TAX NEWS - June 2010

UK Tax: MPs clash on accountants' role in tax avoidance

John Pugh MP hits out at profession for facilitating tax avoidance, a claim which was shot down by accountant Nigel Mills MP

MPs have clashed on the role of accountants in helping individuals avoid tax.

At a Westminster debate yesterday, John Pugh MP hit out at the profession for the advice given to clients by saying, "the only real difference or line between evasion and avoidance is the thickness of a prison wall," pinpointing the role of accountants in tax planning activities.

"There are some well rewarded people in the City whose life is almost entirely dedicated to some form of tax avoidance or tax planning-whatever they want to call it-which they regard as an entirely legitimate enterprise."

However, accountant Nigel Mills MP hit back at the claims.

"Until the election, I was employed by one of the large firms of accountants, although I assure Dr Pugh that I was not involved in tax avoidance," Mills said.

"My role was to seek up-front agreements with Her Majesty's Revenue and Customs, which was generally more than happy to enter into such agreements with my clients.

"I am not guilty of the things of which he accuses accountants."

Pugh also called for general anti-avoidance rules to be introduced to widen the net for catching errant taxpayers, but Mills shot down this option.

"We need to increase tax revenue, so we need to attract taxpayers to the UK and encourage them to remain here,"said Mills.

"A general anti-avoidance rule in principle may not be a brilliant way of doing that."