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Big Four “wield undue influence” over tax system, say MPs

THE BIG FOUR ACCOUNTANCY FIRMS exert an “undue influence” over the formation of tax law and policy, MPs in the Public Accounts Committee claimed today.

In the committee’s 44th Report of Session, the MPs said the secondment of Big Four staff to government to provide technical assistance on changes to tax law was allowing the firms to advise clients on how best to exploit loopholes to drive down their bills.

Concerns were also raised over the complexity of the tax code domestically and internationally and HM Revenue & Customs’ attempt to tackle tax avoidance with the resources at its disposal, with the MPs suggesting it is “fighting a battle it cannot win”.

The report recommends a consultation on rules banning tax-avoiding firms from winning government contracts is extended to include companies providing tax advice.

“The close relationship that the four firms enjoy with government creates a perception that they wield undue influence on the tax system which they use to their advantage,” the report read.

It added: “More worryingly, we have seen what look like cases of poacher, turned gamekeeper, turned poacher again, whereby individuals who advise government go back to their firms and advise their clients on how they can use those laws to reduce the amount of tax they pay.”

The suggestions and recommendations proved controversial, with the Big Four denying any of their advice or secondees have driven policy.

Deloitte head of tax policy Bill Dodwell said: “We have responded to requests for secondees and have provided a small number of people with some tax experience to help the Treasury and HM Revenue & Customs teams working on policy initiatives. Our secondees have all reported to experienced Treasury and HMRC officials and have never driven any policy initiative.

“We do not believe that there has ever been any conflict of interest but would want to help ensure that there is no perception of conflict. We would also note that bodies such as the Chartered Institute of Taxation and the Chartered Accountants’ Institutes – which we support – put in significant effort into ensuring that the Treasury and HMRC receive views from smaller firms and small business.”

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