Tax Compliance questions in PQQs: do you know who you are consorting with??

If you are a bidder for central Government contracts worth over £5m and regulated by EU procurement rules you now have some additional questions to ask before you jump into bed with JV partners or consortium members.

It would be a nasty and potentially expensive surprise to learn whilst completing a PQQ that your JV/ consortium partner has to answer “yes” to either of the new PQQ questions about (1) criminal convictions/ civil penalties for tax avoidance; and/or (2) rulings by HMRC as to “incorrect” Tax Returns resulting from tax avoidance activity.

Certainly appropriate disclosure should be sought as part of your due diligence before committing to the JV/ consortium.

You may also want to consider (in appropriate circumstances) providing for indemnities in relation to wasted bid costs if that disclosure proves inaccurate. In circumstances where non-compliances are disclosed in the JV negotiations, and your partner asserts that there is mitigation material which will overcome the problem, you may also want to provide for some form of compensation if those assurances prove to have been over-optimistic.

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