When it comes to the most controversial tax-avoiding US technology companies, one common thread appears: the accountancy giant Ernst & Young (EY).
The firm serves as auditor and tax adviser to Google, Apple, Facebook and Amazon – the businesses which have come under the most fire for avoiding taxes. EY’s presence at each multinational makes it by far the most prevalent accountant in the current tax controversy.
The work is hugely lucrative: publicly available accounts show it billed the four firms some $245m (£171m) in recent years. Of that, $34.5m was for advice on tax affairs, with the rest for auditing the accounts – an activity that includes checking the company’s statements to the taxman are accurate.
At Google, EY has been billing between $2m and $5.5m for tax advice every year since 2011. At Facebook, which is resisting attempts by HMRC to reclaim back taxes, it was paid between $3.2m and $5.3m in the past three years – the only periods for which there is public documentation.
Last year’s bill to Apple was $1.7m for tax advice.
EY came under fire from MPs on the Public Accounts Committee in their investigation into Google’s tax avoidance methods. Committee members drew attention to a number of controversies around EY’s activities in the US which it claimed amounted to “a chain of audit failures” including a widely publicised Senate committee criticism of its tax work with Hewlett-Packard.
As a result of EY’s evidence to the committee on Google, the PAC report concluded: “We expect the big accountancy firms to recognise that the public mood on tax avoidance has changed. They should provide responsible advice to ensure that corporate arrangements reflect the substance of transactions in the UK and enable their clients to be more transparent about where they make profits and pay tax.”
Partners at the firm are set to earn a share of its profits last year averaging £700,000 each. A spokesperson said: “We do not comment on audit clients due to client confidentiality.”