Companies which have tried and failed to avoid paying tax will be banned from attempting to bid for a Government contract under new rules.
The rules, which were published last week, will ask people to declare if they have ever participated in a tax avoidance schemes in the last ten years. Companies than have will still be able to bid for Government contracts, but only those worth less than £2 million.
The change to the bidding process will come into effect in April this year with firms required to sign a clause allowing the Government department in question to terminate a contract if they are found to be in breach of tax obligations.
Speaking of the new rules, Danny Alexander, Chief Secretary to the Treasury, said: “These new rules are another significant tool as they will provide a framework to enable government departments to say no to firms bidding for government contracts where they have been involved in failed tax avoidance.”
In recent news, large firms such as Amazon, Starbucks and Google have all made the headlines for not paying enough UK tax. But under the new rules, they would not be in any breaches.
The BBC said: “The move comes after controversy over the UK tax affairs of major companies like Starbucks, Amazon and Google. There is no suggestion these firms would fall foul of the new arrangements.”
The move is only expected to affect large companies who have the power and resources to avoid paying tax and also bid for the multi-million pound contracts. It is thought that companies who avoid paying tax cost the Treasury around £100 billion per year.
Do you agree that large companies who participate in tax avoidance schemes should be banned from bidding on Government contracts? Or do you think any firm which tries to avoid paying tax should receive a ban?
