Margaret Hodge to grill PwC and Shire over tax avoidance in Public Accounts Committee
The accountant PricewaterhouseCoopers and drugs giant Shire are due face a tense parliamentary showdown over tax avoidance with an angered Margaret Hodge today.
PwC’s head of tax, Kevin Nicholson, was summoned to face Ms Hodge’s powerful Public Accounts Committee following reports last month that multinational corporations advised by PwC Luxembourg had saved millions in tax by channelling money through the grand duchy.
The affair has threatened to undermine the European Commission presidency of Jean-Claude Juncker, who was prime minister of Luxembourg for nearly two decades until last year.
Shire, a FTSE 100 pharmaceuticals group headquartered in low corporation tax Ireland, was reportedly one of PwC’s tax clients and was charged tax of a fraction of a percentage point on nearly $1.9bn (£1.2bn) of profit attributed to its Luxembourg unit over a five-year period. Fearghus Carruthers, Shire’s head of tax, was also due to appear at the hearing today.
A committee source said its chairman, Ms Hodge, who is a favourite to be Labour’s candidate for Mayor of London, had “surprises” for the pair.
Last year, PwC and three other leading accountants – Deloitte, EY and KPMG – told the committee that they were no longer involved in the type of aggressive tax avoidance schemes that were commonplace a decade ago.
Ms Hodge confirmed she is “really annoyed”, implying that she believes her committee was right to conclude last year: “We believe they have simply moved to advising on other forms of tax avoidance which are profitable for their clients; such as the complex operating models they offer to major corporate clients to minimise tax by exploiting the lowest international tax rates.”
A source close to PwC said Mr Nicholson would clarify the group’s position and repeated an earlier statement that the accountant would “stand by” evidence given to the committee at the start of last year.