The committee led by MP Margaret Hodge, in the report, Tax Avoidance: the Role of Large Accountancy Firms, alleged that the big four accountancy firms are using knowledge gained from staff seconded to the Treasury to help wealthy clients avoid paying UK taxes.
The accountancy firms have provided the UK government with expert accountants to draw up tax laws. But the firms went on to advise multinationals and individuals on how to exploit loopholes in legislation they helped to write, the committee found.
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HM Revenue and Customs is the body responsible for collecting tax in the UK. They have been criticised for not doing enough to tackle tax avoidance.
The report was initiated after it was revealed in February that the UK loses at least GBP5 Billion each year due to tax avoidance.
But the firms said they behaved ethically and that the complexity of tax law was largely to blame for any appearance to the contrary. They welcomed the committee’s calls for the rules to be simplified.
"We perform an essential function in the UK economy by helping our clients navigate this complexity," Bill Dodwell, head of tax policy at Deloitte said.
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By GlobalDataIn the report’s conclusions and recommendations, it said there needs to be greater simplification of tax laws and that international tax rules are out of date – a point the PAC said it was "pleased the four firms agreed with it on".
