in the back
Mapeley revisited
HMRC, Issue 1452
india-buildings.jpg
OFFSHORE BREEZE: Liverpool’s historic India Buildings, home of HMRC – and some juicy tax breaks
AS THE sun sets on its infamous deal to sell its offices to a Bermuda company and rent them back for 20 years (Eyes passim ad nauseam), HM Revenue & Customs is busy signing a series of deals for large regional “hub” offices to replace them. After its excoriating experience with Mapeley Steps and Bermuda, is the department eschewing tax-reducing transactions this time round? It seems not.

Under the first of the three deals – for office blocks in Liverpool, Cardiff and Bristol – HMRC has “pre-let” buildings that are being redeveloped under so-called “forward funding agreements”. These involve developers selling the sites to insurance company Legal & General before they are redeveloped, with an agreement to perform the necessary work and with the tenancy (with HMRC) conditional on its completion.

The advantage of this structure over the more straightforward option of developing the land and then selling it to the new landlord is that stamp duty land tax (SDLT) is charged only on the smaller, pre-development value. With the uplift in most cases likely to be in the tens of millions of pounds, and SDLT levied at 5 percent, the savings are impressive.

Even juicier tax breaks
At the new offices in Liverpool’s historic India Buildings, the tax breaks look even juicier. Legal & General has just announced that “the developer is Marwees India Buildings with Shelborn Asset Management as the development manager”. Shelborn boss Brian Rabinowitz told the Eye there was no such company as the former one. The building is owned by Marwees Ltd, which, although currently listed on Land Registry records as a British Virgin Islands company, is now, he said, a Guernsey one.

The switch could be related to 2016 tax changes that deemed non-resident companies buying and selling even a single UK property to be taxable on the profits of doing so in the UK. But where there is a tax agreement between governments, such as exists between the UK and Guernsey, the offshore company has to have a permanent setup in the UK before it can be taxed. The Guernsey company with a UK manager might enable Marwees to say it does not.

Party like it’s 2001…
Rabinowitz said he had “no idea” who the owners behind Marwees are. He also refused to discuss his own sketchy record when it comes to dealing with the taxman. In 2014 the high court served a winding-up petition on another company of his, Brampton Asset Management Ltd, over unpaid tax before the order was rescinded after it presumably coughed up.

There was no such reprieve for a company called Candelabra Ltd. It ran the Jewish orthodox Menorah High School for Girls in Dollis Hill, set up by Rabinowitz and another businessman in 2001, until 2010. Then it went into liquidation, owing the taxman £680,460.

The school nevertheless continues to function as a voluntary aided (ie taxpayer-funded) faith school through the Menorah High School for Girls Foundation Trust. It acquired the site occupied by the school and then made some money selling off part of it. Rabinowitz remains a trustee and the school’s deputy chair of governors. Meanwhile, there’s no sign taxpayers got any of their money back.

What with offshore companies, stamp duty wheezes and mysterious property magnates, down at the tax office it’s just like 2001 all over again!

More top stories in the latest issue:

STANDARD (MAL)PRACTICE
A huge money-laundering case before the US, UK and Nigerian courts raises some tough questions for British bank Standard Chartered.

BAR HUMBUG
The new Pubs Code that was meant to help free publicans from the hated beer tie to avaricious ‘pubco’ landlords is helping hardly anyone at all, it emerges.

CLASS WAR
The Department for Education is still collecting data on children’s nationality and country of birth via a controversial question on the school census.

WELCOMING MATS
Funding rules meant to stop companies selling educational services to multi-academy trusts that they are also sponsoring are being ignored yet again.

STEALTH OF SCOPE
As Scope becomes a ‘pan-disability’ lobbying outfit, adults with cerebral palsy are left with no major national charity to represent their interests.

INDEPENDENT LIVING
Some disabled people are facing the extra burden of 20% VAT when making direct payments to the assistants who help them try to lead independent lives.

LOCAL ANAESTHETICS
Ministers have so far ignored a plea for an extra £350m for the NHS – leaving some Tory MPs with volatile electors not at all happy about NHS austerity.

MISSING LINKS
The privatised probation service in Gloucestershire, run by Working Links, gets one of the worst reports so far from the Probation Inspectorate.

WEIR AND WEIRDER
More on Sussex park home owner Barry Weir, who is accused of making residents’ lives a misery through excessive charges, fees, bills and threats.

MENTAL HEALTH CARE
A mother’s battle over the death of her son at an Essex mental health unit leads to a police probe into the fate of about 25 patients going back over 17 years.

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Private Eye Issue 1451