Inland Revenue’s Deal With Mapeley Steps Hits More Controversy

by Robert Lee, Tax-News.com, London

29 July 2004

The controversial twenty year property lease back deal struck between the Inland Revenue and Bermuda-based Mapeley Steps could cost the UK government £1 billion more than first thought due to the accrual of additional charges, according to a report in The Observer.

Details about extra charges, released in response to parliamentary questions tabled by the Labour MP Denzil Davies, reveal that the Revenue paid Mapeley Steps some £223 million in rent last year - around £63 million more than originally envisaged.

The handling of the property deal, which saw 600 Revenue buildings sold for £220 million in 2001, has been shrouded in controversy from the moment it emerged that the Inland Revenue’s new landlord, Mapeley Steps, was based offshore whilst the agency continued to take a strong stance on aggressive tax planning by other organisations.

Some of the harshest criticism was targeted at the then chairman of the Revenue, Sir Nicholas Montague, who argued at the time that tax avoidance - if within the scope of the law - was no reason to discriminate against a bidder, and that it had been a “pure and simple oversight” which led to him to fail to inform his boss, Paymaster General Dawn Primarolo, that the deal could be misrepresented.

Commenting on the extra charges, a Revenue spokesman told the Observer that it was perfectly standard for such serviced accommodation contracts to provide “a flexible framework for provision of a variety of other chargeable services.”

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