Shadow chancellor raises the heat on accountants

Shadow chancellor raises the heat on accountants

Labour’s John McDonnell reveals a broad agenda for reforming the UK audit market and pursuing tax avoiders

Shadow chancellor has revealed to Accountancy Age a busy timetable of initiatives designed to shake up the accountancy sector.

John McDonnell said he met this week Andrew Tyrie, chairman of the Competition and Markets Authority, which is in the process of reviewing the audit market. “We had a conversation about the review that he’s undertaking, and we’ll be giving a view to that review,” said McDonnell.

The shadow chancellor said a review of the accountancy sector that Labour commissioned Prem Sikka, accountancy professor at the University of Essex, to undertake, is expected to be published within a month.

McDonnell said the review forms part of a wider investigation into financial services. “There’s dozens of bodies now that are regulating different parts of the finance sector. We’re looking to see how that can be rationalised and made more effective, and seeing whether that requires legislative change,” said the shadow chancellor.

“What we want to do over the next month is publish that report, consult around that and then bring it forward early in the new year with concrete proposals,” McDonnell added.

“There’s a whole range of options regarding the Big Four firms, about how you break them up, whether there is a role for the state in doing some of these audits, in the way in which we had the Audit Commission doing it in the past for local government,” said the shadow chancellor.

“Whether you cap the size of their operations, split the audit function from the consultancy services within those firms, or whether or not you have the major firms solely for audit and other companies doing the consultancy services – there’s a whole range of options that have been put to us that are part of the wider debate,” added McDonnell.

The shadow chancellor also expressed a desire to push further an agenda for tackling tax avoidance. “We made it clear we want a review of the role of HMRC. It’s the first stage in that review about the resourcing needed and the way in which it can be managed with a proper supervisory board, with stakeholders involved so they can be properly directed in how to tackle tax avoidance.

“We will try to make sure HMRC is properly resourced and properly empowered to play their role, and that includes money laundering as well. It was our side that forced the government into accepting the Magnitsky clause into the last piece of financial legislation.

“It was our amendments that forced the government into looking at overseas property registers. They dragged their feet. But if you look at our team in the Commons and in our team in the Lords as well, we’ve been leading on it,” said McDonnell.

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