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Accounting firms defend themselves against Parliamentary criticism on tax practices


The UK's major accounting firms have defended themselves against claims that they help companies avoid paying tax and exploit their role advising on legislation to find loopholes in it for clients.

At a hearing of Parliament's Public Accounts Committee (PAC) PAC chair and Labour MP Margaret Hodge said that "avoiding tax has become a new way of making profits", and that KPMG, PwC, Deloitte and Ernst & Young had as their main purpose reducing the tax income available to the Government.

Hodge also accused the companies of using their consultations with the Government over legislation to benefit clients by alerting them to loopholes in laws they had helped Government to formulate.

Deloitte's head of tax policy Bill Dodwell told the PAC that it "help[ed] make the tax system work", while KPMG head of tax and pensions Jane McCormick said that there was "no appetite" amongst clients for reducing tax through loopholes.

"The UK - like all countries - wants to attract businesses to base themselves in the UK and a competitive tax regime is vital to achieving that," said Dodwell in a statement. "Growth in UK employment is the single most important factor in economic growth. The UK’s newly competitive corporate tax regime is encouraging multinationals to move additional activities here - supporting jobs and building on the many strengths of the UK."

Tax expert Jason Collins of Pinsent Masons, the law firm behind Out-Law.com, said that Hodge's charge was not fair.

"It is unreasonable of the PAC to portray the involvement of tax professionals in the design of new legislation as a cynical ploy to enable them to show their clients how to exploit loopholes," he said. "HMRC’s willingness to consult and to listen to the views of business has undoubtedly improved the legislation in these areas and helped to ensure it achieves the policy objectives laid down by government, whilst being workable for businesses operating in the real world.”

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