PwC has rejected a claim by MPs that the Big Four accounting firm is promoting tax avoidance on an "industrial scale".
A report by MPs on the Public Accounts Committee (PAC) said PwC promoted hundreds of tax avoidance schemes that artificially divert profits to Luxembourg through intra-company loans. Companies using the schemes have paid less corporation tax, the committee said.
“We believe that PwC's activities represent nothing short of the promotion of tax avoidance on an industrial scale," said Margaret Hodge, chair of the committee.
She said that the evidence PwC gave the committee in January 2013 was "misleading", in particular its assertions that it was not in the business of selling tax schemes and that it did not mass-market tax products.
PwC in a statement: "We stand by the evidence we gave the PAC and disagree with its conclusions about the work we do. But we recognise we need to do more to explain the positive role we play in the tax system and in helping businesses to operate successfully.
"We agree the tax system is too complex, as governments compete for investment and tax revenues. We take our responsibility to build trust in the tax system seriously and will continue to support reform."
The committee heard evidence from Shire Pharmaceuticals which has arranged its affairs so that interest payments on intra-company loans worth £10bn reduce significantly its overall tax liabilities. The effect is to shift profits from other countries, where tax rates are higher, to Luxembourg. Shire paid tax of only 0.0156% on its profits to the Luxembourg tax authority, Hodge said.
“The 'substance' of Shire’s business in Luxembourg, used to justify these arrangements, consists of two people out of the 5,600 staff the company employs globally, the committee said. Neither PwC nor Shire could demonstrate that the company’s presence in Luxembourg was designed to do anything other than avoid tax, Hodge said.
Hodge said the tax industry could not be trusted to regulate their own tax advice and said the the government should introduce a code of conduct for tax advise.
"PwC’s Code does little more than shroud the way PwC exploits flaws in international tax law to devise and offer aggressive tax avoidance schemes to its clients."
Barry Johnston of charity ActionAid said the MP's report underlined the shocking scale of tax avoidance. The charity wants all the parties to commit to a "Tax Dodging Bill" within the first hundred days of the next parliament.
“Tax advisers are a huge part of the global problem of tax dodging, which also costs developing countries billions of pounds a year," Johnston said. "The public is clear that tax avoidance, both in the UK and in developing countries where UK firms operate is morally wrong.”
Law firm Pinsent Masons said that a code of conduct for tax advisers would be a "distraction".