Town hall to launch review of contractors suspected of tax dodging

Islington Town Hall

Islington Town Hall - Credit: Archant

Major firms could face loss of contracts if found to be evading tax

A new town hall committee is set to be established to cut council ties with any companies suspected of avoiding tax or promoting evasion methods.

Under moves by the performance and policy scrutiny committee, a number of organisations could be investigated and stopped from winning council contracts.

Cllr Andy Hull, executive member for finance and performance, this week said that one of the contracts which could “potentially” be reviewed is that with global auditing firm PricewaterhouseCoopers (PwC).

The consultancy company has been previously condemned by the former leader of the council, Margaret Hodge, in a Public Accounts Committee report earlier this year which said allegations it had helped set up Luxembourg accounts for clients “bear all the characteristics of a mass-marketed tax avoidance scheme”. The company denies all claims.

In figures obtained under the Freedom of Information Act, it has been revealed that the council has paid the company £1.7m over a four-year period from 2010 for its auditing and consultancy services.

The amount paid to PwC increased exponentially from £372,925 in the financial years 2010-11 to £486,228 in 2013-14, with the council accepting a number of hospitality gestures including tickets to partner dinners at top hotels.

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Former council leader and Lib Dem spokesman Terry Stacy said: “If true, as soon as these allegations were made the council should have questioned its relationship with PwC, and reviewed its contact with the company accordingly.”

The council contract with PwC is due to run until 2018, and is part of a joint framework agreement with five other London boroughs – Barnet, Camden, Enfield, Lambeth and Harrow.

Cllr Hull said: “It is a matter of public record that PwC provides audit support for Islington Council and a number of other London boroughs.

“The council’s policy and performance scrutiny committee will choose freely which organisations, including potentially PwC, it wishes to scrutinise when its review on tax avoidance gets under way in the autumn. The council will reflect carefully on the committee’s findings once the review is done.”