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The government's decision to close 90 tax offices will leave a major offshore property company with vacant office space for 3,400 staff in the middle of the recession, HM Revenue & Customs disclosed last night.
Mapeley, a Guernsey-based company heavily involved in private finance initiative (PFI) projects, took control of 600 tax offices in 2001 in a deal that was severely criticised by MPs because it allowed the company to avoid tax while owning and servicing tax offices.
Now the company faces having to find tenants for nearly one-sixth of the Revenue & Customs offices it owns - mainly in small towns - at a time of falling commercial property prices.
"HMRC benefit from having a very flexible contract with Mapeley ... for roughly 80% of its estate across the country," Revenue & Customs said. "Any risk relating to the property we vacate will rest with our PFI landlord, and HMRC will get a share of any gains where the contract provides for it. This brings real benefits to HMRC, allowing us real flexibility to reorganise our business and estate."
For Mapeley the situation is different. Its share price has fallen by 97%, from £40 to £1.20, and its most recent interim results, published in August, showed it made a £53.8m pre-tax loss for the first six months of this year.
The company owns and runs some 1,670 properties, meaning that the Revenue & Customs portfolio is one of its biggest investments.
Its chief executive, Jamie Hopkins, who is quitting to join a rival company, Chester Properties, says that Mapeley is performing well considering the market conditions. He is to remain as a non-executive director.
The controlling interest in Mapeley is owned by Fortress Investment Group, a New York-listed hedge fund which has also reported poor results amid the credit crunch and the sub-prime loans crisis. The company has private equity interests in casinos, horse racing, US railroads, hedge funds and property and reported a $57m (£38.5m) loss in its most recent quarterly results, to September.
Wesley Edens, the chairman and chief executive of Fortress Investment Group, is also the chairman of Mapeley.
Mapeley also manages the £70m estate of Abbey, the high street bank which is part of the Santander group, and runs 68 interview offices of the Identity and Passport Service.
It also owns a commercial property portfolio, the value of which has fallen by £100m in the past year and was put at £940m in June.
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