggesting the firm’s set up of its subsidiary business in Luxembourg was “not just avoidance; for me it’s fraud”.
 
 
Hodge argued in a previous PAC hearing in February 2013 that companies which encouraged the use of tax avoidance schemes should be “named and shamed”.
 
In Parliament on Monday, Hodge accused Kevin Nicholson, head of tax for PwC in the UK, of lying when he gave evidence about tax avoidance in January 2013.
 
Nicholson, who previously worked as a tax inspector for HM Revenue & Customs in the 1990s, denied these claims, saying he still stood by what he said.
 
However, Hodge said: “It’s very hard for me to understand that this is anything other than a mass-marketed tax avoidance scheme.
 
“I think there are three ways in which you lied and I think what you are doing is selling tax avoidance on an industrial scale.
 
“You might be saving some of these companies a few pounds or several hundred million pounds, but you are trashing their reputation.”
 
Responding to criticism, Nicholson said the government had facilitated the drive towards offshore financing structures in its recent reforms on corporation tax.
 
“The coalition decided that this sort of structure – Luxembourg financing – was permissible in the new corporate tax regime. In fact they went further and said you have to have an overseas financing company to qualify for the 5% regime,” said Nicholson.
 
“Parliament has looked at this area and decided that they want British businesses to be able to compete internationally.
 
“Politicians cannot duck the responsibility.”
 

MORE ARTICLES ON