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MPs attack government IT suppliers over tax avoidance schemes

Matthew Finnegan | Jan. 11, 2013
MPs have attacked the tax avoidance measures employed by some major IT companies, claiming that firms paying no corporation tax in the UK should be not be awarded large IT contracts in future.

The figures presented in the parliamentary debate have been questioned by one of the vendors however.

A spokesman for Accenture told ComputerworldUK that the company is in full compliance with domestic tax laws, claiming figures cited MPs have been calculated incorrectly.

"Accenture reports all of its revenues earned within the UK, pays taxes on the profits earned within the UK and we are confident that our tax filings are compliant and appropriate," the spokesman said."It is not correct that in 2011 we reduced our tax bill to 3.5 percent, paying only £2.8 million in tax on nearly £82 million of profits."

The spokesperson said that the calculations arriving at this figure had been inaccurate, and had failed to take into account deductions on the total tax charge given to Accenture."On profits of £81.8m the tax charge at the effective statutory rate of 27.16 percent gives £22.2m," he said. "Our current tax charge was reduced by deductions and losses brought forward and other timing differences to a current tax charge of £2.8m. All of this can be verified through our filings with Companies House."

He added that the company is also due to pay an additional £12.7 million in corporate taxes, deferred to later periods "as required by UK GAAP and tax legislation". This will mean Accenture's total tax expense amounts to £15.5 million for the 2011 financial, he said, representing an effective tax rate of 19 percent.It is not the first time companies accused of paying little corporation tax have been warned about being blocked from public sector IT contracts by MPs.

At a Public Accounts Committee hearing late last year concerning tax avoidance by major multinationals, Swales said that Google could be shut out from providing public sector IT services. PAC chair MP Margaret Hodge claimed at the hearing that the government had been "too lenient" on multinational companies paying tax outside of the UK.

 

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