Firms won £1.4bn in state contracts but paid no tax: Watchdog finds G4S among companies handed huge taxpayer-funded sums without paying a penny back Security firm offset tax against cost of their Olympic blunders G4S made 32 per cent profit on £718 million of government contracts Commons Public Accounts Committee said figures are 'galling' Nick Buckles, above, is the former Group Chief Executive of G4S, who paid no corporation tax in the UK last year Controversial outsourcing giants G4S and Atos paid no corporation tax in the UK last year, despite receiving more than a billion pounds from the taxpayer, auditors reveal today. The National Audit Office (NAO) says the two firms received a total of £1.4 billion from the taxpayer for providing services that range from running prisons to assessing the health of the disabled. But the spending watchdog says that neither firm paid a penny in corporation tax. G4S made gross profits of up to 32 per cent on some of the £718million of contracts it operated for the Government last year. But the firm was able to write-off against tax an £88 million loss on its disastrous handling of security at last year's London Olympics -leaving it a corporation tax bill of zero. Fellow giant Capita, which has more than £1 billion a year in public service contracts, is thought to have paid about £50 million in tax, while Serco, which received £1.8 billion from the taxpayer, returned just £25 million in tax. None of the firms would disclose its overall UK profits, making it impossible to work out tax rates. The NAO report reveals that outsourcing accounts for £40 billion a year of public spending. Some £10 billion is spent with a small group of 40 "strategic suppliers." Successive governments have sought to outsource services once provided directly by the State, arguing that the private sector is often better at cutting costs and driving innovation. But critics claim firms have run rings around civil servants and ministers who lack commercial experience. Margaret Hodge, chairman of the Commons Public Accounts Committee, said it was "galling" that contractors receiving huge sums of public money were paying no tax. And she added that it was unacceptable they were allowed to keep details of their profits secret. No tax: G4S was able to write-off against tax an £88¿million loss on its disastrous handling of security at last year's London Olympics Serco, who won the operational contract for the Boris Bike scheme in London, is paid around 1.8bn by the tax payer, but paid £25m in tax last year Mrs Hodge said: "There is something particularly galling about the idea of a company who gets its income from the public purse not putting its rightful contribution back in." The NAO said the lack of transparency about profits, together with concerns about the quality of some services was fuelling a "crisis of confidence" in outsourcing. Its report warned there was a need for more checks to ensure that public service contracts were "sufficiently competitive." Until this year G4S had been led by Nick Buckles, who was accused of presiding over a "humiliating shambles" when the company failed to provide enough security guards for the Olympic Games. A spokesman for G4S said it had paid no corporation tax last year as a result of several "exceptional losses." A spokesman for Atos said: "Due to significant investment in the UK to maintain our business here as well as pension contributions, we did not make enough profit last year to qualify for corporation tax."