AS2012: Government to scrutinise suppliers’ tax arrangements

GOVERNMENT SUPPLIERS revealed to have unsavoury tax practices could find themselves out in the cold when it comes to dishing out state procurement contracts under tentative plans revealed in the Autumn Statement.

As part of measures to clamp down on tax avoidance and evasion, the Cabinet Office and HMRC are to consult on the use of the procurement process to deter tax avoidance, with a view to the new arrangements coming into effect from 1 April 2013.

Chris Morgan, head of tax policy at KPMG, described the limited explanation in the Autumn Statement as “cryptic”, and suggested there was little time given over for consultation.

“It seems they want to have some kind of certification process to ensure that companies dealing with the government follow the rules as the government interprets them,” Morgan says. “It is also part of the drive to have companies be more transparent about their tax arrangements.”

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