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Big Four dragged into Luxembourg tax controversy

The world’s four largest audit firms are getting a taste of the controversy that surrounds Luxembourg and its facilitation of multinationals decreasing tax bills.

Although the focus was initially on PwC, along with hundreds of multinationals, EY, Deloitte and KPMG have also now come under the spotlight.

The Public Accounts Committee has accused PwC and pharmaceutical firm Shire of defrauding the British public with regards to structuring.

The International Consortium of Investigative Journalists named the drug firm among hundreds of companies with structures convenient for Luxembourg, which is known to have low taxes.

The investigation found close to 28,000 documents detailing tax agreements with Luxembourg, suggesting the tiny state was helping over 1,000 multinationals to avoid tax. The relationships in question, which don’t break any laws, were given the go ahead by the Grand Duchy. While the breached documents mainly regarded PwC clients, the Guardian reported that the arrangements have seen all of the ‘Big Four’ firms involved.

In its statement, KPMG said:

“KPMG International has a comprehensive, robust and publicly available global code of conduct setting the standards of ethical conduct for everyone at KPMG member firms.

“Tax professionals are also subject to KPMG’s global tax principles, which set out additional fundamental ethical principles and behaviours.”

Whenever large enterprises are involved in any controversial tax issue, it tends to become public knowledge. This doesn’t mean that smaller firms can easily avoid HMRC’s radar. Companies of all sizes need to be vigilant when it comes to tax, and to avoid falling foul of the rules or ethical practices. Employing the services of an accountant in the Wirral would certainly be a smart move towards keeping everything in order.

Posted by Mark
December 24, 2014

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