10. Tax advantages arising from the offshore status of companies in the Mapeley group were reflected in Mapeley's financial model and therefore the price that HMRC is paying for this contract, although there are some uncertainties about the accuracy of the £55 million estimate of the increase in contract price that would be needed to cover the extra UK tax if the arrangements were onshore. A fully developed onshore model would be needed to achieve certainty in the comparisons of tax savings achieved to date and what would be payable under an onshore scenario. As most of the anticipated tax savings were expected to arise at the end of the contract, it remains uncertain whether Mapeley will obtain higher or lower tax savings than anticipated over the 20 years of the contract.
11. As recognised in current Treasury guidance, there is unlikely to be any overall benefit to the Exchequer from such arrangements as any apparent savings for the Department are accompanied by reduced tax revenues.
22 March 2010
___________________________
Printed in the United Kingdom by The Stationery Office Limited
4/2010 443440/1851 19585