The Cabinet Office has issued updated guidance on the policy of using the procurement process to promote tax compliance.

Since 1 April 2013, all companies bidding for government contracts with a value over £5m have been required to self-certify “tax compliance”. The guidance indicates that all Pre-Qualification Questionnaires for such contracts are required to ask whether, in respect of returns filed on or after 1 October 2012, the supplier has been convicted of criminal offences relating to taxation, or received civil penalties for fraud or evasion. Additionally, prospective suppliers have to indicate if any of their returns have been successfully challenged under the GAAR, on the basis of the Halifax abuse principle, or in relation to a scheme subject to the DOTAS regime (or equivalent legislation in other jurisdictions).

Where a disclosure of “an Occasion Of Non Compliance” is made the relevant department has the discretion to exclude that supplier from the procurement process. Companies may offer mitigation and the guidance provides more detail on the acceptability of various factors, such as changes in senior management or that the company’s policy towards tax planning has “become more in line with government objectives regarding tax avoidance”.

You can read more here.