The UK faces a serious problem of avoidance of corporation tax, due in part to the complexity of the tax regime in the UK, but mainly because the international tax system gives multinational companies opportunities to shift profits between countries in ways that reduce their liabilities in the UK. The House of Lords Economic Affairs Committee says this damages the economy and undermines trust in the tax system. The Committee supports the case for fundamental reform of the international corporate tax framework being pursued in the OECD, but it not clear that the reforms will be effective or whether they can be achieved within the proposed two year timescale. The report calls for the Treasury to undertake a fundamental review of the UK’s corporate tax regime, including the differential treatment of debt and equity. The present system can encourage multinational companies to take on excessive debt in the UK, including by borrowing money from an overseas subsidiary, to reduce their tax liability. Other recommendations include: consideration of a new system of regulation for tax advisers; better parliamentary oversight of HMRC so that the public can be confident that tax deals it agrees with multinational companies are appropriate; firms to publish a summary of their corporation tax returns to ensure there is clarity on what tax has been paid; HMRC should be adequately resourced to deal more effectively with multinationals. The report is critical of the practice of HMRC employing seconded staff from the Big Four accountancy firms.