IR Chairman Gives Evidence Over Mapeley Steps Deal

by Jason Gorringe, Tax-News.com, London

20 June 2003

The beleaguered chairman of the Inland Revenue, Sir Nicholas Montagu is coming under fresh pressure from MPs this week as he gives evidence to the Treasury select committee on the Mapeley Steps leaseback saga.

In March 2001 the Inland Revenue claimed that it had sold 600 of its buildings buildings to a British-based company called Mapeley Limited in a leaseback deal under the private finance initiative for a sum of £220 million. However, eighteen months later, it emerged that the Revenue had in fact sold the buildings to a Bermuda-based sister company known as Mapeley Steps, which is partly owned by billionaire market guru George Soros.

Sir Nicholas's handling of the affair attracted fierce criticism from MPs, for allowing government assets to be transferred to a firm operating in a 'tax haven'. His case has not been helped by allegations that he was not entirely open regarding details of the deal when it went through, and Mapeley's subsequent demand to re-negotiate the lease for more money a short while after the deal was concluded.

The revenue claims that the arrangement will save the British taxpayer some £1 billion over the life of the twenty year contract. However, select committee MPs were more interested in the manner in which the sale of the buildings was conducted, rather than if the sale was a good deal for the taxpayer. The committee's report, published earlier this year, described the IR chairman's attitude towards the affair as "complacent" and criticised the department generally for "serious lapses in the standards required from officials".

So far Montagu has resisted calls for his resignation, although some observers claim that the government has allowed the chairman to see out his term - which runs until March 2004 - in order to deflect criticism away from the Treasury department's handling of the sale, particularly the actions of Paymaster General Dawn Primarolo who claims to have been kept in the dark by Montagu on the details of the deal.

However, in evidence given to the committee earlier in the month, Customs chairman Sir Richard Broadbent claimed that the Treasury would have been extensively consulted on the details of the deal, leading to speculation as to the exact role of Ms Primarolo in the affair.

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