The government has an “unhealthily cosy relationship” with the Big Four accountancy firms, an influential Parliamentary committee has warned.
In its latest report out today, the Public Accounts Committee blasted the HMRC’s “continuing weakness” in tackling tax avoidance as it engaged in a “battle it cannot win”.
The committee highlighted how the Treasury use seconded staff from accountancy firms to advise in the drafting of legislation, saying: “Through their work in advising government on changes to legislation they have a detailed knowledge of UK tax law, and the insight to identify loopholes in new legislation quickly.”
“This is a ridiculous confict of interest which should be banned in a code of conduct for tax advisers,” said committee chair Margaret Hodge.
Miles Dean, of Milestone International Tax Partners, said: “Hodge’s attack on HMRC is insulting to the many thousands of well trained tax inspectors whose job it is to administer the law – particularly given the controversy surrounding her own relationship with Stemcor.”
An HMRC spokesperson said: “The facts show that we are not only aggressively fighting battles against tax avoidance, but we are winning them.”
A Treasury spokesperson struck back at the PAC’s report, saying: “The analysis and conclusions in the PAC report bear almost no resemblance to reality of what government is doing or what is happening.”
“In particular, as a matter of principle, the suggestion that government shouldn’t work with business and indeed anyone affected by its policies is totally absurd.”
KPMG responded in a statement: “When requested to by government departments we do provide individuals on secondment. Their role is to provide tax technical input and commercial experience so that the authorities can make informed choices on tax policy. Our secondees do not write legislation or make policy decisions.”