MPs conclude tax arrangements promoted by PricewaterhouseCoopers bear all the characteristics of a mass-marketed tax avoidance scheme. The top tax partner at PricewaterhouseCoopers, Kevin Nicholson, misled parliament over complex Luxembourg financing structures the accountancy firm helped to set up for scores of multinationals to avoid tax, according to MPs.
In a report published on Friday, the public accounts committee dismisses Nicholson’s repeated claims that PwC was not in the business of selling tax avoidance. MPs pointed to evidence unearthed in investigations published in November in the Guardian and more than 20 news outlets around the world, under the auspices of the International Consortium of Investigative Journalists (ICIJ).
Committee chair Margaret Hodge said: “Contrary to its denials, the tax arrangements PwC promotes, based on artificially diverting profits to Luxembourg through intra-company loans, bear all the characteristics of a mass-marketed tax avoidance scheme.”
Nicholson had been recalled to give further evidence last December after MPs felt his 2013 evidence had been put in question by the Guardian’s investigations. Fearghas Carruthers, the head of tax at drug firm Shire, a PwC client which also featured in the investigation, gave evidence too.
Two years ago Nicholson told MPs: “We are not in the business of selling schemes. We do not mass-market tax products, we do not produce tax products, we do not promote tax products.”
Analysis Luxembourg tax files: how tiny state rubber-stamped tax avoidance on an industrial scale
Leaked documents show that one of the EU’s smallest states helped multinationals save millions in tax, to the detriment of its neighbours and allies
The MPs’ report comes as political leaders in the European parliament promised their own special committee to examine tax rulings granted not just by Luxembourg, but by all member states.
The special committee’s work will last a year and it has powers to examine a wide range of paperwork at the European level.
The move disappointed many MEPs, however, as more than a quarter had petitioned for leaders to endorse a full committee of inquiry, with powers to review papers from member states as well as internal Brussels documents.
The Guardian’s investigation into PwC’s activities in Luxembourg was made possible by the leak of thousands of pages of confidential tax rulings secured by the accountancy firm, which found their way to the ICIJ.