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EDITIONS
Wednesday, 12 February, 2003, 17:51 GMT
Revenue slammed over tax haven deal
There were "serious failures" by Inland Revenue officials who negotiated a deal in which 600 of the agency's properties were sold to a company based in a tax haven.

The influential Treasury select committee said in a report into the affair that they were "astonished and extremely concerned" about the actions of Revenue officials.

We consider these to have been serious lapses... by all the officials concerned

Michael Fallon MP
Two years ago the Revenue agreed to sell and then lease back its properties in a 20-year private finance initiative (PFI) deal worth 220m.

At the time the Revenue claimed to have sold the properties to a British firm called Mapeley, but later admitted to BBC News Online it had actually sold them to a sister company based in the off-shore tax haven of Bermuda.

The report found officials repeatedly failed to keep the Revenue's board informed and said the minister Dawn Primarolo was entitled to feel "deeply disappointed with the service she received".

Mapeley will save millions of pounds in tax over the life of the contract.

Forced to apologise

"We consider these to have been serious lapses, well below the standards expected, by all the officials concerned," Michael Fallon MP, chairman of the committee said.

Late last year, the Inland Revenue's chairman Sir Nicholas Montague was forced to apologise for the way the contract was handled and for failing to keep ministers informed.

No recommendations were made about whether he should be sacked.

Mapeley cleared

The report clears Mapeley of illegally avoiding tax.

"We accept both that Mapeley was entitled to minimise its tax liabilities and the evidence that the avoidance of tax in this case was legal," the report said.

The committee was told that even if the properties had been sold to a British company, the contract would not have prevented them from being transferred off-shore.

The report recommended that the exclusion of bidders from off-shore havens needed to be clarified and that adjustments should be made to recoup lost tax revenues in future contracts.

See also:

23 Sep 02 | Business
05 Feb 03 | Business
12 Dec 02 | Business
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