The Public Accounts Committee (PAC) in the UK has found that PwC misled MPs over the selling of tax avoidance schemes after the firm was called to account before MPs in December 2014.
PAC chair, Margaret Hodge, accused PwC of ‘selling tax avoidance schemes on an industrial scale’ after details emerged of how one of its clients arranged its affairs so that interest payments on intra-company loans significantly reduced its overall tax liabilities.
According to the PAC report, the tax arrangements PwC promotes, based on artificially diverting profits to Luxembourg through intra-company loans, bear all the characteristics of a mass-marketed tax avoidance scheme, contrary to its denials.
The report is part of an inquiry to the role played by large accounting firms in the tax avoidance of multinational corporations, which reduced the amount of corporation tax that some multinational companies pay in the countries in which they make their profits.
The PAC has now called on HM Revenue and Customs (HMRC) to be more robust in challenging mass marketed avoidance schemes, urging government to regulate tax advisers with punitive financial sanctions.