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New rules use government buying power against tax avoidance

14 February 2013

Commenting on the rules proposed by HM Treasury and Cabinet Office allowing government departments to ban the awarding of Government contracts to companies and individuals who have taken part in aggressive tax avoidance, Bill Dodwell, head of tax policy at Deloitte, said:

“The proposed new rules on tax compliance for those tendering for public contracts will allow, but not require, the Government to disqualify a provider if it has been engaged in aggressive avoidance.  The rules do not affect those which have undertaken normal planning.

“The rules will only apply to new contracts offered for tender from 1 April 2013 –but historical compliance failures, potentially over the last ten years, will be considered.
“Non-compliance covers schemes that fail due to the new GAAR, an existing or new targeted anti-avoidance rule, or the application of the ‘Halifax’ abuse of law principle in relation to VAT.  It also covers those who enter into schemes disclosed under the Disclosure of Tax Avoidance Scheme rules which subsequently fail, as well as those which pay a penalty for fraud or tax evasion.
“The problem area for some will be activities in the past, when perhaps a different environment existed.  It may also be challenging for the Government to exercise its judgement where there has been an occasion of non-compliance.”


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Deloitte LLP
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