Asked by: Angela Rayner (Labour - Ashton-under-Lyne)
Question to the Cabinet Office:
To ask the Minister for the Cabinet Office, whether his Department is taking steps to monitor profits made by public procurement suppliers that accrue to offshore trusts.
Answered by Jeremy Quin
The driving principle behind public procurement policy is to award contracts on the basis of value for money, which means the optimum combination of cost and quality over the lifetime of the project.
The Government expects businesses to take all necessary steps to enable themselves to comply with their tax obligations, to ensure a fair and level playing field.
HM Revenue & Customs require certain large multinational enterprises to report details of their economic activities in each country where they operate and the taxes paid in each country. There are penalties for those that file late or fail to do so.
The Procurement Bill introduces new mandatory grounds for the exclusion of bidders which are found guilty of tax evasion or involvement in abusive tax avoidance schemes, whether in the UK or overseas.
Asked by: Lord Bishop of St Albans (Bishops - Bishops)
Question to the Cabinet Office:
To ask Her Majesty's Government what assessment they have made of the ethical implications of awarding public contracts to firms which (1) directly, or (2) indirectly, help to promote tax avoidance.
Answered by Lord True - Leader of the House of Lords and Lord Privy Seal
Aggressive tax avoidance is unacceptable.
The grounds for exclusion of bidders from public procurement procedures relating to tax are set out in The Public Contracts Regulations 2015.
Asked by: Graham Stringer (Labour - Blackley and Broughton)
Question to the Department for Business, Energy and Industrial Strategy:
To ask the Secretary of State for Business, Energy and Industrial Strategy, what steps his Department is taking to prevent tax avoidance by participants in the Contracts for Difference scheme.
Answered by Anne-Marie Trevelyan - Minister of State (Foreign, Commonwealth and Development Office)
The Contracts for Difference (CfD) scheme is the Government’s main mechanism for supporting low carbon electricity generation. The Low Carbon Contracts Company (LCCC) works with CfD generators to ensure that they deliver on their contractual commitments to build and operate low-carbon electricity generating stations. The LCCC pays CfD generators for the low-carbon electricity that they produce. As with any other commercial undertaking operating within the UK, it is for each electricity generator supported by the CfD scheme to pay its taxes in accordance with UK tax rules.
Asked by: Navendu Mishra (Labour - Stockport)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what HMRC's policy is on using companies that engage in tax avoidance.
Answered by Jesse Norman
HMRC, as the tax authority, adopt a robust approach to tax compliance for their own procurements. HMRC conduct tax compliance checks for their own competitive tenders, reserving the right to exclude a supplier where they can demonstrate a breach of tax/social security obligations by the supplier, including in instances where no binding judicial or administrative decision has been made.
Suppliers bidding for HMRC contracts valued at over £5 million are also required to self-certify their tax compliance status (Cabinet Office Procurement Policy Notice 03/14), including declaring: (i) any convictions for tax related offences/civil penalties for fraud or evasion; (ii) successful challenges under the General Anti-Abuse Rule (GAAR) or the ‘Halifax’ abuse principle; or (iii) involvement in a failed avoidance scheme which was/should have been notified under the Disclosure of Tax Avoidance Scheme (DOTAS). The circumstances surrounding any such declaration would be considered before any decision is taken on contract award.
HMRC also undertake extensive tax compliance checks both as part of the procurement process and at least annually for all high value/risk/complexity contracts and for some selected low value/high risk or high complexity contracts. HMRC’s standard contractual terms and conditions allow them to terminate a contract where a supplier is in breach of tax law during the term of a contract.
Asked by: Owen Thompson (Scottish National Party - Midlothian)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if he will take steps to enable individuals who were unwittingly taken advantage of by loan charge promoters to enter into a settlement with HMRC over loan schemes without having to declare wrongdoing and state that they knew they had avoided tax.
Answered by Jesse Norman
HM Revenue and Customs (HMRC) have provided several formal opportunities for taxpayers to settle their use of disguised remuneration (DR) schemes, both prior and subsequent to the announcement of the introduction of the loan charge.
Whenever a settlement agreement is agreed with HMRC, there must be a legally binding contract. HMRC do not require individuals settling their DR use to admit to wrongdoing, or to declare that they knew they had avoided tax, when agreeing these contracts.
Individuals who wish to use the 5 or 7 year payment instalment arrangements available under the current settlement terms do have to confirm that they are no longer engaged with tax avoidance (as required under the published terms), and this is acknowledged within the settlement contract. Agreeing to this term does not require the taxpayer to declare that they were knowingly engaged in tax avoidance in the past.
Asked by: Lord Lucas (Conservative - Excepted Hereditary)
Question to the HM Treasury:
To ask Her Majesty's Government what steps they have taken to ensure that contracts for core business functions are not entered into with companies who seek to minimise the rate of tax paid on their activity in the UK; and what assessment they have made of whether the use of any such contracts will create a conflict of interest within HMRC when it comes to enforcement of anti-avoidance legislation.
Answered by Lord Bates
The 2015 Public Contract Regulations introduced a new obligation for public bodies to exclude suppliers from a procurement where the supplier has been found guilty of breaching its obligations in relation to payment of taxes, and this has been established by a judicial or administrative decision having final effect within the relevant jurisdiction. This includes where HMRC have successfully challenged a potential supplier under anti-avoidance legislation.
Asked by: Ed Davey (Liberal Democrat - Kingston and Surbiton)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, how many people subject to the 2019 Loan Charge were contractors who were contracted to (a) HMRC, (b) a Government Department, (c) a local authority and (d) another public sector body for some or all of the period of the contract the renumeration for which is now subject to the Loan Charge.
Answered by Mel Stride - Secretary of State for Work and Pensions
The 2019 loan charge is targeted at artificial tax avoidance schemes where earnings were paid via a third party in the form of ‘loans’ which in reality were never repaid, ‘disguised remuneration’ (DR) schemes.
HMRC has never endorsed or participated in disguised remuneration tax avoidance schemes. It is possible for contractors to use disguised remuneration without the participation or knowledge of their engager. As a contracting authority, the majority of HMRC’s contracts are via an agency and use the Crown Commercial Service’s framework contracts, or service contracts with contracted suppliers. Any contractor identified in the course of HMRC’s compliance work as using a tax avoidance scheme would be investigated in the same way as any other contractor.
The Government estimates that up to 50,000 individuals will be affected by the 2019 loan charge. The loan charge applies to all users of DR tax avoidance schemes. It does not single out a specific group or industry. Further information on who the charge affects can be found in HMRC’s issue briefing at: https://www.gov.uk/government/publications/hmrc-issue-briefing-disguised-remuneration-charge-on-loans.
The data requested is not available.
Asked by: Catherine West (Labour - Hornsey and Wood Green)
Question to the Cabinet Office:
To ask the Minister for the Cabinet Office, what steps the Government plans to take as a result of information in the Paradise Papers relating to companies that hold existing government contracts.
Answered by Caroline Nokes
The 2015 Public Contract Regulations implemented the latest EU Public Procurement Directive, and introduced a new obligation for public bodies to exclude suppliers from a procurement where the supplier has been found guilty of breaching its obligations in relation to payment of taxes. This has been established by a judicial or administrative decision having final effect within the relevant jurisdiction.
Asked by: John McDonnell (Labour - Hayes and Harlington)
Question to the HM Treasury:
To ask Mr Chancellor of the Exchequer, if he will bring forward legislative proposals so that a person engaged in tax avoidance is prohibited from preparing the skilled persons report under section 166 of the Financial Services and Markets Authority Act.
Answered by Steve Barclay - Secretary of State for Environment, Food and Rural Affairs
The selection of a party to conduct a skilled person review under section 166 of the Financial Services and Markets Act (2000), as amended by the Financial Services Act (2012), is a matter for the independent regulators. To enable the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) to contract directly with the skilled person firm, the FCA and the PRA have developed a Skilled Person Panel in line with the Public Contracts Regulations 2006.
Asked by: John McDonnell (Labour - Hayes and Harlington)
Question to the HM Treasury:
To ask Mr Chancellor of the Exchequer, whether any of the skilled persons reports submitted under section 166 of Financial Services and Markets Authority Act were prepared by a party engaged in tax avoidance schemes rejected by tax courts and tribunals.
Answered by Steve Barclay - Secretary of State for Environment, Food and Rural Affairs
The selection of a party to conduct a skilled person review under section 166 of the Financial Services and Markets Act (2000), as amended by the Financial Services Act (2012), is a matter for the independent regulators. To enable the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) to contract directly with the skilled person firm, the FCA and the PRA have developed a Skilled Person Panel in line with the Public Contracts Regulations 2006.