by David Hencke, Westminster Correspondent
Government plans announced this week to cut Whitehall staff and close offices could, instead of saving money, land taxpayers with bills amounting to hundreds of millions of pounds, Tribune has learned.
The problem has been exposed by a damning National Audit Office report into an inept contract handing over the running and ownership of more than 500 tax and valuation offices to an off-shore company in Bermuda.
The NAO report reveals that, following the huge commercial property slump, if the offshore company Mapeley, now based in Guernsey, walks away from the deal it could cost the taxpayer up to £110 million.
The deal was meant to save the taxpayer £1.2 billion, but the most that could now be saved is £900 million – and if the office closures go ahead it could instead land the taxpayer with increased bills.
The report warns that the closure decisions create “financial pressures” for Mapeley – recently delisted from the stock exchange – and if the company walks away the Government faces “significant costs” including a one-off payment of between £40 million and £110 million for “unpaid rent and supplies” and “substantial on-going costs relating to estates management and increased rent liabilities.”
If Mapeley goes under it could also cause problems for a major bank, Santander, owner of Abbey National, since its branches are also owned and run by Mapeley. The company also runs some Identity and Passport Offices.
The report reveals that Whitehall negotiators were so inept that Customs did not realise it had negotiated a deal with an offshore company until it had signed the contract. This meant that when Mapeley sold redundant tax offices acquired from the Revenue its offshore status allowed it to avoid paying British taxes on the profits.
Officials also – ironically – did not understand the nature of the VAT arrangements on the complicated deal so the department in charge of VAT has lost another £138m by not being able to recover VAT on its own premises.
Mark Serwotka, general secretary of the Public and Commercial Services union, said: “The whole Mapeley affair is a prime example of the private sector being given a blank cheque at the expense of the taxpayer. With massive office closures across HMRC there is a real danger that fraud and error rates will go up with the loss of face to face advice and local compliance officers.”
A spokesman for Revenue and Customs said: “The NAO report shows that HMRC has improved the management of the contract and built a more effective partnership with Mapeley. We recognise that there is much more work to be done to ensure that the contract delivers all it can to our staff and taxpayers. The measures needed to achieve that are being put in place.”
