But we’ve already got a system that does this Ritchie

I could not agree more. So long as a reasonable criteria can be defined – and those proposed by the government so far utterly fail in that respect – assessing the suitability of a government contractor on the basis of their tax paid and, as importantly, on their disclosure of their tax paid is wholly appropriate behaviour for any government.

If a company does not pay the tax due then it is prosecuted in the courts. And if the courts say that it has not paid the tax due then it is guilty of tax evasion.

There is no other definition of having or having not paid the tax due.

So, we’ve a very simple method of ensuring your wishes here. Those companies that have been found guilty of tax evasion in court should be struck off the list of government bidders. Those that have not not.

Similarly, the law currently tells companies how they must reveal taxes paid in their accounts. Which all of them do in fact do.

Simples, eh?

And as to this:

And candidly I doubt the EU would uphold a challenge.

If a company is obeying the law in its country of incorporation then it cannot (repeat, cannot!) be barred from applying for UK government contracts.

So if a German company is revealing tax paid according to German law then it cannot be stopped from applying for a UK government contract.

15 comments on “But we’ve already got a system that does this Ritchie

  1. Facts are not his strong point.

    “The VAT Gap – 18% of EU GDP” screams a blog post headline.

    Of course, the report cited states “The VAT Gap…. accounted for €193 billion, or 1.5% of GDP. This amounts to 18% of the theoretical VAT”

    If he gets into government mistakes like this will have interesting results!

  2. I’m not sure even sure that banning tax-evading companies from bidding for government contracts is a good idea.

    We don’t ban convicted criminals from work (except for a few jobs).

  3. Also how far do we take this corporate responsibility?

    Should local councils lose government grants when they have broken the rules?

    Certainly the EU should lose all funding until it gets its accounts in order, but they’re serial offenders, very different to a one-off tax dodge.

  4. But isn’t this a case where the actual tax paid matters (and not whether any tax evasion or avoidance has occurred)? For example, let’s say 2 companies tender for a government contract.

    Company A tenders for £100m, of which say 50% will go to the UK Treasury through taxes (corporation tax, employee taxes, irrecoverable VAT, etc etc).

    Company B tenders for £80m, but due to various (and perfectly legal) arrangements the company pays only 5% tax.

    Which tender should a government agency accept? I’d argue it’s clearly it’s company A. Not because they are moral, but because they are actually cheaper, notwithstanding the headline price.

  5. “a reasonable criteria”: so he went to a crap school too, then?

    Irrelevant as far as the LHTD is concerned. He wouldn’t have listened anyway.

  6. ..assessing the suitability of a government contractor on the basis of their tax paid and, as importantly, on their disclosure of their tax paid is wholly appropriate behaviour for any government.

    How about assessing on something called “competence”, oh I forgot, obviously not considered relevant in the public sector..

  7. @ PF
    You are maligning the public sector by implying that Murphy is part of it. In many parts of the public sector competence does matter and is considered highly relevant.

  8. What’s being hankered for is a situation in which the company that gives the Government more than its due would be preferred for Government contracts.

    Nothing could possibly go wrong.

    It isn’t in any way a system of bribes. At least it’s transparent.

  9. and a company that has made losses sufficient to offset against future tax on the contract is disbarred right from thre outset…..this is laughably nonsensical.

    Why not base the contract on your perception of whether the contractor will meet your needs? Is this too old-school?

  10. TheJollyGreenMan,

    On the contrary, large companies will obviously model the costs of projects when tendering for them. It’s not hard to get a ballpark tax rate.

    However all I was really suggesting is that, from the Treasury’s point of view, it is cheaper to use a company which pays UK taxes and / or employs UK people than one that doesn’t.

  11. @ John77

    I understand how one might feel maligned..:)

    Fair comment, and I completely agree (re variations within the public sector, I have experienced that myself personally).

    I think it was more a critique as to how I interpreted Murphy, rather than a personal judgement. Ie, it seemed ridiculous to me that this crucial attribute didn’t even appear to be relevant to him – re the way that the public sector should receive value and manage its cost base!

  12. “from the Treasury’s point of view, it is cheaper to use a company which pays UK taxes and / or employs UK people than one that doesn’t”

    That is true in reality, but not in Treasury accounting.

  13. Not forgetting the EU, where a company in Germany can bid on a British contract. Cannot rule them out.
    Simon, if one company is paying more to HM treasury out of a project than another, is there more or less being spent on the actual contracted service
    Forget treasury, what gives a better service?

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