With Tesco overstating its profit forecasts by £250m, despite having the accounts audited by PwC, even more doubts arise about the integrity of our current system of "shareholder capitalism". Their "cosy and lucrative relationship" is reminiscent of the recent tax avoidance case involving Greene King and their auditors, Ernst and Young. The schemes were described by Tory MP Richard Bacon as "purely artificial", having been bought from Ernst and Young for 8% of the tax saved, and marketed as "Project Sussex". The fact that Ernst and Young, one of the "Big Four" audit firms, along with Deloitte, PwC and KPMG, is allowed to "market" such devices and be paid according to the amount of tax avoided, is deplorable, and any government with an ounce of morality would declare it illegal.
Even worse, the success of the scam depended, according to the QC representing HMRC, on "certain accounting treatments", and Greene King`s accounts were signed off by auditors from, of course, Ernst and Young! Should we be surprised by this, especially when representatives from the so-called "Big Four" sit on Treasury committees advising on ways businesses can be lured into Britain by schemes such as the "patent box" scam, which result in lower corporation tax being paid, often as low as 5% instead of the required 23%? No, any more than MPs earning £7.1m from their "second jobs and outside interests" comes as a shock, even though a minister of state at the Department of Energy and Climate Change earning £100,000 from "three firms in the energy sector" does beggar belief! How could it be possible for him not to use "privileged information learned as a minister"? Strange how one of the firms involved, Vitol, recently only paid 2.6% global tax on profits of £846m, and its CEO donated £550,000 to the Tory party!
As the Alliance for Lobbying Transparency says, MPs` "paymasters are the public" and we have the right to know not only about the details of all the income received by candidates in the forthcoming election, but of their taxes paid too. A party pledging that really would be different!