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Tax Avoidance (Government Contracts)

Volume 558: debated on Wednesday 6 February 2013

3. What recent discussions he has had with the Chancellor of the Exchequer on ensuring that companies in receipt of Government contracts do not engage in tax avoidance schemes. (141652)

In the autumn statement, my right hon. Friend the Chancellor announced that the Cabinet Office and Her Majesty’s Revenue and Customs would examine how the procurement process can be used to deter tax avoidance and evasion. I expect an announcement to be made on this matter shortly with a view to new arrangements coming into effect from 1 April.

That is very welcome news, and I hope that friends of the Cabinet Office will be able to make sure that the Chancellor announces in the Budget that we will end once and for all the possibility of taxpayers’ money funding people to avoid paying their corporate taxes. That has to end at both national level and local government contract level.

I very much agree with my right hon. Friend. Our primary concern in public procurement is value for the taxpayer, but it is entirely legitimate to be concerned about ensuring that companies that are—rightly—profiting from Government contracts should be paying the proper amount of tax.

Is not the answer simply to put out a message to all companies that if they do not pay their taxes they will not get the contract?

I do not recall this ever being addressed by the previous Government. We have inherited very large numbers of extremely costly contracts where nobody has taken any interest in this subject at all.