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.