Revenue under fire for tax avoidance

The Inland Revenue is expected to face sharp criticism in a Treasury committee report over the sale of its properties to a company based in a tax haven.

Two years ago the Revenue agreed to sell and then lease back 600 its properties in a private finance initiative deal worth £220m.

At the time it claimed to have sold the property to a British firm called Mapeley, but later admitted it had actually sold them to a sister company based in the offshore tax haven of Bermuda.

The Treasury will deliver its report at noon on Wednesday.

'Unbelievable

David Laws, Liberal Democrat MP and former member of the Treasury Select Committee when it learned of the deal, told the BBC the deal was unbelievable.

"It is something you couldn't make up," he said.

"The Inland Revenue - charged with reducing tax avoidance and evasion - takes part in a deal which involves massive tax avoidance."

The company involved will save millions of pounds in tax over the life of the contract.

Cover-up

"Then (the Revenue) covers this up in a number of different places by misrepresenting the nature of the company it dealt with," Mr Laws said.

Late last year the Inland Revenue's chairman Sir Nicholas Montague was forced to apologies to parliament for the way the contract was handled and for failing to inform ministers of the company's true nature.

"It really has been a catalogue of disasters," Mr Laws said.

"The Inland Revenue has hidden behind the excuse that tax avoidance is not actually illegal, so there is nothing illegal in this deal, but we need a clearer statement from ministers about whether they are happy for the Inland Revenue to be involved in these types of deal."

Mr Laws also indicate the future of Sir Nicholas could be at stake.

"If the Government feels that he is not addressing that issue, then his position and the positions of senior people at the Inland Revenue will be under review."