Treasury accountants accused of helping rich to avoid tax

'Poachers turn gamekeepers turn poacher again' as big four firms allegedly exploit insider knowledge

LAST UPDATED AT 14:36 ON Fri 26 Apr 2013

ELITE accountancy firms that advise businesses and individuals on how to lower their taxes have an "unhealthily cosy relationship" with the government, according to a report from Parliament's influential Public Accounts Committee (PAC).

In a situation described as "poacher turned gamekeeper, turned poacher again", the PAC claims the so-called 'Big Four' firms (Deloitte, Ernst & Young, KPMG and PricewaterhouseCoopers) are using knowledge gained from staff seconded to the Treasury to help clients avoid paying UK taxes.

The report says the apparent use of "insider knowledge" from the top four firms to "sell clients advice on how to use those rules to pay less tax" is concerning.

The committee is calling for a ban on external accountants working inside government as the current situation was described as a "conflict of interest" and a "never-ending game of cat and mouse".

Committee chairwoman Margaret Hodge (pictured) told the BBC: "The large accountancy firms are in a powerful position in the tax world and have an unhealthily cosy relationship with government.

"They second staff to the Treasury to advise on formulating tax legislation. When those staff return to their firms, they have the very inside knowledge and insight to be able to identify loopholes in the new legislation and advise their clients on how to take advantage of them."

However, Jim Harra, director of business tax at HMRC, said accountants seconded to the Treasury were watched "very carefully" when they returned to their firms. "Provided that advice is how to use the legislation in accordance with the way Parliament intended it to be used, then we have no problems with that," he said.

The 'Big Four' accountancy firms have also defended themselves against the PAC's allegations. In the Daily Telegraph, Kevin Nicholson, head of tax at PricewaterhouseCoopers, said the report seemed to be "based on a misunderstanding both of what we do and how we do it".

Jane McCormick, head of tax at KPMG in the UK, added: "Our secondees do not write legislation or make policy decisions." 

HMRC said it was "aggressively fighting" tax avoidance and "winning". · 

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