By Richard Johnstone | 14 February 2013
Companies found guilty of tax avoidance could be banned from winning government contracts, under proposals published by the Treasury today.
The draft rules, which could be in place by April, would require bidders for government tenders to confirm that they have complied with their obligations to pay tax over the past decade.
Specifically, they would have to tell the department if any tax returns had been found to be incorrect following challenge by Revenue & Customs under anti-avoidance and anti-abuse rules. Suppliers would also be required to disclose any convictions or penalties for tax-related offences, civil fraud or evasion.
The Treasury’s consultation document stated that the regulations would apply to all taxes administered by R&C, including corporation tax, income tax, national insurance and VAT.
Departments would be able to disqualify any bidder that has broken the rules, Chief Secretary to the Treasury Danny Alexander said.
The regulations would work in partnership with the government’s new General Anti-Abuse rule, intended to tackle ‘artificial’ tax avoidance schemes, he explained. ‘These new rules are another significant tool as they will enable government departments to say no to firms bidding for government contracts where they have been involved in failed tax avoidance.’
Cabinet Office Minister Francis Maude, who is responsible for government procurement, added: ‘This government is dealing with the unprecedented deficit we inherited, and that's why it is only right we ensure that only companies that are meeting their tax obligations can win government contracts.
‘We will continue to put value for money at the heart of our procurement practice as we drive millions of pounds of savings for the taxpayer. These new rules provide a framework that allows departments to promote tax compliance through the bidding process.’