ICAEW and the Big Four firms have acknowledged the need for enhanced professional guidance covering tax avoidance in the wake of the recent highly critical Public Accounts Committee (PAC) report on the role of the large accountancy firms.

Michael Izza, ICAEW chief executive said: 'We will continue to ensure ICAEW chartered accountants are aware of their obligations when it comes to the provision of tax advice. This includes updating our guidance for members to reflect the latest measures designed to reduce aggressive tax avoidance including the introduction of the General Anti-Abuse Rule (GAAR) later this year.'

Jane McCormick, head of tax at KPMG in the UK, pointed out that while the PAC suggested the Treasury should introduce a code of conduct for tax advisers, 'it is worth noting that there is already a Professional Code of Conduct which has been jointly prepared by the professional institutes and reviewed by HMRC. This code is being updated by the institutes to ensure it reflects the current environment.'

John Dixon, UK managing partner for tax at Ernst & Young, said that revisions to tax policy were also necessary, as well as clearer guidelines for advisers.

'The UK tax system is not broken, but we absolutely do need to rebuild the confidence of the public that the tax system is operating as Parliament intended. Greater transparency is fundamental to creating that confidence, as is the simplification of the UK tax code, which everyone agrees has become extremely complex,' Dixon said.

All the Big Four challenged the PAC's view that secondees from large accountancy firms who advise government were then able to use that position either to influence the development of tax policy or to advise clients of potential loopholes in legislation.

Kevin Nicholson, head of tax at PwC, said: 'We strongly disagree with the PAC's conclusions about the role of large accountancy firms which seem to be based on a misunderstanding both of what we do and how we do it. We operate under a clear code of conduct, professional guidelines, and work constructively with HMRC. We provide technical insight to government but only when asked and are never involved in deciding tax policy which is a matter for the government.'

Bill Dodwell, head of tax policy at Deloitte, said: 'Tax advisers are already governed by a code of professional ethics which is set by a range of professional bodies including the CIOT and accountancy bodies and this is regularly updated to reflect the current environment. We expect that the next update of the code will cover this issue in more detail, to help all tax advisers understand their professional obligations.'