Islington Council is set to investigate how companies that avoid paying UK tax can be barred from council contracts.

The Policy and Performance Scrutiny Committee will report before Christmas after calling-in large companies that have been accused of tax avoidance to answer councillors’ questions. 

The ‘scrutiny review’ follows the pioneering work of the same committee which led to the first anti-blacklisting policy adopted by the council in 2014. 

Chair of the Committee, Cllr Troy Gallagher, commented: “Tax avoidance is a disgrace and deprives the country of billions of pounds each year. At a time of massive cuts from the Government to Islington, we need to make sure that big companies are paying their fair share of tax.”

The committee will identify companies that the council currently contracts with that are allegedly avoiding tax, and investigate how procurement processes could be updated to ensure that these companies do not win Council contracts.

The investigation will also seek to understand how companies are avoiding UK tax and what powers, such as licensing powers, the council has to influence companies’ behaviour.

Following an investigation by the Policy and Performance Scrutiny Committee in March 2014, Islington Council became the first council to take decisive action against firms that had been involved in the practice of blacklisting. Blacklisting is the illegal practice of denying employment to individuals on the basis of information, accurate or not, which is held on a database. Firms who want council contracts must now show they do not practise blacklisting, and those who have used blacklisting in the past must prove they have ceased and taken sufficient measures to remedy their past wrongs. Any council contractor caught practising blacklisting in the future will have their contract terminated.

Cllr Gallagher added: “The pioneering work the committee did on blacklisting is something we will build on as we call time on tax avoiders. We will be hearing evidence from tax experts, council managers, and will be requesting input from HMRC and others.

“People in Islington know that it is only fair to ask companies to pay their tax; it’s time we made sure the council does all it can to tackle tax avoidance.”