Bureau Recommends: PFI equity moved to tax havens
The Financial Times outlines how over 90 Private Finance Initiatives (PFIs) have been moved to offshore tax havens, reducing tax revenue paid to the UK.
PFIs are long term contracts with the government that pay out annual fees to private companies to take on public works, like road maintenance and hospital construction. By moving ownership of the schemes offshore the tax due on any profits is reduced.
The FT piece is based on a report by the European Services Strategy Unit, a think-tank which maintains a database of the projects and is highly critical of the PFI scheme.
According to its data, equity in projects owned by John Liang Infrastructure, 3i and others including schools, hospitals, courts and police stations, is now being held in Guernsey and Jersey.
According to the report 33 projects owned by HSBC Infrastructure generated £38m profit last year but paid just £100,000 in tax.
Treasury officials have confirmed that they are examining whether the taxpayer should take a share when equity stakes in PFI projects are sold at a profit.
The FT also reports that the government is set to ask the PFI industry to set up a ‘code of conduct’ to cut the £8.5bn cost of current deals.
The article follows on from a BBC File on 4 investigation last week which examined the £200bn of taxpayers’ money that has been committed to such projects.