The Big Four have been criticised for their conflicts of interest in relation to seconding their staff to government - described by MPs of the Public Accounts Committee (PAC) as 'poacher turned game keeper' that then went back again to being a poacher.
As a result of the inquiry, PAC has now recommended that the Treasury and HMRC enforce a ban in its code of conduct in respect of the conflict of interest concerning advisers who work for government and then return to their firms to continue as tax advisers.
The PAC report, published today, followed a grilling of the Big Four firms about the tax advice they provide to large clients, during a hearing before the committee in January.
In its report - detailing how PwC, Ernst & Young, Deloitte and KPMG are seconded to the Treasury to advise on technical issues in drafting legislation - the PAC said it is 'inappropriate for individuals from firms to advise on tax law and then devise ways to avoid tax'.
The firms, the report said, conceded that this may give rise to a perception that they have an influence on the formulation of tax policy that smaller businesses do not have.
PAC chair Margaret Hodge described their relationship with government as 'unhealthily cosy'.
'They second staff to the Treasury to advise on formulating tax legislation,' said Hodge. 'When those staff return to their firms, they have the very inside knowledge and insight to be able to identify loopholes in the new legislation and advise their clients on how to take advantage of them. The poacher, turned gamekeeper for a time, returns to poaching.
'This is a ridiculous conflict of interest which should be banned in a code of conduct for tax advisers, as we have recommended to the Treasury and HMRC,' said Hodge.
However, head of tax policy at Deloitte, Bill Dodwell - who had appeared before PAC in January - defended the way the Big Four helped the Treasury and HMRC with staff secondments.
'First of all, we have seconded staff to the Treasury at their request. And this is a very small number of people - probably one a year,' said Dodwell.
He said that he did not discuss this average for Deloitte at the PAC hearing as the questions on staff secondment had been directed at another Big Four firm.
'It was a matter of regret to me that we didn't have the chance to raise these points in front of the committee. I accept that anything suggesting the perception of a conflict of interest is unhelpful and we would want to avoid this going forward.
'The thing that concerns us is this perception - we absolutely don't think there has been a conflict of interest and we would want to work hard to completely remove any possible perception of that,' said Dodwell.
Responding to PAC assertions that Big Four staff help to draft tax rules, and then return to their firms to advise on potential loopholes, Dodwell argued said that staff who are seconded go to the 'bottom of the Treasury's tax staff' and are not in a position to influence policy decisions around the rules.
'Policy is determined by senior Treasury and HMRC staff. We'd be quite happy if we didn't second anybody. They ask for help and we provide it in a pretty limited fashion. If the Treasury were to devise a code of practice for this that would be absolutely fine,' said Dodwell.