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HMRC publishes details of supplier tax avoidance proposals

Charlotte Jee Published 14 February 2013

New policy targeting contracts worth £2m or over will also apply to non-UK suppliers


More detail has emerged on new draft rules released today that would permit Whitehall departments to ban companies and individuals, including IT suppliers, involved in failed tax avoidance schemes from being awarded government contracts.

A discussion and draft guidance document released by HM Revenue & Customs (HMRC) explains that the rules, which will apply to all central government contracts worth £2m or more advertised from 1 April 2013, will include a time limit beyond which earlier tax avoidance events are disregarded.

This is currently proposed to be set at ten years. This time limit would apply to the date that the non-compliance was recognised formally rather than the date that the arrangements were entered into.

The document adds that failure to notify contracting authorities of changes in relation to tax compliance while a contract is being implemented will trigger action, which could include termination of the contract.

Furthermore, under the new regulations, government bodies will ensure that their contracts contain a standard clause enabling them to terminate a contract, at their discretion, if a supplier has had an 'occasion of non-compliance.'

Regarding non-UK suppliers or multi-national suppliers, the HMRC document says that, in order to ensure UK suppliers are not unfairly disadvantaged and to meet the UK's international commitments, they will be obliged to certify that there has not been an equivalent 'occasion of non-compliance' in another jurisdiction.

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