Government Contracts Going to Tax Avoiding IT Companies
In a recent Parliamentary debate on tax avoidance by big business, MPs named several large companies who manage to substantially reduce their tax bills using a variety of complex tax planning arrangements.
To compound matters, MPs further criticised HM Revenue and Customs for awarding multi million pound contracts to large IT companies who they themselves have identified as participating in aggressive tax avoidance, such as Capgemini and Accenture.
John McDonnell, Labour MP for Hayes and Harlington said:
“Capgemini, the lead contractor on the £8 billion Aspire contract, paid only £308,000 of corporation tax last year on £38 million of profits—less than one per cent. That company is employed by HMRC but avoids the tax that HMRC seeks to use it to collect. It is extraordinary.
“Accenture, which has a £9.6 billion contract with HMRC to supply technical support, managed to reduce its tax bill to 3.5 per cent, paying only £2.8 million in tax on nearly £82 million of profits in Britain last year. 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.