Wednesday, 20 February 2013

UK Government Gets Serious About Taxes: Proposal Could Ban Tax-Avoiding Suppliers from Public Contracts

Authored by Richard Hogg 

Tax season has arrived and the government isn't playing around this year. Fed up with corporate tax avoidance schemes, the Treasury and Cabinet offices have proposed new regulations that could ban companies from winning lucrative government contracts.

The new proposal, if passed, will allow buying organisations to require suppliers and contractors to disclose information about tax payments for contracts worth more than £2 million. Suppliers found to have been involved in failed tax avoidance schemes could be barred from the tendering process, and have existing contracts terminated. Adam Leach provides a detailed breakdown of the proposed regulation on SupplyManagement.com.

According to The Guardian, Francis Maude, who oversees government procurement deals, said: "It is only right we ensure that only companies which are meeting their tax obligations can win government contracts. These new rules provide a framework that allows departments to promote tax compliance through the bidding process."


The proposal could, however, add a lot of complexity to the sourcing process for resource-strapped government procurement teams. The regulations also risk taking bids away from local UK companies that have overcome past tax transgressions, and awarding them to overseas competitors instead. 

What do you think of the proposed regulations? Will it provide a boost to the economy, or create more sourcing challenges for public sector procurement?

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