Big 4 to be grilled

The Big Four accountancy firms are next in line to face a grilling by the Public Accounts Committee (PAC) over their role in the ongoing tax evasion/planning row that has engulfed a swathe of multinationals such as Starbucks, Amazon and Google.

PAC chair Margaret Hodge told BBC Radio 4's Today programme:

‘The certainty that we want, particularly from the big four accountancy firms who have a duty to lead by example, is that, in the advice they give to their clients, they are not advising how to engage in aggressive tax avoidance schemes.’

The spat has ignited the debate about how multinational companies operating in the UK – many of them advised by the Big Four - enjoy a distinct competitive advantage over their UK-based rivals through their ability to legally use low-tax havens.

Hodge said firms not taking a tough stand on the issue should be denied lucrative government outsourcing contracts.

‘If we are to promote a culture change in the UK, we have got to take action now,’ she said. ‘I think using the power of the public purse to purchase contracts is an important power that we have.’

‘The big four are getting more and more government business as this government chooses to outsource a lot of back-office activities.’

But PwC’s head of tax policy Mary Monfries defended her firm’s tax planning role on the programme, saying:

‘We help companies when they are looking at tax as a cost, but we have some clear principles about the way we work. ’

‘Any tax advice that we give has to be based on and supported by the law.’

Recent research by the Tax Justice Network and the broadcaster found that the Big Four had over 200 offices scattered over 45 of the world’s lowest-tax jurisdictions Liechtenstein, Bermuda and the Caymans.

Starbucks last week caved in to public pressure and announced that it will pay an extra £10m a year in corporation tax in the UK until it turns a profit.

Since it opened in the UK in 1998 the company has racked up over £3bn in coffee sales, and opened 735 outlets but paid only £8.6m in income taxes and commands close to a third of coffee sales in the UK.