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HMRC's tech outsourcers under fire from MPs

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11th Jan 2013
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HMRC and the technology outsourcers that manage its computer systems came under fire in the parliamentary debate on tax avoidance this week, reported our sister site PublicTechnology.net.

During the exchanges, Ian Swales, the Liberal Democrat MP for Redcar, posed the questions: “Is it right that Accenture, Capgemini and others win government contracts when they are named as aggressive tax avoiders? Should HMRC itself have sold its buildings for leaseback to Mapeley, a Bermuda-based company?”

Swales highlighted the uncomfortable truth that in many instances profits being reaped through private finance initiatives and government outsourcing contracts are being channeled offshore.

“The government has fuelled the frenzy by doing private finance initiative and outsourcing deals with tax avoiders," he said.

Accenture came under heavy fire from John McDonnell, Labour MP for Hayes and Harlington.

“Accenture, which has a £9.6bn contract with HMRC to supply technical support, managed to reduce its tax bill to 3.5%, paying only £2.8m in tax on nearly £82m of profits in Britain last year," he said.

"It was employed by HMRC and awarded a massive contract, and then used those resources to avoid paying tax. You couldn’t make it up, but it is happening regularly.”

McDonnell was also fiercely critical of Capgemini,  which is the lead on the Aspire outsourcing contract with HMRC, as well as Accenture.  

“Capgemini and Accenture are the two IT companies with which HMRC has contracts, and both were recently identified as avoiding tax themselves,” he said.

“Capgemini, the lead contractor on the £8bn Aspire contract, paid only £308,000 of corporation tax last year on £38m of profit - less than 1%. That company is employed by HMRC but avoids the tax that HMRC seeks to use it to collect. It is extraordinary.”

The solution suggested by Lib Dem MP Ian Swales was to introduce a “paid in Britain” rule for government procurement.

“Doing public sector business with tax avoiders does net damage to our economy. Government action could mean that companies quickly change their behaviour,” he said.

“The government have enormous power to require those seeking grants or contracts to reveal the tax structure of their UK entities. When making their choice, decision makers could then include the bidder’s tax arrangements. The National Outsourcing Association supports such a move, which is surely part of getting the best value for UK taxpayers when spending their money.

“To those who cry ‘EU bidding rules’, I say that it is right to look at both costs and potential tax income. Who can stop countries demonstrably making the best value choice in the national interest from an open process?” he asked. 

“The problem is urgent, huge and growing. The more companies and their advisers see what others are doing, the more the leakage becomes a flood. Only a select few will be able to keep their heads above water, and it will be the smaller, independent companies who are overwhelmed. We cannot rely on pleas for morality or altruism. Companies play by the rules set in this House and the enforcement we put in place to back them up.

“Just last week the Prime Minister said that the issue is a top priority," Swales concluded. "Tinkering will not do. Now is the time for radical action.”

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By david5541
14th Jan 2013 12:51

well done ian swales for bringing this private memebers bill

 “Is it right that Accenture, Capgemini and others win government contracts when they are named as aggressive tax avoiders? Should HMRC itself have sold its buildings for leaseback to Mapeley, a Bermuda-based company?” 

 

if like me you watched the debate on corporate tax avoidance by multinationals.......you will know there are alot of public sector corprorate contractors who avoid corporate tax, vince cable evwen quoted thames water who like starbucks have avoided corporate tax by claiming mega interest rate relief on long term funding.to create a loss

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By ThornyIssues
14th Jan 2013 12:53

Swilling money

Trouble is .... if the Government force these suppliers to pay more tax, they will simply charge HMRC more to cover the cost increase. Money just swills about. 

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