Hundreds of millions of pounds have flowed from the UK to a Bermuda company in an alleged tax dodge, it is claimed. Hamilton-based Mapeley Steps Ltd. is owned by a company in Tortola in the British Virgin Islands.

The story surfaced in a recent edition of British political satire publication Private Eye which alleged that several hundred buildings and property owned by the British tax authorities were sold to international speculators based in offshore jurisdictions.

The alleged tax dodge surfaced when, on November 5, 2000, Conservative MP Christopher Chope asked Chancellor of the Exchequer Gordon Brown: "on what date the contract between his department and Mapeley Ltd. was concluded for the strategic transfer to Mapeley Ltd. of the ownership and management of the combined estate of the Inland Revenue and HM Customs and Excise..."

Private Eye said paymaster general Dawn Primarolo - whom they labelled as tough on tax avoidance - replied on Mr. Brown's behalf and said: "The Inland Revenue and Customs and Excise are working with Mapeley to finalise the details of the STEPS (Strategic Transfer of the Estate to the Private Sector) contract."

In this answer and in a similar exchange in January 2001, Ms Primarolo did not contradict Mr. Chope's assertion that the sale of the estate was to Mapeley Ltd., a British registered company.

However, Private Eye said: "Some weeks later, came the lie direct," for on March 9, 2001, the Inland Revenue issued a Press release announcing the signature of a contract to sell its buildings, and those of Customs, to Mapeley Ltd.

The release said: "Under the terms of the STEPS contract, the ownership and management of the estate transfers to Mapeley Ltd. who are required to provide the departments with serviced accommodation over 20 years."

Private Eye, however, said this assertion could be tested against the 2001 accounts of Mapeley Ltd. recently filed at Companies House.

Having done so, it said: "Strikingly absent from these accounts is any reference to the purchase of 600 buildings from the tax authorities or to the ownership of such a huge estate."

Private Eye added that a different picture emerges from the accounts of another company - Mapeley Steps Contractor Ltd. - which were submitted at the same time.

Mapeley Steps Contractor Ltd. has a far more substantial interest in the properties according to Private Eye which established that, in the last nine months of 2001, the company received ?136 million of rents from Inland Revenue and Customs.

Although Mapeley Steps and Mapeley Steps Contractor Ltd. are both registered in Britain, the accounts say all the rent money was used for "operating costs" leaving the company with an overall loss of ?12 million, which Private Eye added: "On which of course it pays no tax."

The company's accounts say that ?108 million of the operating costs were described as "property rentals" of which ?81 million were "master lease rentals invoiced by Mapeley Steps Ltd."

Private Eye's investigation goes cold at this point.

"What do the accounts of Mapeley Steps Ltd. have to tell us about this huge income from master lease rentals? Nothing. Because Mapeley Steps Ltd., unlike Mapeley Ltd. and Mapeley Contractor Ltd., is not registered in Britain. All we have is its address: 44 Church Street, Hamilton, Bermuda."

An investigation by picked up the trail of where the ?81 million from the "master lease rentals" went once it reached Bermuda.

According to files with the Registrar of Companies, Mapeley Steps was incorporated on December 7, 2000 by M.L.H. Quinn & Company, now Wakefield Quinn.

However, efforts to examine the register of members at the attorney's office - which has since moved from Church Street to Reid Street - were unsuccessful as Wakefield Quinn no longer represent Mapeley Steps Ltd.

The current registered office for Mapeley Steps in Bermuda is now Harbour International Trust Company (Bermuda) Ltd., located in Wessex House on Reid Street.

According to the Register of Members at Harbour International Trust Company (Bermuda) Ltd., Mapeley Steps Ltd. is 100 percent owned by Harbour Fiduciary Services, also of Wessex House. Mapeley Steps Holdings Ltd. is also 100 percent owned by Harbour Fiduciary Services.

Harbour Fiduciary Services was 100 percent owned by Global Asset Management but the shares were transferred on December 6, 2001 to IFTAG Consulting SA in Tortola in the British Virgin Islands, but was unable to find out who were the beneficiaries of this BVI company.

Private Eye labelled Bermuda as one of the "world's most blatant tax havens" and added: "So of the ?136 million in rent paid by the Inland Revenue and Customs to Mapeley Steps Contractor Ltd., a handsome ?81 million went to a company in Bermuda. It follows that the ownership of the Inland Revenue buildings is not, as the Revenue pretended last year, with British companies but with a company of a similar name in Bermuda, where it can easily escape any obligation to pay tax."

Private Eye added that the buildings were sold under a private finance initiative deal lasting 20 years, and that details of the deal were secret. It was also reported that accounts for Mapeley Steps Contractor Ltd. show annual commitments under non-cancellable operating leases of ?125 million.

Private Eye commented: "Most, if not all, of these commitments will be the money the company is committed to pay to the Bermuda company under the master leases.

"Even if only ?100 million of this is transferred to the tax haven, this means that, at today's prices, after 20 years, ?2 billion will be coughed up by the tax authorities in rent for the buildings the themselves have sold - and will end up in a tax haven. The beneficiaries of all this largesse are the shareholders in Mapeley's parent company: George Soros, James Ritblat, Fortress Investments and other notorious tax avoiders over the world."