Procurement and tax — update

The government has revised the scope of its procurement and tax proposals in response to extensive concerns raised by stakeholders. Announced as part of the Budget 2013, the main changes include: only catching non-compliance taking place after 1 April 2013, and, in future, only looking back over a period of six years, as opposed to the 10 years initially proposed; the definition of an ‘occasion of non-compliance’ being restricted (it no longer includes tax returns found to be incorrect due to targeted anti-avoidance rules); and only the contracting entity being required to self-certify (self-certification is not required on behalf of group companies).

In February 2013, the Government released proposals aimed at encouraging tax compliance by Government suppliers in an attempt to bear down on tax abuse. It was proposed that as part of the procurement process, a supplier tendering for central Government contracts would have to self-certify that, in accordance with certain criteria, it had complied with its tax obligations. If a supplier was unable to self-certify, it could be excluded from the selection process.

Initial concerns centred on the scope of the criteria to be satisfied in order to self-certify, as the ambit of the anti-avoidance criteria was widely drawn and was uncertain in part. There was also particular concern over the retrospective nature of the proposals as it was suggested that a supplier would need to self-certify in respect of its tax affairs over the past 10 years…

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