Agenda item

Steve Key, Service Director Finance and Property Services was present for discussion of this item, together with Peter Horlock, Head of Strategic Procurement, Finance and Property Services Department.

During consideration of the report the following main points were raised –

·         The Committee noted the revisions to the SID laid round

·         The Committee noted that Tax Evasion and Tax Avoidance were not interchangeable terms and that Tax Avoidance is taking steps to minimise tax liabilities and is legal, provided that there is no objection from HMRC and you have been open about your action. It is often considered to be taking measures for a tax advantage. On a small personal scale this is ensuring the correct tax code may be used, money is transferred to an ISA, artificial unnecessary transactions for business etc. On al large scale this could be paying a tax expert to find legal loopholes in the system. Tax Evasion is taking deliberate steps to falsify, mislead or defraud the payment of tax. Tax evasion is illegals and may lead to individuals being subject to 10 years imprisonment. Examples of this have included hiding money offshore, significant physical or virtual(online) trading and not declaring the income, failing to file a tax return, actively filling in a false return i.e. not including your full income, hiding taxable assets

·         Tax avoidance is legal however tax evasion is illegal so it would be difficult to take action against anyone avoiding tax and it was stated that the Chief Contracts Lawyer would be attending the next meeting to advise the Committee on the legal scope for action available to the Council in relation to dealing with tax compliance during the procurement process

·         The Committee expressed the view that bidders should be advised with immediate effect of the responsibility of bidders for contracts to be mindful of their obligations in respect of evasion of tax

·         Members were of the view that whilst their powers may  be fairly limited it would be useful to get legal opinion as to what action the Council could take in order to preclude contractors and their parent companies that have been found guilty of tax evasion from bidding for contracts. In addition there may be future legislation from Government looking at this area

·         In response to a question it was stated that currently that he was not aware whether there is a register of companies who had been found guilty of tax evasion that could be accessed but he would look into this

·         If a a contractor make as false declaration however then action could be taken

·         Members were of the view that there should be a pan London approach to any action that could be taken against companies found guilty of tax evasion

RESOLVED:

That the Chief Contracts Lawyer be requested to attend the next meeting to give legal advice on the scope for action available to the Council in relation to dealing with tax compliance during the procurement process and to respond to the points raised above