Big biz, expensive beancounters write UK tax law, says senior MP
Alarm raised as corps get cosy with taxmen
Corporate giants and accountancy firms hold too much sway over UK's tax law, according to the chairwoman of an influential parliamentary panel.
Labour MP Margaret Hodge, who heads up the Public Accounts Select Committee, said the Tory-led coalition government "only talks to those who have a self interest in reducing their tax contribution" when writing new rules.
Representatives from heavyweight beancounters KPMG, Deloitte, PwC and Ernst & Young will be quizzed by the committee today. The panel's MPs want to know how much time and energy the accountants spend on helping firms legally exploit tax loopholes.
The news comes as Google exec chairman Eric Schmidt, who previously praised the ad giant's ability to minimise its tax bill, said he would go along with any changes Britain made to tax payments.
Speaking at Cambridge University, Schmidt said that "whatever the tax regime, we would pay that".
Prime Minister David Cameron said at the World Economic Forum in Davos last week that countries had to cooperate with each other to crack down on tax shenanigans.
"When some businesses aren't seen to pay their taxes, that is corrosive to the public trust," he said. "I want this year's G8 [meeting of the largest economic powers] to bring a new focus on tax [and] transparency."
However, new rules in UK levies coming into play this year have stirred controversy: the changes include tax breaks for companies that patent their products; and firms that have offshore finance arms will be able to pay just a quarter of the standard 23 per cent corporation tax on profit.
The changes were decided in consultation with "working groups", which Hodge said were dominated by top business bods - including folks at accounting firms and companies with potentially huge corporate tax bills. She believes this is a conflict of interest.
"What to me is really dangerous is that many are working very closely both with HMRC and with the Treasury to devise new tax changes, and then they exploit those perfectly legitimate objectives," Hodge told the BBC. ®