Treasury takes PwC to task over £10bn Budget tax claim

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The Independent Online

Critics of budget measures to tighten up the tax regime for multinational companies had been unable to substantiate their claim the plans could cost companies billions of pounds, the Treasury said yesterday.

Critics of budget measures to tighten up the tax regime for multinational companies had been unable to substantiate their claim the plans could cost companies billions of pounds, the Treasury said yesterday.

In a frank statement, the Treasury said representatives from PricewaterhouseCoopers, the accountancy firm, had denied they said Budget proposals would cost business £8bn-£10bn. Nor could they provide any evidence or analysis to back up their claim earlier this week that the cost could be "several billions annually".

The Conservatives had pounced on the accountants' claims to criticise the tax burden on business, in the wake of Tuesday's Budget.

Yesterday Michael Portillo, the shadow chancellor, said Gordon Brown had piled "stealth taxes" on to business. "While he loudly lowers headline rates, he quietly fiddles the figures and increases a vast range of other taxes which leave families and businesses struggling to cope," he said.

The Treasury said that, in a meeting yesterday afternoon, Peter Wyman, a senior partner at PwC, "merely said clients, whom he could not name, were concerned about the potential impact of the Budget measures". The Treasury said it was not clear these concerns were based on a correct understanding of the proposals, which affect double taxation and "controlled foreign companies" used by multinationals to manage UK tax liability.

It added that it would be willing to talk to any worried companies to clear up the misunderstanding.

"The Government is concerned that the UK should maintain an internationally competitive tax system," it said. But it would root out artificial avoidance devices in order to keep corporate tax rates low.

Piling on the embarrassment for the accountants, it ended: "The Government will not be deterred from doing so by lobbying from tax-avoidance advisers."

PwC last night described the meeting as "very useful".

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