Investigate accountancy firms supporting tax avoidance in Scotland and suspend any new Scottish Government contracts

SNP 2016 election manifesto stated it would not give public procurement contracts to firms involved in tax dodging

COMMON WEAL and one of Britain’s leading tax experts have called on the Scottish Government to investigate the appropriateness of giving contracts to accountancy firms supporting tax avoidance activities in Scotland, in light of new Paradise Papers revelations on Tuesday 7 November.

Common Weal has also called on Revenue Scotland to publicly declare whether it is opening an investigation into whether Deloitte and PwC broke or is designing ownership structures which break the tax administration’s General Anti-Avoidance Rule on LBTT, the Scottish replacement for Stamp Duty introduced in 2015.

“If they have designed tax dodging structures for this corporation, which other corporations have they done the same for in Scotland? How much are we losing in non-domestic rates and LBTT every year from these same firms that we give big public contracts to?” Ben Wray

Following revelations in the BBC and The Guardian about the role of Deloitte and PwC in designing tax avoidance ownership structures for US private equity giant Blackstone so that it could avoid tax on the purchase of and income from the St Enoch Centre, Ben Wray Common Weal head of policy said:

“The Scottish Government and public authorities in Scotland give huge contracts every year to Deloitte and PwC for services. Now we find through the Paradise Papers revelations that they are both involved in designing ownership structures which allowed Blackstone to avoid almost all tax on its purchase and income from the St Enoch Centre in Glasgow. If they have designed tax dodging structures for this corporation, which other corporations have they done the same for in Scotland? How much are we losing in non-domestic rates and LBTT every year from these same firms that we give big public contracts to?

“This is an issue for the Scottish Government and for Revenue Scotland. The SNP stated in its 2016 election manifesto that it would not give public procurement contracts to companies involved in tax dodging. They must now see that policy through in the case of Deloitte and PwC by investigating their actions in relation to tax avoidance and suspending all new contracts for the two firms until these investigations are complete.

“While the purchase of the St Enoch Centre took place in 2013 before powers over Stamp Duty were devolved to the Scottish Parliament, Revenue Scotland must investigate whether its General Anti-Avoidance Rule is or has been broken by the opaque ownership structures designed by Deloitte and PwC with the specific purpose of avoiding payment of tax, including LBTT which falls under the jurisdiction of Revenue Scotland.”

“This is no minor issue. The Paradise Papers show that Scotland has to fight for the right to tax against those who would deny it, and its people, that power.” Richard Murphy

Commenting on the revelations in Scotland, Professor Richard Murphy, tax justice campaigner and chartered accountant who has recently published a report on the role of the ‘big four’ accountancy firms in dodging tax, said:

“Scotland is now establishing its right to tax. And at exactly the same time as it is doing so we can see the forces of international capitalism lined up to undermine Scottish taxation. This is no minor issue. The Paradise Papers show that Scotland has to fight for the right to tax against those who would deny it, and its people, that power.”