A new statement from HMRC has shown early indications that businesses hoping to bid for government work are taking the step towards being tax compliant, as the government continues to roll out its latest tax and procurement policy.
Under the new rules government departments have the discretion to exclude any business that cannot certify a clean tax record from the procurement process.
Danny Alexander, Chief Secretary to the Treasury, told the Liberal Democrat conference two years ago that there was nothing to prevent ‘the very small minority of firms’ that continue to not play by the rules from winning government contracts.
He went on to say that taxpayers’ money should not be used to fund tax dodgers while the government continues to crack down on them.
The new policy applies to central government contracts over £5m that took effect in April 2013 following an informal consultation.
It requires a company to disclose whether its tax affairs have given rise to a criminal conviction for tax related offences which is unspent, or to a penalty for civil fraud or evasion or any of its tax returns submitted since October 2012 has been found to be incorrect.
In a joint statement by HMRC and the Cabinet Office it said that the latest review was exploring whether the policy was having the intended effect on encouraging tax compliance from government suppliers.
“Of the 65 bids applying for central government contracts of £5m or more, one potential bidder failed the overriding mandatory procurement test,” said the joint statement. “This failure, however, was due to the bidder being unable to provide and deliver services that would fulfil the procurement department’s contract, rather than an issue of whether or not they were tax compliant.”
The remaining 64 potential bidders declared that they were tax compliant.