UK Parliamentary Committee Harries Big Four
30 April 2013
Posted by: Author: Amanda Banks
Source: Amanda Banks (Tax-News.com, London)
A new report by a UK Parliamentary Committee has called for HM Treasury to devise a new code of practice for tax advisors, which would determine whether the firms they work for should be given contracts with government, and deal with potential conflicts of interest between the firms' role advising government on legislation and their giving of advice to private clients.
The suggestion appears in a new report by the Public Accounts Committee, on tax avoidance and the "Big Four" accountancy firms of Ernst and Young, Deloitte, KPMG, and PwC. Committee Chair Margaret Hodge made comments along similar lines during a committee meeting in February, during which she also scolded representatives of the firms who had come to give evidence.
The report states that the code of practice should set out what HM Treasury and HM Revenue and Customs "consider acceptable in terms of tax planning," and that firms which fail to comply should be excluded from "government and wider public sector work."
The report also notes that staff from the four firms are seconded to HM Treasury to advise on technical issues in drafting legislation, and argues that the code should set out "how conflicts of interest should be managed when a firm advises government on the formulation of tax law and subsequently provides tax advice to clients in related areas." Representatives of the Big Four argue that their input helps to improve the quality of legislation.
Kevin Nicholson, head of tax at PwC, expressed strong disagreement with the Committee's conclusions as presented in the report. He stated they "seem to be based on a misunderstanding both of what we do and how we do it," and he added: "We operate under a clear code of conduct, professional guidelines, and work constructively with HMRC. We provide technical insight to Government but only when asked and are never involved in deciding tax policy, which is a matter for the Government." He described the large accountancy firms as having "an important and positive role to play" helping businesses "to operate successfully and grow, and pay their taxes."
Another, unnamed, tax partner was quoted in the media as describing the report as "muddled." It was pointed out that advisors could be sued by clients if they did not help clients to make their tax affairs as efficient as possible.