Friday, February 15, 2013

UK govt to blackball tax avoidance firms from major contracts. Or will it?

That's the headline in The Guardian.
The Treasury has unveiled proposals to blackball suppliers from bidding for lucrative public sector contracts if they have crossed swords with Revenue & Customs over certain aggressive tax structures in the past 10 years.
That looks pretty meaty, doesn't it? (Reuters has more.) It's a no-brainer, and truly amazing that it hasn't been done before.

But. (Of course, there was going to be a 'But.')
"From April, would-be government contractors must declare in their bid paperwork if they have used a tax structure that HMRC objected to and was either defeated at tribunal or led to an out-of-court settlement in the last decade. Civil servants can then bar contractors from Whitehall contracts if they are not satisfied the firms have reformed their approach to tax paying." 
Our emphasis added. Two things here. First, what if a contractor 'forgets' to declare this in its bid paperwork? Why no HMRC blacklist? Why ever not? The second part in bold opens the door to pretty much everyone being let off the hook. (We can just picture the long, liquid crustacean lunches; we can already hear the cries of 'You abused our democracy for years, but you've promised to stop. OK, that's fine.'

And then:
Nor will the rules penalise some of the most controversial multinational corporations – including Apple, Google, Amazon, Starbucks and others – who have been criticised in recent years for exploiting differences in international tax regimes to lower their overall tax bill.
Not good enough. Not nearly good enough.

And now here's another 'but:' an even bigger one.
Margaret Hodge, chair of parliament's public accounts committee, attacked contract awards to big accountancy firms which, she said, were among the most active in inventing schemes to minimise tax bills for companies doing business in the UK. "I think it is questionable whether you should get public contracts," she told top tax experts from Deloitte, PricewaterhouseCoopers, Ernst & Young and KPMG. Her committee heard how these four firms make almost £490m annually from public sector work in Britain.

However, large accountancy firms will not face blackballing on account of advice offered to clients under the rules proposed.
Whaaat?  They are the very heart of the system. And they will be exempt?

If ever there were a case of tinkering at the edges in pursuit of favourable media coverage, this appears to be it.

It's very simple indeed: if they don't bring the Big Four accountants into the frame for the widespread abuses they have perpetrated over the years, then this is not a serious initiative.

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