There is no clarity over where firms draw the line between acceptable tax planning and aggressive tax avoidance, according to the latest report from the Public Accounts Committee (PAC) on the Big Four accounting firms.

The scathing remark follows an inquiry into the role of the Big Four - PwC, Ernst & Young, Deloitte and KPMG - into their advisory role in issues of tax avoidance and comes three months after the four firms faced a PAC hearing on the issue.

According to PAC, the firms stated that they would no longer engage in some of the schemes they devised ten years ago, such as the cases they have lost in court.

'We heard about the guidelines that firms have to govern their tax advice, but they are still devising complex schemes that look artificial and their appetite for risk appears high - selling schemes that they consider only have a 50% chance of being upheld in court.

'These principles do not stop them selling schemes with as little as 50% chance of succeeding if challenged in court. Clearly HMRC has to consider the risk to the taxpayer of a protracted legal battle. It would appear that firms and tax avoiders are taking advantage of the constraints under which HMRC is obliged to operate. Furthermore, HMRC is always constrained by resources,' the PAC said in its report.

It also recommended that the Treasury introduce a code of conduct for tax advisers, setting out what it and HMRC consider acceptable in terms of tax planning.

'Compliance with this code should determine whether or not these firms can access both government and public sector work,' the PAC said.

PAC chair Margaret Hodge said that the firms declare their focus is 'now on acceptable tax planning and not aggressive tax avoidance'.

'These protestations of innocence fly in the face of the fact that the firms continue to sell complex tax avoidance schemes with as little as 50% chance of succeeding if challenged in court,' said Hodge.