Tax man hits trouble over offshore Mapeley deal

HMRC has hit fresh trouble over its controversial offshore property deal with
Mapeley, with a warning from the National Audit Office it is failing to achieve
value for money and risks losing more.

A second report on the deal involving the transfer of ownership or leases on
60% of its estate to the private contractor in 2001 said taxmen had the
opportunity to save up to £1.2bn by reducing the size of their estate, but had
lacked a long-term plan to do so and failed to achieve all available savings.

And it warned that its proposals now to vacate a significant number of
buildings by 2011 create “areas of specific financial pressure for Mapeley,
exacerbated by the economic downturn and falling property prices.”

Comptroller and Auditor General Amyas Morse said Mapeley had benefited when
the property market was expanding but the downturn had made the contract “more
onerous” and demanded: “HMRC must take a significantly more astute commercial
approach if it is to deliver value for money for the taxpayer.”

Commons Public Accounts Committee Chairman Edward Leigh said HMRC’s
predecessors, Inland Revenue and Customs and Excise, had only found out about
the tax arrangements connected with this “extraordinary 20-year property
management deal” after the ink dried on the contract and things showed no sign
of improving.

A central plank of the deal was to enable HMRC to vacate properties it no
longer needed but it had had no detailed plan to do so and only now had finally
drawn one together which would created financial pressures for Mapeley.

NAO said HMRC would be in serious trouble if the company falls victim to the
downturn. A default would cost £40m to £110m in unpaid rent and debt to
suppliers and there would be “substantial on-going estate management costs.

HMRC has already paid over £300 million more than planned and expects the
overspend to reach £570 million by the end of the contract.

Related reading