HMRC Pays Rent to Hidden Offshore Company | Hacker News Reader

HMRC Pays Rent to Hidden Offshore Company

kitguru.net

61 pointskami10217 comments

HMRC is basically the IRS of the UK.

Private Eye's been on about Mapeley for years.

Indeed - their website http://www.mapeley.com/OurApproach/Customers/HMRC.aspx

The key thing is HMRC sold their properties off and then paid rent to stay there - rightly or wrongly that was the craze for a while.

The issue was they sold them to a company registered overseas. The criticism is that the Government shouldn't have done that, or at least heavily penalised that when considering bids because of the future loss of tax revenue. Worth mentioning this isn't about currency evil Tory cuts, the buildings were sold off in 2001 under the party now in opposition.

All government agencies did it they held billions in realestate so paying rent made much more sense.

This is even quite common in business corporations sell their HQ to get a huge influx of cash and lease it back this is a pretty standard accounting trick.

In the long run, it's a losing tactic. Assets can be used as collateral to borrow indefinitely; once you sell them, you lose that capability (and instead get a long-term recurring expense you don't control).

More than one business went under because they did this "cashing out" trick without fully understanding the consequences.

It's more likely the people at the top did understand the consequences, but chose to anyway because of personal gains.

Echoing toyg, this can't possibly make sense for a government. In the long run, they'll obviously pay more in rent than the buildings are worth.

Yes, but "long term" is more than one election away

of course it can owning those assets yields them nothing, selling and paying rent is cheaper, if rent becomes too expensive they can move out.

If they're going to move out, they could keep the building and rent it out themselves, and make more money in the long run that way.

So HMRC is dodging paying tax on it's offices - to itself? I'm confused as to why they'd bother, couldn't they just take a bigger slice of the tax pie if they needed it to cover the cost of the offices?

No, HMRC rents its offices from a commercial company - it just happens that the company is headquartered offshore. HMRC themselves aren't dodging tax, and I'm sure there is no suggestion that the offshore company is doing anything improper either, the article is more about the irony of HMRC seeming to endorse or validate such offshore behaviour when of course a big reason for companies to go offshore is to - legally - avoid tax which would otherwise have to be paid to authorities like HMRC.

I see - thanks for the explanation.

Although it's not really up to HMRC, they have to work through Private Finance Initiatives (PFIs), which the Thatcher and Major governments ushered in. Some people have become and will continue to become very wealthy from these deals. You might think that some of those beneficiaries might have been in government when PFI rules were introduced, and remain today - but you can't prove it, as the money trail usually goes cold offshore.

Is there any hint of any evidence of that - it's an enormous accusation. Stupidity and near bankruptcy of the state have always been the assumptions I have worked with on why PFI was so popular. Actual corruption is a real step too far though. Then again maybe the people pf Iceland thought the same

I would rather it was corruption than stupidity. Our government are also in charge of a nuclear arsenal.

No, that's rather the point of offshoring things, usually through lengthy chains - although you only need three degrees to be immune to pretty much any kind of disclosure. As for corruption, it's again hard to pin down, as even if disclosed they're just private citizens managing legal investments.

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