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Thursday, 12 December, 2002, 13:39 GMT
Revenue's apology for tax haven deal
The Inland Revenue has admitted it not only made a mistake when it sold 600 properties to a company based in a tax haven, but also may have unwittingly underwritten the deal.

Sir Nicholas Montague, the Revenue's chairman, told the Treasury Sub Committee his department had issued misleading information and also failed to inform parliament properly.

A memo from Sir Nicholas showed the contractor raised financial concerns about the deal one month after it was signed in March 2001.

The Revenue sent two letters to the contractor, Mapeley Steps, one of which was to reassure its creditors and shareholders about the viability of the deal.

Sir Nicholas said parliament should have been advised the Revenue was giving the undertakings because they constituted "letters of comfort", which in accounting terms could be considered an expression of financial support.

He also apologised for his department failing to inform ministers that the buildings were to be sold to a company based in a tax haven before the contract was signed in March 2001.

Tax deals

The private finance initiative (PFI) deal involved selling the buildings of the Revenue and Customs and Excise for 220m ($347m) to Mapeley Steps, which is registered in Bermuda.

Under the deal, the government will rent back the buildings for 20 years from a sister company in the UK, Mapeley Steps Contractors, which will service and maintain them for an additional fee.

In a press release, when the deal was signed, the Revenue falsely claimed the buildings had been sold to the UK company.

The Revenue is responsible for leading the government's crackdown on tax dodging in off-shore havens.

Earlier this year the chief executive of Mapeley Steps, Robin Priest told BBC News Online there was no wrong-doing on the part of his company.

See also:

23 Sep 02 | Business
18 Apr 02 | Business
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