I am pleased to share this press release from Christian Aid on a campaign I support:
Today (27th January) a campaign has been launched across England and Northern Ireland urging people to lobby their local councils to get tough with companies that dodge tax. The Fair Tax Mark will be supporting this campaign, which has been developed by Christian Aid. Corporate tax evasion and avoidance are having an incredibly damaging impact on the world's poorest countries, to such a level that it is costing them $160bn a year - far more than they receive in aid.
Councils in England alone spend some £45 billion a year buying goods and services from companies and that gives them a lot of influence over suppliers. The prospect of losing a multi-million pound contract is likely to concentrate some companies' minds and make them think harder about whether to dodge tax, here or in a developing country.
As part of the campaign for local councils to tackle tax dodging, it is envisaged that bidders for local council contracts would be asked to account for their past tax record. In addition, the Fair Tax Mark will be flagged as an example of enlightened business practice and a demonstration that not all businesses are aggressive tax dodgers, but rather accept that they need to pay the right amount of corporation tax in the right place at the right time.
Already, some are moving in the right direction. In December, Oxford City Council voted unanimously to investigate whether and how the council can include rigorous questions about companies' tax practices in council procurement procedures. Detailed tax compliance questions have been adopted by Belfast City Council, and the Fair Tax Mark has been engaging with a major city in northern England and expects to be to announce a major positive development very soon.
Paul Monaghan of the Fair Tax Mark commented: "This campaign has the potential to be the ultimate carrot and stick. It aims to hurt the tax dodgers via the loss of lucrative contracts, whilst incentivising those paying a fair share of tax. People already rightly expect their local council to screen out suppliers engaged in fraud, corruption and child labour. Tax dodging can and should be added to this list, especially at a time when local government is faced with so many painful cuts to local services."
Council notes that:
- corporate tax evasion and avoidance are having a damaging impact on the world's poorest countries, to such a level that it is costing them far more than they receive in aid
- this is costing the UK as much as £30bn a year
- this practice also has a negative effect on small and medium-sized companies who pay more tax proportionately
Council further notes:
- the UK Government has taken steps to tackle the issue of tax avoidance and evasion by issuing Procurement Policy Note 03/14, which applies to all central government contracts worth more than £5m
- the availability of independent means of verifying tax compliance, such as the Fair Tax Mark
In early 2015 new regulations required public bodies, including councils, to ask procurement qualification questions of all companies for tenders over £173,000 for service contracts and £4m for works contracts. However, these questions are not as detailed as the PPN 03/14.
Council believes that bidders for Council contracts should be asked to account for their past tax record, using the standards in PPN 03/14, rather than the lower standards in the recent regulations. Council therefore calls for procurement procedures to be amended to require all companies bidding for council contracts to self-certify that they are fully tax-compliant in line with central government practice, using the standards in PPN 03/14, applying to contracts of the size specified above.
Council asks the Cabinet to publicise this policy and to report on its implementation annually for the next three years.
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Up and Down the Country, across many of our Towns and Cities, lurk the dreaded Parking Enforcement Officer. Many of these Officers work for NSL. NSL contracts include sixteen London boroughs, the entire province of Northern Ireland, major cities such as Birmingham and Manchester, and numerous other authorities stretching down to the south coast as far as Brighton and Hove.
NSL’s Ultimate Parent Company is Aac Capital Nebo Feeder Ii Lp, based in the offshore Juridsiction, St Peter Port, Guernsey.
There’s a starter for 10.
This Campaign comes at the worst possible time for my Councillors who are hollow-eyed with cutting important services for their communities in time for the annual budget. There is considerable support for such a campaign in principle. Attracting attention from Councils in 2016 will be harder than usual.
Accepted
Local authorities are already required to ask a standard question on tax convictions, and have the right to exclude the bidder if it has tax convictions.
Belfast and Oxford are doing nothing special.
Is there any local authority which is NOT asking this question in its PQQ? Please give names, and lodge a complaint. There is a standard central government PQQ, so even a tiny district Council should have no excuse.
This seems to be a campaign to seek changes which have already been made.
Evidence suggests most are not doing this
It is not compulsorily
Part of regulation 57(3) of the 2015 regulations involve mandatory exclusion, part of it involves discretionary exclusion. So this would suggest it is compulsory to ask the question.
Councils do tinker with their own PQQs but not on stuff like this. It is a standard question.
Which evidence suggests most don’t comply? I would have seen probably 10 PQQs since the new regulations came in nearly a year ago (including Belfast’s), and they all comply on this point.
Can you please name one Council that is not asking this question?
I am told it is not common
You may think otherwise
I can only go on what I am told
And we have had this conversation before
Are you prepared to say who told you?
It seems irresponsible and unfair for you to accuse us in local authorities of widespread non-compliance (and not knowing our job) based on an unnamed sources, without checking yourself, and without being able to name a single offender.
I gather compliance is a yet modest
You’re effectively saying there is widespread non-compliance but can’t name one who doesn’t comply.
I realise public officers are everyone’s favourite punching bag, and that comes with the job. But I’d hope you would aspire to do a bit better.
Disappointing.
Actually, what everyone is surprised about is that Northern Ireland is the one place almost totally compliant
That’s how widespread non-compliance is
Where are you?
Who is ‘everyone’? I don’t know anyone who thinks Northern Ireland is the only place that is 100% compliant.
Everywhere I know in England (where I am based) is 100% compliant too. Compliance is so straightforward I can’t think why anyone would not comply (except maybe as an oversight).
I can’t name a non-compliant English Council and seemingly neither can you. If you can, please serve the public by publishing names, so we can complain.
The offending Council should have no grounds to argue with the complaint – they should fix it immediately.
You clearly live in a little bubble of perfection
Surely you owe him an example of a non compliant council. He is offering to investigate for you so surely that is in the public interest.
I owe an unidentified person nothing at all
From what Adrian says I do worry that this is simply unnecessary promotion of the fair tax mark. If councils are already compliant as is being claimed it is surely unfair to force the free tax Mark obligation onto companies.
You mean like the EU gave it?
What’s the problem with a great idea?
The problem is the perception
Man owns company issuing fair tax Mark
Man suggests council are not carrying out tax compliance
Man suggests companies must register for tax Mark to improve this situation
Council employee says the assertion that councils are not doing tax compliance is false
Council employee asks for councils where this is happening
Man refuses to substantiate the claims
Doesn’t look great.
I have never said any one must register for the Fair Tax Mark to get this
Because that would not be legal, for a start
So shall we stop being silly here?
And I have no idea he is a council employee
The same as I have no idea you are Jim
Doesn’t look great, does it, for you?
You don’t owe me any duty of disclosure about non-compliance of a Council.
But surely it would be in the public interest to identify non-compliant Councils so they can fix the problem as they must.
Do it for the residents in those communities, and the clean businesses who tender for contracts.
Go on, don’t be shy.
You have also made a vague, general slur against my colleagues in other Councils saying there is widespread non-compliance (suggesting they don’t know how to do their job). But you can’t name one example.
You’re free to say if of course, but I do regret you feel the need to do it.
I have disclosed
Almost everyobne bar those named are not apparently complying
Next
‘Almost everyone’ – the ‘almost’ is a fudge word.
Name a single non-compliant Council – there must be plenty for you to choose from. I will go on their procurement portal to check if you’re right.
Imagine if I came out with a vague statement that ‘the majority of tax campaigners are crooks’ – you’d be rightfully annoyed if I couldn’t name one who was a crook. This is what you’ve done to my colleagues. It’s unfair and irresponsible.
I feel you have a duty to my colleagues you have slurred and to the residents of non-compliant Councils to specifically name offenders so action can be taken.
I have
Which one did you name? I missed it.
I named the exceptions
I have a Belfast PQQ from December 2015. It pretty much mirrors the CSS PQQ – certainly doesn’t adopt the PNN wording (which was introduced before regulation 57 and seems superseded by it).
Maybe they’ve changed it in the last 2 months, over Christmas. Did they?
I prefer regulation 57 as adopted by pretty much everyone:
1) it sets out the will of Parliament, not Treasury.
2) it is clearer. PNN uses the ambiguous expression ‘successful challenge’ (whatever that means – ambiguities like this are interpreted in favour of the bidders – an ambiguity itself creates unfairness between bidders who interpret differently). But regulation 57 makes it clear there needs to have been a final, binding judicial/administrative decision in the country where the entity is established or the UK. Much clearer question.
To say everyone other than those you name above is not complying with regulation 57 in its PQQs is just manifestly untrue I am afraid.
Richard Murphy is right to say that local councils are not screening out tax evaders and that can / should do more. Christian Aid (after much research) concluded that an area ripe for improvement. Details of campaign background here. http://www.christianaid.org.uk/ActNow/tax-justice/index.aspx
I was at a City Council meeting in the North recently and was determined that just one of twelve nearby councils had acted on this. You’ll get to know who they are in coming months as they take action – AS A RESULT OF THIS CAMPAIGN.
[Declared interest: also a Director of Fair Tax Mark].
Paul. As a director of fair tax it seriously undermines your credibility if you use “evasion” when you mean “avoidance”. Are you seriously claiming that councils regularly deal with companies that evade tax? This is a criminal matter and should be reported.
I suspect you are trying to blur the line which is extremely disappointing.
Many small companies evade tax
So we are now claiming that councils routinely engage with companies who evade tax?
They may
Do you know they don’t?
Paul, you presumably refer to the 12 NE authorities from the North Yorkshire border to the Scottish border.
As you would know, they are all part of the NEPO, and use the same documentation.
I’ve just randomly checked a live tender for a NE Council – an ITT for Durham County Council. A Contract for Youth Employment Initiative (DurhamWorks).
Page 6 says:
You will be excluded from this procurement process if there is evidence of convictions relating to specific criminal offences including, but not limited to, bribery, corruption, conspiracy, terrorism, fraud and money laundering, or if you have been the subject of a binding legal decision which found a breach of legal obligations to pay tax or social security obligations (except where this is disproportionate e.g. only minor amounts involved). If you answer “yes” to the question below on non-payment of taxes or social security contributions, and have not paid or entered into a binding arrangement to pay the full amount, you may still avoid exclusion if only minor tax or social security contributions are unpaid or if you have not yet had time to fulfil your obligations since learning of the exact amount due. If your organisation is in that position please provide details using the relevant space below. You may contact the Council for advice before completing this part of the Tender.
Page 8 asks
Has it been established by a judicial or administrative decision having final and binding effect in accordance with the legal provisions of any part of the United Kingdom or the legal provisions of the country in which your organisation is established (if outside the UK), that your organisation is in breach of obligations related to the payment of tax or social security contributions?
It is a straight yes/no question (and if you answer yes, you are invited to give details about what you’ve done about it).
So it seems your information is out-of-date.
This is pretty much the same question Belfast was asking as recently as December. I’m in the NW, and the Merseyside/AGMA Councils do the same. But Richard seems to think Belfast is doing something special.
This is a standard question – everyone is supposed to be asking it.
If you know of a Council that is not, don’t campaign – complain! It would be upheld as an open and shut case.
As ever, devil in the details (especially when it comes to tax)(never mind procurement):
– Yes, the ‘PQQ questions’ should be standard. However these PQQs only ask whether a company has been involved in illegal tax practices — whereas the questions we want councils to ask are more far reaching and ask about `incorrect’ tax avoidance anywhere in the world, not just illegal practices.
– We are looking for implementation of Procurement Note 03/14, and this is not standard for local councils.
– PN 03/10 means we are looking to identify (for example) whether tax returns submitted on or after 1 October 2012 has been found to be incorrect as a result of: HMRC successfully challenging it under the General Anti-Abuse Rule (GAAR) or the ‘Halifax’ abuse principle; or a tax authority, in a jurisdiction in which the supplier is established, successfully challenging it under any tax rules or legislation that have an effect equivalent or similar to the GAAR or the ‘Halifax’ abuse principle.
– We are also, crucially, looking for implementation not just lip-service box-ticking.
All detailed in the link I sent earlier.
And early signs are that lots of councils are interested 🙂
Thanks Paul
Appreciated
Thanks Paul
You are right – the devil is in the detail, which Christian Aid seems disinterested in. Seem to be more about plenty of misleading virtue signalling from headlines than actually achieving anything.
Who judges what is ‘incorrect’ other than via a judicial function in a final and binding decision? If it hasn’t been found incorrect by them, it isn’t incorrect, and a bidder would be well within its rights to answer ‘no’ to the question.
In a dispute, the bidder could easily say the question was ambiguous, and with all these things, the court would interpret the ambiguity contrary to the party who wrote it (i.e. the Council).
It is an obvious objection to this sort of question, and in practice, would add little to improve on the question already being asked.
One of the issues I have been banging on at the Councils where I work over the years is to suspend bidders from the process if they are in arrears on undisputed debts to our Council – business rates, even parking fines etc. It is in the too hard basket. Difficult to believe but true. How they will cope with these proposals is another question.
Of course, the gorilla in the room is how seriously Councils check up on the answers to these ‘yes/no’ exclusion questions (not just the tax ones).
Adrian, time will tell if the new questions bite, but at least you are no longer claiming that this campaign is seeking to make changes which have already been made.