From 1 April 2013 companies bidding for Government above-threshold contracts worth more than £2 million will be obliged to self certify that they have not been involved in certain types of tax avoidance, according to a Treasury press notice.As usual, read more at the article link above.
During the selection stage of the procurement process, bidders will be asked to self certify their tax compliance "via a simple question" as to whether they have had any 'occasions of non-compliance' within a defined period - proposed to be any time in the last ten years.
Non-compliance will occur if a tax return is found to be incorrect as a consequence of HM Revenue & Customs (HMRC) successfully taking action under the new General Anti Abuse Rule (GAAR), under any targeted anti-avoidance rule (TAAR), or under the “Halifax abuse” principle. The Halifax principle applies in relation to VAT and potentially some cross-EU border direct tax planning.
There will also be non compliance if any tax return is found to be incorrect because a scheme which the supplier was involved in, and which was, or should have been, notified under the Disclosure of Tax Avoidance Scheme (DOTAS) rules, has proved to have failed or the supplier’s tax affairs have given rise to a conviction for tax related offences or to a penalty for civil fraud or evasion.
HMRC is "successful" in this context when a tax return is amended, whether following the outcome of litigation or simply by agreement between HMRC and the taxpayer.
Foreign suppliers and suppliers with tax obligations in foreign jurisdictions will be required to certify that there has not been an ‘occasion of non compliance’ in relation to the equivalent foreign tax rules.
For another review of this subject matter by attorneys Heather Gething, Neil Warriner, Adrian Brown and Michael Hunt from the UK law firm Herbert Smith Freehills LLP, see
Government procurement rules: tax compliance is a factor to be considered: With effect from 1 April 2013, Her Majesty's Government will use the procurement process to secure compliance with UK and foreign tax obligations.