Tax policy success as bidders for government contracts ‘very mindful’ of need to be tax compliant

Gurjit Degun
27 August 2014

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27 August 2014 | Gurjit Degun

Suppliers bidding for central government contracts of £5 million or more are “very mindful of the need to be tax compliant”.

That's the finding of a review of the Tax and Procurement policy which encourages tax compliance among government suppliers. Under the guidelines, if a business cannot certify a “clean” tax record, government departments can exclude them from a procurement process.

Of the 65 bids applying for central government contracts of £5 million or more, HM Revenue & Customs and the Cabinet Office found one potential bidder failed the overriding mandatory procurement test. This however was because the bidder could not provide and deliver services that would fulfil the contract, not whether they were tax compliant. The remaining 64 potential bidders declared they had been tax compliant.

“The review explored whether the policy is having the intended effect of encouraging tax compliance from government suppliers,” a statement from the government said. “The review found that early indications are that those wishing to bid for relevant contracts are very mindful of the need to be tax compliant.”

The policy came into effect from 1 April 2013 and requires suppliers to self-certify that they have not engaged in tax evasion or tax avoidance, which it defined as "avoidance which has had to be reported under the Disclosure of Tax Avoidance Schemes regime; or is subject to a ruling under the General Anti-Abuse Rule; or is an indirect tax avoidance scheme or any overseas equivalents".

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