UK government to crack down on tax-avoiding suppliers

IT suppliers could lose out on multi-billion-pound contracts as the government introduces methods to exclude tax avoiders from bidding process

The government is expected to introduce new methods to prevent suppliers from minimising their UK tax bills, which could see some lose out on multi-billion pound contracts.

In November 2012, Computer Weekly learned that government officials were considering the viability of ordering suppliers bidding for Whitehall contracts to disclose the amount of tax they pay in the UK relative to their UK revenue.

According to a report in the Sunday Times, Francis Maude will this week introduce rules to prevent suppliers that avoid paying tax from bidding for contracts.

In December’s Autumn statement, the government referred to changes to bidding to reduce alleged tax avoidance among suppliers. “In the statement, the government said it was looking at new rules to prevent tax avoidance,” said a Cabinet Office spokesman.

IT suppliers Capgemini and Accenture are among companies criticised for avoiding tax. But suppliers claim they pay their tax as specified in the taxation rules.

Accenture, for example, denies that it is doing anything to aggressively avoid tax. It cites the fact that you only pay tax on profit, and as a result of its failed contract with the NHS where it lost $450m, its UK profits have been hit over the past few years. It has previously stated that it complies with all UK tax laws.

"Accenture reports all of its revenues earned within the UK and pays taxes on the profits earned within the UK. We take our responsibilities as a UK taxpayer seriously and pay tax on our UK profits as required by UK laws. Not only does our tax structure comply with UK tax law, but we take a conservative view of the tax law. We are confident that our tax filings are compliant, transparent and appropriate," said an Accenture spokesman.

Last month, MPs slammed the award of large government IT contracts to companies alleged to be avoiding taxes.


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