Q121 Mr Bacon: Good. Finally, on consultants, a number of people have referred to the costs. What I would like to see, if you could send us a note, is a detailed breakdown since plainly there will be chartered surveyors, chartered quantity surveyors, insurance, civil engineers, structural engineers and Lord knows what else. I am not clear where these all sit. Presumably they do not all sit within that £7.5 million, do they, or do they?
Mr Varney: That is procurement cost. That £7.5 million is mainly the procurement. It would have been, I suspect, mainly legal advice about the contract.
Mr Bacon: I am interested in the whole shebang, tax advice particularly and also when it was given because it seems to me extraordinary that the Inland Revenue could find out so late and Customs and Excise not at all about this offshore structure when they were presumably paying tax advisers quite a lot of money. Could you give us a detailed breakdown of all the advice from wherever it came, and whether it was under the heading of procurement or whatever other heading you want to put it under? If you could make it comprehensive, that would be very helpful.5
Q122 Mr Williams: I note an interesting congruity between times of appointment. Mr Varney of course came in when his predecessor left in September and that was the normal retirement date, was it not?
Mr Varney: Yes.6
Q123 Mr Williams: Ms Ghosh came in in September. Is that right? September 2004?
Ms Ghosh: No. I joined the Inland Revenue in April 2003 and I was appointed to my Customs and Excise dual role in September this year.
Q124 Mr Williams: What happened to your predecessor?
Ms Ghosh: There was not somebody holding the post. As it happened, there was effectively a vacancy on the Customs and Excise side.
Q125 Mr Williams: So it is a new post basically?
Ms Ghosh: It is effectively a new post, yes.
Q126 Mr Williams: Mr Hopkins, what has happened to the shareholdings in your company since this contract was signed?
Mr Hopkins: What has happened to the shareholders?
Q127 Mr Williams: The value of shares.
Mr Hopkins: It is a private company and we do not really value our shares on a regular basis because the -
Q128 Mr Williams: If it came to the shareholders selling, how would they?
Mr Hopkins: By internal agreement.
Q129 Mr Williams: There is no way we can work out what tax we have lost by the accretion in the value of shares to them?
Mr Hopkins: We obviously purchased some assets, so there is an asset base which has risen or dropped in value. We think that has performed well over the last couple of years. That is how we were looking at value.
Q130 Mr Williams: In addition to the £55 million that was referred to, there is an unknown amount of potential tax on share values that is accruing to your overseas shareholders?
Mr Hopkins: The £55 million comes from a calculation based on various assumptions which would assume we were not paying the corporation tax and the capital gains tax was paid on the increase.
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5 Ev 21
6 Note by witness: Sir Nicholas Montagu retired in March 2004 at the normal retirement age. Ann Chant took over as acting Chairman, IR until David Varney's appointment in September 2004.