Changing businesses culture on tax
The Autumn Statement included an announcement that the Cabinet Office and HMRC will ‘consult on the use of the procurement process to deter tax avoidance and evasion’. This appears to be the official words for what Danny Alexander said at the Liberal Democrats’ Autumn conference, ‘If you want to work for us, you should play by our rules. Taxpayers’ money should not be funding tax dodgers’.
It appears the government has accepted that it may not be able to stop every form of tax avoidance, so it will use its purchasing power to try and change business culture on tax. This should be interesting bearing in mind that MPs seem not to understand the difference between (illegal) tax evasion and (legal) tax avoidance. Assuming tax evaders will not be given government contracts that still leaves a lot of “wriggle room”. Who decides what tax avoidance is acceptable and what is not?
The government procures a very wide range of services – including construction, IT, outsourcing and consultancy services, and the boards of companies may need to reconsider attitude to risk.
The consultation is expected shortly and the measure is due to come into effect on 1 April 2013.
This should prove interesting to watch.
Date: 16th January, 2013
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