From 1 April 2013 bidders for government contracts will need to certify that they are tax compliant and if they fail this test they will be excluded from winning government contracts.
The new restrictions will apply to Central government tenders advertised on or after 1 April 2013. The bidding process will include a new pass/fail question in the pre-qualification questionnaire (PQQs). This will require bidders to self-certify that they had no occasions of non-compliance in the past. PQQs should be submitted within 30 days of the initial advert in the Official Journal of the European Union. Tax non-compliance will arise where the bidder has accepted, or a court has determined, that additional tax is due and as a consequence a tax return has been amended. Tax non-compliance will further depend on circumstances where one or more of the following criteria applies:
- The new general anti-abuse rule applies.
- The Halifax abuse principle applies – this is an abusive practice when two conditions are met. The first that the transactions concerned must give a tax advantage contrary to the purpose of the legislation, and secondly, that the “essential aim” of the transactions was to obtain a tax advantage.
- The scheme was notifiable under the disclosure of tax avoidance scheme rules and has failed, or
- There is a current criminal conviction for a tax related offence or a penalty for civil fraud or evasion.
Bidders will have an opportunity to add an explanatory statement setting out mitigating factors when they submit their PQQs. The new guidance applies to contracts advertised by: central government departments, executive agencies and non-departmental public bodies.