By Marcus Leach
The Commons Public Accounts Committee has recommended a ban on external accountants working inside government.
The group of MPs have made this recommendation to stop external accountants telling clients about tax loopholes they have found, and forms part of a report on tax avoidance.
The MPs said HM Revenue and Customs (HMRC) was in a "battle it cannot win" against the accountancy firms who have thousands of people giving advice.
HMRC said it was "aggressively fighting" tax avoidance and "winning".
In its latest report on tax avoidance, the committee turned its attention to accountancy firms after previously criticising multinational companies, including Starbucks, Amazon and Google, for the amount of corporation tax they paid.
The MPs said accountants were being seconded to work in the government to advise on changes to tax law but using the position to glean inside knowledge and tell businesses how to avoid tax. The MPs want the practice stopped.
"The Public Accounts Committee has highlighted some important points in the current debate about tax. There is clearly scope for modernisation of an international tax system that is outdated for today’s business world, and we support reforms that will help build trust in the system," Kevin Nicholson, head of tax at PwC, said.
"A simpler tax regime and more resources for HMRC will help the tax system to run more smoothly and efficiently, which can only be a good thing in helping businesses grow and create jobs.
"The large accountancy firms have an important and positive role to play. At PwC we have accountants, actuaries, tax and business advisors helping businesses large and small across the UK to operate successfully and grow, and pay their taxes.
"We strongly disagree with the PAC’s conclusions about the role of large accountancy firms which seem to be based on a misunderstanding both of what we do and how we do it. We operate under a clear code of conduct, professional guidelines, and work constructively with HMRC. We provide technical insight to Government but only when asked and are never involved in deciding tax policy which is a matter for the Government.
"Much is already being done to address public concerns about the tax system and there are a number of imminent changes such as the General Anti-Abuse Rule (GAAR) and the guidelines on public sector procurement, which should have a positive impact. We will continue to engage in debate on what more needs to be done to build confidence in the tax system. A priority now is a focus on what shape the tax system should be in to drive future tax revenues."
The report said: "We have seen what look like cases of poacher turned gamekeeper, turned poacher again, whereby individuals who advise government go back to their firms and advise their clients on how they can use those laws to reduce the amount of tax they pay.
"We are very concerned by the way that the four firms appear to use their insider knowledge of legislation to sell clients advice on how to use those rules to pay less tax."
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