Q131 Mr Williams: That related, according to the Report, to the movement of the property overseas. We are talking about the fact that the shareholders are overseas. There are two elements. The £55 million is said in the Report to be the result of moving property overseas.
Mr Hopkins: Correct.
Q132 Mr Williams: I am not asking about that. I am asking what else might have been lost in the lost taxable capacity as far as revenue is concerned, because the overseas shareholders will not pay profit on capital gains in this country, will they?
Mr Hopkins: That is right. It is very difficult for me to comment on the tax position of the shareholders.
Q133 Mr Williams: Really, when we say £55 million has been lost in a way in terms of the tax evasion, there is another sum which is quite indeterminable. What is the capital value of the company?
Mr Hopkins: It is a mixture of an operational business so there is an income stream on the service delivery and then there is an asset owning business so it is a difficult structure to put together.
Q134 Mr Williams: What happens if the company goes bust? You referred to having contingencies and you want to deal with that in private. In that case, I am sure the Chairman will agree that we have a private session at the end of this meeting. You will have that information available for us, will you?
Mr Varney: Yes.
Q135 Mr Williams: The Chairman also referred to the fact that Customs were not told until after the deal about the offshore nature of it. Unfortunately, because I was reading, I missed the reply. Can you repeat the reply? Why were they not told?
Ms Ghosh: Again, in their evidence to the Treasury Select Committee, Nick Montagu and Richard Broadbent gave the answer that effectively the reputational risk rested with the Inland Revenue in the sense of the nature of the tax arrangement. Therefore, the Inland Revenue board saw this as an internal issue rather than an external issue. I know Nick will have apologised for the fact that -
Q136 Mr Williams: Did you get the impression that they were a little surprised when they discovered it?
Ms Ghosh: Richard Broadbent again answered that question in the TSC.
Q137 Mr Williams: But Richard Broadbent is not here.
Ms Ghosh: Oh, I see. He commented in fairly neutral terms. I am sorry, I have not got the text of the TSC meeting in front of me.
Q138 Mr Williams: That was in evidence before a committee?
Ms Ghosh: That was in evidence before a committee.7
Q139 Mr Williams: I am not talking about that. I am talking about when he heard, not when he got before the committee
Ms Ghosh: I am afraid I was not privy to what happened in his private office when he heard.
Q140 Mr Williams: How was he informed? Did someone pick up the phone and say, "By the way, Jack, I thought you might like to know this is all offshore"?
Ms Ghosh: Your question is about how Mr Broadbent was informed?
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7
Note
by witness:
Evidence taken before the Treasury Select Committee hearing; The Handling of the Joint Inland Revenue/ Customs and Excise STEPS PFI Project 11 December 2002.