Tax avoidance: Treasury minister dismisses 'absurd' warning that HMRC is ‘too cosy’ with accountancy giants

Big Four ‘outgun’ HMRC in tax avoidance battle

A Treasury minister today dismissed as “absurd” a warning by MPs that accountancy firms who second staff to the Government later use their inside knowledge to help companies and rich people to exploit tax loopholes.

David Gauke, the Exchequer Secretary, defended the Treasury’s use of experts from the “big four" accountancy firms Deloitte, Ernst & Young, KPMG and PricewaterhouseCoopersto advise on tax law. He rejected criticism from the Commons Public Accounts Committee that such staff could be “poacher turned gamekeeper turned poacher” because they could advise clients on how to avoid tax after returning to their accountancy firms.

Mr Gauke said: “We’ve benefited from their involvement in developing the law. We are benefiting from accountants going around the world to their clients saying ‘invest in the United Kingdom', so I don’t see there’s a conflict of interest there.”

He added: “If there were any issues of people acting outside the letter of the law or indeed the spirit of the law then HM Revenue & Customs (HMRC) would act. The idea that we shouldn’t make use of private sector expertise in developing a tax system that would bring investment and development to the UK is absurd. They’re not going out to advise clients on how to dodge the legislation, they’re going out to advise clients on how to abide by the legislation.”

Jim Harra, the director-general of business tax at HMRC, told BBC Radio 4’s Today programme he did not recognise the problem identified by the committee. "That's something we would be very vigilant about and something I don't recognise that we see," he said. "Clearly they do go back out with some expertise and they do advise on how to use the legislation. We watch very carefully what advice accountants are giving to their clients. Provided that advice is how to use the legislation in accordance with the way Parliament intended it to be used, we have no problems with that."

Mr Harra added: "We do use secondments as part of our way of consulting on the design of tax legislation. The people who we bring in, in very small numbers, are closely directed by senior officials, so they are not in the lead on any of this."

But Margaret Hodge, the Labour MP who chairs the committee, told the same programme there should be a code of practice to prevent accountancy firms whose staff provide technical advice helping clients to pay less tax. Avoiding tax was a “big industry” which HMRC was too poorly resourced to confront, she said.

Fiona Hotston Moore, senior partner of Reeves accountants, said:  “There is indeed a perceived conflict of interest whereby the ‘big four’ tax advisers are advising and consulting on setting tax strategy whilst advising their own clients on tax avoidance.”

She added: “We need co-operation between the accounting bodies and HMRC and also international co-operation. Such co-operation should be organised so it is not perceived to benefit individual firms but rather the profession is working with HMRC for the benefit of the wider interests. Part of the solution would be to beef up the high-level internal tax technical resource within HMRC.”

Start your day with The Independent, sign up for daily news emails
Sport
tennisLive: Follow all the updates from Melbourne as Murray faces Czech Tomas Berdych in the semi-final
Arts and Entertainment
'The Archers' has an audience of about five million
radioA growing number of listeners are voicing their discontent; so loudly that even the BBC's director-general seems worried
Arts and Entertainment
Henry VIII played by Damien Lewis
tvReview: Scheming queens-in-waiting, tangled lines of succession and men of lowly birth rising to power – sound familiar?
Arts and Entertainment
Taylor Swift is applying to trademark song lyrics from 1989
musicYou'll have to ask Taylor Swift first
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
News
Joel Grey, now 82, won several awards for his role in Cabaret
people
Sport
Harry Kane celebrates scoring the opening goal for Spurs
footballLive: All the latest transfer news as deadline day looms
2015 General Election
May2015

Poll of Polls

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Compliance Assistant

£13000 per annum: Recruitment Genius: This Pension Specialist was established ...

Recruitment Genius: Service Agent / QA Engineer

Negotiable: Recruitment Genius: This is an exciting opportunity to join an est...

Recruitment Genius: C# / XAML Developer

Negotiable: Recruitment Genius: This is an exciting opportunity for a talented...

Recruitment Genius: Senior Digital Project Manager

Negotiable: Recruitment Genius: This established Digital Agency based in East ...

Day In a Page

Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

Isis stands strong as its numerous enemies fail to find a common plan to defeat it

The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

Virtual reality: Seeing is believing

Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
Homeless Veterans appeal: MP says Coalition ‘not doing enough’

Homeless Veterans appeal

MP says Coalition ‘not doing enough’ to help
Larry David, Steve Coogan and other comedians share stories of depression in new documentary

Comedians share stories of depression

The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
Has The Archers lost the plot with it's spicy storylines?

Has The Archers lost the plot?

A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
English Heritage adds 14 post-war office buildings to its protected lists

14 office buildings added to protected lists

Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Scientists unearthed the cranial fragments from Manot Cave in West Galilee
World War Z author Max Brooks honours WW1's Harlem Hellfighters in new graphic novel

Max Brooks honours Harlem Hellfighters

The author talks about race, legacy and his Will Smith film option to Tim Walker
Why the league system no longer measures up

League system no longer measures up

Jon Coles, former head of standards at the Department of Education, used to be in charge of school performance rankings. He explains how he would reform the system
Valentine's Day cards: 5 best online card shops

Don't leave it to the petrol station: The best online card shops for Valentine's Day

Can't find a card you like on the high street? Try one of these sites for individual, personalised options, whatever your taste
Diego Costa: Devil in blue who upsets defences is a reminder of what Liverpool have lost

Devil in blue Costa is a reminder of what Liverpool have lost

The Reds are desperately missing Luis Suarez, says Ian Herbert
Ashley Giles: 'I'll watch England – but not as a fan'

Ashley Giles: 'I'll watch England – but not as a fan'

Former one-day coach says he will ‘observe’ their World Cup games – but ‘won’t be jumping up and down’
Greece elections: In times like these, the EU has far more dangerous adversaries than Syriza

Greece elections

In times like these, the EU has far more dangerous adversaries than Syriza, says Patrick Cockburn
Holocaust Memorial Day: Nazi victims remembered as spectre of prejudice reappears

Holocaust Memorial Day

Nazi victims remembered as spectre of prejudice reappears over Europe
Fortitude and the Arctic attraction: Our fascination with the last great wilderness

Magnetic north

The Arctic has always exerted a pull, from Greek myth to new thriller Fortitude. Gerard Gilbert considers what's behind our fascination with the last great wilderness