Hypocrisy, HMRC and Mapeley

In December 2009 I wrote about HMRC's contract with Mapeley (an offshore property company):

"The National Audit Office (NAO) have issued a report that gives HMRC a well deserved kicking for this contract.

HMRC had promised £1.2BN of savings in maintenance and other costs, as a result of signing with Mapeley. In reality the savings will be around £900M, possibly falling to £650M.

The NAO go on to state that there is now a "significant risk" that the contract will not deliver value for money over the rest of its life.

It seems that, according to the NAO, HMRC had no long-term plan regarding the sale and didn't even know that Mapeley was offshore!

The NAO is of the view that HMRC had not recognised the contract as a major strategic asset, and had not allocated the requisite commercial skills to managing it."

The Commons Public Accounts Committee (PAC) has now also made a few comments about the contract. It notes that HMRC lacked the "commercial skills or business acumen" to manage such a large contract effectively, while its reputation had been damaged by its involvement with an offshore firm (seemingly HMRC didn't even realise at the time that Mapeley was offshore).

HMRC signed a 20 year contract with Mapeley STEPS in 2001 to take over the ownership and management of 60% of its estate, it expected to pay £3.3BN at today's prices.

However, it has already overpaid £312M and the final cost is expected to hit £3.87BN.

PAC states that HMRC should have realised it would have to take a more proactive approach. Most especially as Mapeley was a new company, which had put in a low bid.

In fact Mapeley has already had to seek financial assistance from HMRC to deal with "serious cash flow problems", as a result of the economic downturn and falling property values.

How ironic that HMRC, a staunch and shouty opponent of tax avoidance has in fact signed a contract that involves tax avoidance through an offshore company.

Clearly a case of do as we say, rather than do as we do!

Tax does have to be taxing.

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