Breaking News – UK government says tax cheating b****** firms should be banned from winning public contracts

The UK’s Treasury (Finance Ministry) announced new rules  today to ban firms who avoid tax illegally from winning public sector contracts.

“New rules that will allow government departments to ban companies and individuals which take part in failed tax avoidance schemes from being awarded Government contracts have been unveiled by Chief Secretary to the Treasury, Danny Alexander and Minister for the Cabinet Office, Francis Maude today”.

Draft guidance has been published for consultation, but as it is hoped to bring the new rules into effect on April1st, there is not long for discussion. We’ll look in more detail at what it means, whether it is practical and might work next week.

But as well as the announcement from Treasury here, there is a Procurement Policy note on the Cabinet Office website here.  And as well as laying out the proposals, Cabinet Office is looking for feedback from procurement staff in terms of how the rules might work.

Basically, the idea is that suppliers will self-certify as part of the tendering process to say whether they’ve been naughty boys and girls in tax terms, (e.g. “Any tax return is found to be incorrect as a consequence of HMRC successfully taking action under the General Anti-Abuse Rule (GAAR) … “  etc).

If they do own up, there seem however to be quite a few mitigating excuses, even if the firm has transgressed at some point – for example, "we’ve got new management in since then". Anyway, more to come on this…


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Voices (2)

  1. Jonathan Betts:

    I guess the devil will be in the detail but surely a tax avoidance scheme is either legal or illegal. If the latter, then presumably they can be eliminated in the contracting process anyway? If it’s the type of scheme that’s pushing the boundaries (i.e. isn’t illegal at the time) but is subsequently judged to be through the courts then the company will have broken the law which again would be picked up in the contracting process.

  2. John Diffenthal:

    The weasel words here are in the term ‘avoid tax illegally’. It’s an oxymoron. To those in the trade, avoiding tax is entirely legal and is a consequence of poorly drafted legislation. Illegal tax evasion takes place despite well drafted legislation, but there hasn’t been much in the newspapers about major corporates doing that kind of thing – it is more often the preserve of VAT fraudsters than corporate tax avoiders like Facebook, Google, Starbucks and others who are supposed to be ‘smelling the coffee’.

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