Joining The Dots of HMRC's Property Deals

Unsurprisingly, yesterday's article about HMRC's very expensive superhub in Cardiff has raised a few eyebrows and issues.

My thanks to a loyal reader for posting the following comment that highlights a few dots that need to be joined:

"Whoa there pilgrim, just a cotton picking minute, let's take a closer look at this afore ye spend all that "customer's" money!?

Who owns the Llanishen site? Thought Mapely did as per Wales On Line 13 Nov 2015 - The freehold interest in the current HMRC office site at Llanishen is owned by Mapeley Estates, following a private finance initiative agreement ...????

Surely that was why HMRC was paying for rent etc. on the site?

Then there is the matter of £20m (currently) for fitting out, so the lease is bare building? This is (currently) £5000/head just to fit out! WTF they having 22" plasma screens, gold plated loo's, FFS?! Piss off to IKEA, just a mile or 2 down the road and save yourself a few million!

Transport/parking infrastructure - all of a sudden 4.000 extra staff plus security, cleaners, deliveries etc. land upon the centre of Cardiff via train, bus, car, pedal, foot. Bloody trains have to queue now outside the station and Cardiff traffic is a nightmare for public and private transport.

Who is actually paying for this "range of benefits to people in Cardiff" ? Oh, that's all right then, it is only the end user that has to worry then, come back in 5 years time and see how much the real cost has reached!

Given the appalling track record of previous estate deals in this part of the public sector this needs a wee dig by an investigative journo' to establish VFM and whether basic business checks have been applied to such an amount of "customer expenditure".

Oh, yes, as these Muppets no longer FTF with their "customer" base, why the need for an expensive central location - vanity? Is there a common purpose associated with the development that remains hidden?

Answers on the back of a postage stamp please."

Oh, and don't forget (as per WalesOnline):

"The freehold interest in the current HMRC office site at Llanishen is owned by Mapeley Estates, following a private finance initiative agreement with the UK government. 

But that deal will expire around 2020. The land would then revert into UK government ownership."

2020 being the year that HMRC moves to its superhub.

There's irony for you!

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



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HMRC's Property Plans Are Shite - It's Official

The Public Accounts Committee has poured scorn on HMRC's "plans" to save more than £500m by condensing its sprawling office estate into just a handful of giant hubs.

PAC doesn't think that the 10-year scheme to reduce HMRC’s 170 offices to 13 regional bases in city centres, along with four specialist centres and a London headquarters will deliver the expected economies.

PAC also noted that closing down offices would damage local economies, with some offices being major employers in the areas.

The Telegraph quoted PAC:

"HMRC has yet to demonstrate it has a realistic and affordable plan to deliver such a radical change to its estate, and we do not believe that it needs to be based in expensive cities across the UK”.

In other words the plans, if they exist, are shite!

PAC, for good measure, also warned about the effects on staff:

“It already experiences too high a level of staff turnover with 5,000 to 6,000 staff leaving a year and it will take time to recruit and train staff in new regional centres.”

HMRC said that it will "consider" the report.

Snort!

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



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Relocation, Relocation, Relocation!

The National Audit Office has today published a report that rubbishes HMRC's plans to reduce the costs of running its estate.

The NAO wants HMRC to adjust the scope and timings of the project, in order to reduce the risk of service disruption.

As of November 2016, HMRC was responsible for one million square metres of buildings across the country, making it the fourth-largest estate in central government. Annual estate running costs stood at £269m in 2015-16, which pays for the accommodation of 58,600 staff.

Under the programme, HMRC will transition from 170 widely dispersed offices to 13 regional centres, with an additional four specialist sites and a central London headquarters. This will see 137 offices close by 2021 and involve 38,000 employees moving to the regional centres or leaving the department altogether. Some may need to relocate by up to 174 miles if they want to keep their jobs.

The scale of the savings that HMRC can make is limited by its Private Finance Initiative contract with Mapeley, which does not expire until 2021.

Under this deal, HMRC sold its freehold properties, which amounted to two-thirds of the estate, to Mapeley for £370m, then immediately leased them back, with Mapeley providing facilities management and maintenance services.
 

Amyas Morse, head of the NAO, is quoted by Public Finance: 

“HMRC has improved the handling of its current contract with Mapeley and achieved better outcomes, though significant risks remains.

Looking ahead, HMRC has acknowledged its original plan for regional centres was unrealistic and is now re-considering the scope and timing of the programme.”

He advised HMRC to “step back and consider whether this strategy still best supports its wider business transformation and will deliver the sustainable cost saving it set out to achieve in the long run”.

The legacy of Mapeley!

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



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HMRC In A Nutshell

My thanks to a loyal reader who posted the following comment yesterday, that summaries the state of HMRC in  a nutshell:

"In my Mapeley run HMRC office the heating is broken and is apparently not likely to be fixed this winter. The gents toilets have also overflowed onto the carpet in the corridor and the staff are treated each morning to the smell of stale urine. 

This is what you can routinely expect as your working conditions in this department. I personally would like to rub the faces of all those who agreed and promoted this contract into that piss soaked carpet."

Working heating and toilets are surely the very least that any company should provide its staff!

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

HMRC Building Our Future - Mapeley

My thanks to a loyal reader who directed me to Hansard 28 April 2016 wrt

HMRC: Building our Future Plan

 

There are numerous mentions of our old friends at Mapeley and the significance of 2021.

Happy reading!

Chris Stephens

I suspect that the word “Mapeley” will come up in the course of this debate, so let me touch on it. I referred earlier to the more than 700 offices formerly used by HMRC. Mapeley Estates snapped up more than 130 of them for its offshore property portfolio after loading itself up with debt in order to front up its side of this rotten charade with the then Government: 84% of the funding that Mapeley obtained to acquire that lucrative contract came in the form of loans. That shabby deal with a shabby company comes to an end in 2021. For the privilege of renting publicly built offices sold off for a song, HMRC will have the right to occupy buildings, with leases based on market terms” after that date. That is very generous of Mapeley.​

I commend the National Audit Office on its 2009 report on the deal. It is redolent with phrases such as, “the Department has not achieved value for money…The Department did not fully appreciate the risks… The Department has not had strong processes to monitor the overall cost of the contract and whether it is achieving value for money”.

The Exchequer Secretary admitted to this House last year that the end life of the Mapeley contracts represented a “one-off opportunity to make this change to the estate footprint.”—[Official Report, 24 November 2015; Vol. 602, c. 1300.]

That is part of the truth behind the closures—a private finance initiative deal worth billions from the public purse, used to enrich a Bermuda-domiciled corporate entity, with the public left with nothing at the end of 20 years, except the right to sign a commercial lease.

I will end with the words of a PCS member and HMRC employee, my constituent Bobby Young, who is chair of the PCS Revenue and Customs branch:

“Whilst my branch welcomes the news of a slight increase of jobs in Glasgow, we absolutely oppose it if it comes at the cost of jobs elsewhere. Communities from Bathgate to Bootle will be devastated by these closures—that is not a price worth paying for the sake of a few extra jobs in Glasgow.”

If anyone should know about prices, it is an employee of Her Majesty’s Revenue and Customs. Sadly, it seems that their superiors know very little about value.

Chris Law (Dundee West) (SNP)

I recently discovered that the ownership of the leases of HMRC offices—this has already been mentioned by my hon. Friend—was transferred to a company called Mapeley in 2001. You could not make this up, Mr Deputy Speaker. Where is Mapeley based? In the Bahamas. That is right: HMRC pays rent to a company registered in a tax haven. To quote the chairman of the Public Accounts Committee, this Government have scored a “massive own goal”. Who stands to profit from the sales of HMRC local offices? You guessed it: Mapeley again. Why not use local council offices that may be available, and then any profits from the rents would go straight to the Treasury?

Stuart C. McDonald (Cumbernauld, Kilsyth and Kirkintilloch East) (SNP)

Perhaps the Minister will be able to answer some of our questions today, but I must emphasise that debates alone will not be enough. We need the people behind these proposals to come here to explain them directly to Parliament. That would allow Members to get stuck into the nuts and bolts and to get behind the management-speak and buzzwords that are too often passed off as answers. If that does not happen, staff and taxpayers will be left questioning whether HMRC is really “building our future”, as the glossy brochure states, or whether this is in fact a question of buildings forcing our future. It has already been pointed out that this is taking place in the context of the expiry of the extraordinary contracts that were entered into in 2001, when 600 or so properties were sold to the offshore company, Mapeley Steps, and then leased back, PFI-style, to HMRC. Those contracts expire in the years leading up to 2021. In the absence of answers to our questions, many will conclude that this is more about digging HMRC out of the hole that it jumped into in 2001, rather than being about any kind of strategy. That is the only conclusion open to us.

Rob Marris (Wolverhampton South West) (Lab)

Well, Minister, it’s all a bit of mess, isn’t it? I congratulate the hon. Member for Glasgow South West (Chris Stephens) on securing the debate. He touched on staff morale, the workforce figures and the fact that there has been no ministerial statement. Along with several other hon. Members, he also mentioned the shameful Mapeley contract, signed—I am sad to say—by a Labour Government who did not realise at the time that it was an overseas company.

Tax does have to be taxing.

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Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

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However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

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HMRC Cleaners Strike

The “national living wage” (NLW) was theoretically designed to boost low-paid workers’ income and help people off welfare. However, unsurprisingly some companies have been looking for ways to reduce the cost impact of the NLW.

Step forward ISS, the company that employs the HMRC cleaners in Liverpool.

ISS informed the HMRC cleaners them that it intended to claw back any increase in hourly pay by cutting each worker’s number of hours so that their overall wages stayed the same.

In theory this meant no changes to the take home pay, and a cut in working hours.

So far so good?

Except that single people on low pay who work at least 30 hours a week qualify for working tax credits. These are paid out by HMRC, which is also responsible for enforcing the NLW.

When ISS lopped two hours from their working week, the cleaners fell below the threshold and have, as a result, lost between £40 and £50 a week in tax credit payments each.

Hence the cleaners voted to go on strike for two days this week.

The Guardian notes the irony that ISS is a Danish company contracted by a Mapeley (Mapeley being offshore) offshoot to clean the buildings.

Now, of course, if the cleaners find additional hours in other work they will be able to have their tax credits reinstated. That of course all depends on the local job market.

The question is, if the number of hours cleaning has been reduced do the staff of HMRC who work in those offices notice any difference?

If not, then it seems ISS were overcharging HMRC for work that was not required before the hours were cut. If there is a noticeable decline in office cleanliness, then HMRC need to raise this with ISS.

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Troup's Offshore Dalliance

As the political and media hoo-hah continues over offshoring, and the related tax implications, it appears that neither HMRC nor the Guardian have a sense of irony over the facts that HMRC's property management company is Mapeley (which has an offshore presence) and that the Guardian has itself used (maybe still uses) an offshore vehicle.

Anyhoo, that aside the media (eg the Guardian) reports today that:

"The boss of Revenue & Customs (HMRC), the government department overseeing a £10m inquiry into the Panama Papers, was a partner at a top City law firm that acted for Blairmore Holdings and other offshore companies named in the leak.

Edward Troup, executive chair of HMRC since April, is a former partner at Simmons & Simmons, whose clients have included the Panama-registered fund created by David Cameron’s father, Ian."

Whoever said that HMRC doesn't do irony?

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

HMRC's Special Relationship With Google

As the media, the politicians and the taxpayers of Britain work themselves into a frenzy over Google's £130M deal with HMRC; let us not forget that HMRC has a special symbiotic relationship with Google.

As a loyal reader reminded us all today, HMRC was the first major government department to move to Google Apps as reported by The Register in June 2015.

David Fitton, head of public sector sales for Google UK, wrote on Linkedin at the time:

"The acceptance by HMRC that they can store OFFICIAL information offshore in Google data-centres represents a major change and endorsement of Google's approach to managing sensitive information."

The key thing there is that the data is stored in offshore data-centres.

Therefore, when people moan about Google's offshore tax arrangements, let us not forget that HMRC love a bit of offshoring too (as indeed does their estate management company Mapeley)!

That's what's known as a "special relationship".

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

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HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Diamonds Are Forever! - HMRC Becomes Diamond Shaped

In August I wrote that HMRC had bought some land in Stratford wrt HMRC's plans for hubs.

Moving forward to the present, my thanks to a loyal reader who advised me that HMRC is likely to reduce its office capacity from 170 offices at present, to around a dozen regional centres in five years.

A few "transitional sites" will continue a little longer, presumably because there are too many staff there now for HMRC to be able to afford to pay them off.

Announcements to the staff will take place region by region from 10th to 19th November.

A message sent to HMRC staff by HMRC's chief people officer William Hague this week (seen by Civil Service World) says the "overwhelming majority" of employees will be moved to the regional offices as smaller units are closed, and sets out plans for a series of more limited "transitional sites" to allow some staff to continue to work locally. 

As per Hague:

"These changes are one of the biggest building blocks of our transformation, as we simply can't transform the way that we serve the public without fundamentally changing how and where we work.

That's because the way that we're currently organised, across 170 offices, simply doesn't make business or financial sense. It makes it hard for us to collaborate, develop people, or respond to operational priorities – and has created a position where we have isolated pockets of colleagues who have limited career opportunities. 

The only way that we can change this is by rationalising our estate. Our estate contracts are structured in such a way that we need to act now. The alternative would involve us being forced to keep deteriorating buildings that we can do little about." 

Loyal readers with long memories may recall that HMRC has estate contracts (around 60% of HMRC's estate is contracted to Mapeley) with Mapeley (feel free to search this site for details about Mapeley).

The good news is that, according to Homer, HMRC is on a course to become more

"diamond-shaped"

Whatever that means?

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Money Money Money

HMRC August data for expenditure above £25K shows that it spent over £800,000 on credit card commission charges in August.

Other tidbits include our old friends Mapeley which received £18.7M (which included costs of utilities payments and refurbishments).

HMRC also paid £77M for the accommodation and ‘other’ expenses of information management service provider Aspire. Capita received £579K for training costs, law enforcement training, HR services, debt management and knowledge analysis and intelligence.

Exchequer Partnership received £2.5M for the serviced accommodation at 100 Parliament Street, London (HMRC's bunker).

 

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

PAC Talks Bollocks Again

I see that PAC has distinguished itself again by lashing out at the accounting profession, in petulant frustration at the fact that people and companies seek to arrange their financial affairs in such a manner so as to minimise their tax burden.

The BBC reports that PAC wants to ban external accountants working inside government, to stop them telling clients about tax loopholes they have found.

Errmm, isn't this in fact a practice that is proactively encouraged by HMRC and the Treasury?

Bill Dodwell, head of tax policy at Deloitte, is quoted by Accountancy Live:

"We have seconded staff to the Treasury at their request. "

It should be noted that HMRC are no slouches in recruiting from the private sector, eg HMRC recently appointed Volker Beckers (ex CEO of RWE npower, a company that paid no tax for 2009-2011) as an NED.

On a similar point, have not past HMRC senior directors on leaving HMRC joined the private sector eg Hartnett joining HSBC? HSBC being the company that was fined $1.9BN for various "issues". Therefore will any ban on private sector people working with/for HMRC cover both "sides" of the revolving door?

MPs are whining that accountants were being seconded to work in the government to advise on changes to tax law, but using the position to glean inside knowledge and tell businesses how to avoid tax.

This criticism by MPs is rather "ironic" given that there are quite a few of them who use accountants themselves to deal with their trusts and financial affairs in a tax efficient manner.

Committee chairwoman Margaret Hodge (who, by happenstance, is in the top 20 of the UK's richest MP's and is worth around £18M) said the practice represented a "ridiculous conflict of interest":

"The large accountancy firms are in a powerful position in the tax world and have an unhealthily cosy relationship with government."

Cough, ermm Margaret...Stemcor!

PAC are also worried about the fact that HMRC are outnumbered by well-resourced accountancy firms in key areas, such as businesses transferring their profits overseas in order to pay less tax.

Errmm, two things here:

1 Given that HMRC is being restructured and staffing levels cut back, how is this a surprise?

2 Regarding offshoring of profits etc..Mapeley!

I leave the final word to HMT

"The analysis and conclusions in the PAC report bear almost no resemblance to reality."

Views and comments, as ever, are always welcome.

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



Tax Investigation for Dummies, by Nick Morgan, provides a good and easy to read guide for anyone caught up in an HMRC tax investigation. A must read for any Self Assessment taxpayer.

Click the link to read about: Tax Investigation for Dummies

HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Mapeley In The News

Loyal readers will recall that Mapeley, an offshore property company that owns and manages around 60% of HMRC's "estate", occasionally features on this site.

Yesterday the Liverpool Echo reported that a set of offices in Liverpool, once occupied by HMRC and currently owned by Mapeley, will now be turned into flats.

Oddly enough, the article seems to imply (from my reading of it anyway) that people have only recently realised that Mapeley is offshore.

Here is the article in full, please feel free to comment:

"LIVERPOOL’S former tax office building is set to be taken over by a social landlord.

City planners are due to decide on a bid that will see it turned into more than 200 one, two and three-bedroom flats.

It is anticipated there will be considerable demand for one-bed flats in future – either run by social landlords or private firms – because many people in the city are now expected to pay ‘bedroom tax’ on homes with spare rooms.

The ECHO has learned that the former Her Majesty’s Revenue and Customs (HMRC) is now owned by a company ultimately based in Guernsey, the Mapeley Group.

It was rented back by HMRC until the tax office moved out.

The company,  which used to be owned in part by international financier George Soros,  has recently come in for criticism from MPs over alleged “tax avoidance” because of its off-shore status.

It is one of the two companies that has submitted the planning application to refurbish the five-storey building.

The planning application, brought by Mapeley STEPS (Strategic Transfer of Estate to the Private Sector) and Glenbrook QD Ltd, states: “The development will be funded and delivered by Glenbrook and run and managed on a day to day basis by a third party registered social landlord.”

As well as the 86 one-bedroom, 124 two-bedroom and 20 three-bedroom flats – which will be “high quality accommodation that meets lifetime homes standards” – there will be a community centre, children’s playground and picnic area.

While more than 400 nearby residents were consulted as part of the bid, only one has objected over fears of traffic clogging up the narrow road to the building at Mariners Wharf.

Mystery currently surrounds which housing association will lease the development, as many of the city’s social landlords confirmed they were not involved in the scheme.

Mapeley did not confirm who the social landlord provider was and Glenbrook QD could not be reached by the ECHO for comment.

A spokesman for Mapeley STEPS Contractor Ltd, which collected the rents from HMRC, is “one of several within the Mapeley Group which is based in Guernsey”.

A stake in Mapeley was owned by Mr Soros, the man who came to widespread notoriety when he put a £10bn speculative bet against the pound in 1992, devaluing the currency and sparking what became known as ‘Black Wednesday’.

Martin Ralph, of the Merseyside Trade Unionist and Socialist Council (TUSC), which campaigns against tax avoidance, said the news that HMRC had been paying its rent to offshore companies while it was still in the building was shocking, adding: “This all shows how money flows.

"Benefits get cut because the government says it can’t afford to pay them but the money it does still pay will end up flowing into tax havens.”"

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



Tax Investigation for Dummies, by Nick Morgan, provides a good and easy to read guide for anyone caught up in an HMRC tax investigation. A must read for any Self Assessment taxpayer.

Click the link to read about: Tax Investigation for Dummies

HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Beaker's Significant Tool

I am highly gemused to see that our political masters and HMRC have something of a sense of humour, and have published in advance their April Fools' Day joke.

I refer of course to Danny "Beaker" Alexander's "Significant Tool", aka HMRC's Tax and Procurement Discussion Document. This "fine" document came about as a result of Beaker's comments on 25th September 2012 about "tax dodgers":

"Taxpayers’ money should not be funding tax dodgers. So I have tasked HMRC and the Cabinet Office to come up with a workable solution to this problem and we will set out more details later this year."

The document proposes that individuals and businesses that have taken part in tax avoidance could be denied government contracts.

Potential suppliers will be required to notify contracting departments of their recent tax compliance history and state if any return has been found to be incorrect as a result of HMRC successfully challenging it under the general anti-abuse rule (as per the Finance Bill 2013),  an anti-avoidance rule, or the Halifax abuse principle.

Government departments will be allowed to terminate an agreement if the service provider subsequently breaches tax compliance obligations.

For good measure the proposals are to operate retrospectively, with (as per Taxation) a possible a ten-year time limit relating to the date the non-compliance was recognised.

In the event that anyone has any comments on the proposals, they should be submitted by email no later than 28 February to HMRC's David Harris or Robert Sanford.

Good luck with that then!

On the subject of tax avoidance etc, Mapeley anyone?

How ironic that HMRC, a staunch and shouty opponent of tax avoidance had 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!

Aside from Mapeley I would wager that a good many companies that our political masters sign contracts with (or indeed have shares in, or sit on the boards of) are doing their best to reduce their tax bills (ie avoiding taxes).


Tax does have to be taxing.

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Asleep At The Wheel

On August 4th 2000, the Telegraph reported the following:

"MAPELEY, the building services consortium backed by the financier George Soros, yesterday won a £2 billion contract to manage Inland Revenue and Customs & Excise properties including London's Somerset House."

Loyal readers of this site will doubtless be familiar with the name Mapeley (simply click on the label "Mapeley" below this article to see earlier articles).

On 1st September 2011 Accountancy Age reported the following:

"TAX REVENUE lost through the use of tax havens by Private Finance Initiative (PFI) investors means the scheme does not represent value for money, MPs have said today....

A report by the Commons' Public Accounts Committee found that many shareholders of PFI investment funds are registered offshore. It quoted one fund that had 72% of its shareholders abroad."

I find the above "revelation" about PFI investors by the CPAC to be somewhat "belated" and "underwhelming", given that this site has on more than one occasion noted that Mapeley (for one) is offshore. In fact, if you click the link in the previous sentence, you will see that CPAC noted that Mapeley was offshore in 2004.

Have our political masters been asleep at the wheel for the last decade, why now are they only waking up to what they themselves knew many years ago?

Tax does have to be taxing.

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Click the link to read about: Tax Investigation for Dummies

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The Top 100 Suppliers

Kable have published a list of HMRC's top 100 suppliers during the financial year 2009/10.

In total HMRC spent £1.8BN on suppliers, of this £0.8BN went on the Aspire IT contract and £0.3BN went to the property company Mapeley (who have been featured on this site before - see tag below).

Tax does have to be taxing.

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Peterlee – Emerald Court, Bracken Hill Business Park

I have, on occasions, mentioned Mapeley (an offshore property company) and the rather lousy deal that HMRC made with Mapeley.

Here is a wee example of how HMRC, albeit inadvertently, have helped others make a nice little profit.

Source Drivers Jonas Deloitte

Client
Matrix Securities Ltd

Area of Advice
Disposal of a call centre

Vendor
Matrix Securities Ltd

Purchaser
Mapeley

Terms
Sold for £11.1m to show a net initial yield of 6.0%.

Date of Deal
June 2006

Our Role
We arranged the sale of a 61,000 sq ft call centre, let to the Inland Revenue, with a passing rent £717,000 pa.

The syndicate, put together by Matrix who funded the construction of the property on a speculative basis 7 years ago, were thrilled with the outcome - some £1m over expectations and provided them with a very healthy return."

I suppose though that an element of the profits made by all the parties involved, those who are onshore at least, are taken back by HMRC via tax.

Tax does have to be taxing.

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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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Tax Investigation for Dummies, by Nick Morgan, provides a good and easy to read guide for anyone caught up in an HMRC tax investigation. A must read for any Self Assessment taxpayer.

Click the link to read about: Tax Investigation for Dummies

HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Bottom of Class

In August I asked:

"If offshore tax havens are so evil, in the eyes of the Treasury and HMRC, why are HMRC's buildings subject to a sale and leaseback deal with Mapeley PLC (a property company based offshore in Guernsey)?"

It would seem that was not the only question that I should have asked about HMRC's relationship with Mapeley.

In fact "Serious Cat", in the comments section of that article, was quick to point out at the time that there were other issues wrt HMRC choosing Mapeley:

"I think we all know exactly why Mapeley were chosen for this property management contract and, indeed, there are some parliamentary minutes floating around which detail this reason - they're cheap!

Of course, Mapeley had no experience in property management, but theirs was the cheaper bid by far."

And

"The following is an excerpt from the "Oral evidence taken before the Committee of Public Accounts on Wednesday 27 October 2004"

Q1 Chairman: Good afternoon. Welcome to the Committee of Public Accounts where today we are looking at PFI: the STEPS deal, and we are joined by witnesses from the Inland Revenue, HM Customs and Excise and a witness from Mapeley. Mr Varney is the executive chairman of the Inland Revenue/Customs and Excise. It is your first visit, I believe. You are very welcome. He is joined by Ms Helen Ghosh, director general, corporate services, and Ms Siobhán McHale, director of estates and, from Mapeley, Mr Jamie Hopkins who is the chief executive officer. Mr Varney, does it give the Inland Revenue any sense of shame that they are now known as a well known tax avoider?

Mr Varney: I do not think they are known as a well known tax avoider. I do recognise that in the agreement there is an unfortunate feature. As you know, the government changed the guidelines so for a forward procurement that would not arise.

Q2 Chairman: Why did you not specify in the bidding documents for this deal that these properties should be held onshore?

Mr Varney: With the benefit of hindsight, one can say it was a mistake.

Q3 Chairman: Will you please look at paragraph 2.24 which you will find on page 21? You will see there that it says: "The Board of the Inland Revenue only became aware of the tax arrangements late in the procurement" and the Customs and Excise were not told until after the deal had been signed. Why is that?

Ms Ghosh: I was not there. It was before my time, but—.

Q4 Chairman: We are not interested in whether you were there or not. You represent this Department and you will answer questions on it.

Later in the minutes...

Q92 Mr Steinberg: You have no proven record, have you, as a company in property management?

Mr Hopkins: Prior to this transaction, no.

Q93 Mr Steinberg: Why did you go to them? Purely financially?

Mr Varney: £500 million to reinforce—

Q94 Mr Steinberg: You were prepared to gamble the whole of the Inland Revenue estate on the basis of £500 million which they may at the end of the day cock up?

Mr Varney: The NAO Report makes very clear we followed all the lessons from DWP. We tried to look at how we minimised the risk in this contract. The public purse is better off to the extent of £500 million, plus it has competition and flexibility. That is not a gamble. That is a sensible decision.

Q95 Mr Steinberg: I would have been very suspicious when a company comes along and they can undercut everybody by half a billion pounds. Are you not suspicious at all about that? They do not have a record in property management and they can come along and undercut everybody by half a billion pounds and you think you are on a safe deal, do you?

Mr Varney: I think you do the due diligence which is described in the NAO Report but I do not see my job as trying to maximise the revenue of service providers.

The full text is available here and it makes very interesting reading.

Hopkins has jumped ship from Mapeley and gone to one of their rivals, while Varney pocketed a knighthood and left HMRC in 2006.

Basically, the whole thing was a massive cock-up from beginning to end. Mapeley have no property management experience and it shows. Tales of 3-month delays in receiving a replacement light-bulb are not uncommon and many members of staff have simply given up reporting issues because of the poor service.

That's the reality of the Mapeley contract."

However, it doesn't end there. 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.

Well done!

Tax does have to be taxing.

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Tax Investigation for Dummies, by Nick Morgan, provides a good and easy to read guide for anyone caught up in an HMRC tax investigation. A must read for any Self Assessment taxpayer.

Click the link to read about: Tax Investigation for Dummies

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Question

If offshore tax havens are so evil, in the eyes of the Treasury and HMRC, why are HMRC's buildings subject to a sale and leaseback deal with Mapeley PLC (a property company based offshore in Guernsey)?

"In April 2001 we purchased the portfolios of the department of Inland Revenue, HM Customs & Excise and Valuation Office Agency (since merged into HM Revenue & Customs - HMRC). These portfolios totalled 147 freehold properties and 454 leasehold properties. Our agreement with HMRC includes 20 year sale and leaseback and the provision of comprehensive property and facilities management services to most of the HMRC estate.

As at 30 June 2008, the total value of this portfolio was £526.8 million.

Under this contract we own the freeholds and manage the leaseholds occupied by HMRC as principal (we take the risk of rising rents and we benefit from falling costs), provide a full facilities management and carry out construction fit-out works on behalf of HMRC to a pre-agreed price."

Tax does have to be taxing.

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What is TAXWISE?

TAXWISE is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Taxwise

Tax Investigation for Dummies, by Nick Morgan, provides a good and easy to read guide for anyone caught up in an HMRC tax investigation. A must read for any Self Assessment taxpayer.

Click the link to read about: Tax Investigation for Dummies

HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"