The Public Accounts Committee (PAC) concluded this week that PWC, otherwise known as PricewaterhouseCoopers, was guilty of promoting tax avoidance schemes on an “industrial scale”. The seriousness of this finding is difficult to over-estimate: PWC is one of our ‘Big Four’ business consultancy, accountancy and auditing firms. Their businesses have been constructed on the back of statutory audit, essentially a monopoly granted by government to ensure the truthfulness and fairness of the published accounts. Audited accounts are the bedrock on which business is taxed, albeit after a multiplicity of adjustments required by our tax legislation.
The PAC’s finding is a timely one, coming at time when the Tory press had been railing against Miliband’s modest criticism of tax avoidance by big business. These press attacks, claiming that (horror of horrors), Labour is ‘anti-business’ have been made to look pretty silly. Miliband’s response, that Labour will move within six months of being elected against tax havens in Crown dependencies, is welcome. Perhaps he has been reading the recent discussion document from the Economics Commission of the Communist Party on how our tax regime should be reformed. If so, he will now know how to respond to the malign influence of PWC and the other ‘Big Four’ accountancy firms in the UK. The Commission proposed:
- A ban on the revolving door between HM Revenue and Customs and these firms and on them working on government tax policy
- An end to secondments between the Civil Service and the Big Four
- A ban on government contracts going to any firm that devises aggressive tax avoidance strategies – no more running with the hare and the hounds.
- Legislation to abolish limited liability partnerships, the form employed by the Big Four to conceal what they are up to.
- Complete separation between the auditing and consultancy businesses – divestment, not token walls
- A statutory requirement to publish accounts to the same level of disclosure required of companies
Endorsing these recommendations would be seen as a declaration of war on the Big Four and would trigger a further onslaught on Labour in the Tory press. But perhaps Labour is at last waking up to the fact that, short of capitulation to a Tory agenda, they are going to receive such an onslaught whatever they promise. Most encouraging of all, perhaps it has at last dawned on Labour that businesses don’t vote – people do.