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Thursday, 8 April 2010
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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