How low, how low, how low?

Cost-cut­ters hired by the po­lice know all about slash­ing big bills...they turned over £100m and paid £3k tax

The Sunday Post (Newcastle) - - NEWS - By Mark Howarth

Po­lice chiefs have handed a £2.25 mil­lion con­tract to a com­pany that is paid vir­tu­ally no tax in the last three years. Bloom Pro­cure­ment Ser­vices (BPS) has been hired to help cut costs as Po­lice Scot­land looks to bal­ance the books. A Gov­ern­ment cash squeeze means that hun­dreds of of­fi­cers are un­der threat as the ser­vice strug­gles to find sav­ings of £40m by 2021. How­ever, we can re­veal the lat­est cor­po­rate con­sul­tants to be en­listed have con­trib­uted next to noth­ing to the pub­lic cof­fers them­selves. BPS – which spe­cialises in pub­lic sec­tor deals – pulled in rev­enue of nearly £100 mil­lion be­tween 2014 and 2017 – but paid tax of only £3,400. A se­ries of com­plex busi­ness trans­ac­tions with a sis­ter com­pany has helped Bloom lighten its tax bill; in 2016/17 its in­come nearly dou­bled yet, ac­cord­ing to its ac­counts, it handed the Trea­sury not a sin­gle penny. Scot­tish Gov­ern­ment guide­lines give pub­lic bod­ies the right to ex­clude firms from bidding for con­tracts if they “breach [their] tax obli­ga­tions”. There is no sug­ges­tion Bloom has done any­thing il­le­gal. Po­lice Scot­land is re­ly­ing on

con­sul­tants to help it re­or­gan­ise and cut costs over the com­ing decade, scal­ing back the num­ber of of­fi­cers and re­fo­cus­ing their du­ties in line with the rise of cy­ber-crime and the use of tech­nol­ogy to pre­vent of­fend­ing. Ear­lier this year, Bloom picked up a £480,000 deal with the force to pro­vide “pro­fes­sional ser­vices”. Now the lat­est £2.25m link-up with Po­lice Scot­land has been con­firmed with the con­tract signed off by the Scot­tish Po­lice Au­thor­ity. The com­pany is be­ing brought in to pro­vide “trans­for­ma­tion sup­port” with its role in­clud­ing “an im­me­di­ate re­quire­ment for sup­port in de­sign au­thor­ity; busi­ness change; peo­ple and or­gan­i­sa­tion and con­tract strat­egy”. It is ex­pected that New­castle­upon-Tyne-based BPS will help put Po­lice Scot­land in touch with cheaper sub-con­trac­tors and sup­pli­ers, a role it al­ready per­forms with other forces, coun­cils and NHS boards down south. In 2016/17, it racked up a turnover of £52.3m but had costs of nearly £52.3m, which left it with a profit of just £3,097 on which it paid no tax, ac­cord­ing to its an­nual ac­counts. It was a sim­i­lar story in the pre­vi­ous two years, which saw sales of £28.8m and £13.7m – but tax bills of only £1,981 and £1,388. Its tax li­a­bil­ity would have been far higher had it not em­ployed sis­ter com­pany V4 Ser­vices, which would have oth­er­wise made a loss. For­tu­nately for en­tre­pre­neur Adam Ja­cobs, who owns both com­pa­nies, the £3.1m Bloom paid its sta­ble­mate may have re­duced their joint tax bill by as much as £450,000. It’s be­lieved that V4 Ser­vices – which draws up cost-cut­ting pro­grammes – may also be in­volved in the Po­lice Scot­land project too. David Hamil­ton, vice-chair­man of the Scot­tish Po­lice Fed­er­a­tion, said: “Many po­lice of­fi­cers will ques­tion the ethics of spend­ing pre­cious pub­lic money on pri­vate com­pa­nies with multi-mil­lion pound turnovers and cu­ri­ously small tax bills. We look at Scot­land’s po­lice ser­vice, over­stretched and un­der­funded, and yet see mil­lions spent on ex­pen­sive con­sul­tants and ‘pro­fes­sional ser­vices’.” Tax ex­pert An­ton Lane, of Edge Tax, who has ex­am­ined the ac­counts, said: “There are some in­ter­est­ing trans­ac­tions but no ev­i­dence here of any­thing il­le­gal. Ev­ery­one is en­ti­tled to legally min­imise their tax li­a­bil­ity. In­deed com­pa­nies have a duty to their share­hold­ers to do so. “The SPA and Po­lice Scot­land will surely have done due dili­gence on Bloom and when it did, it may have noted the fact that, un­usu­ally, the com­pany’s costs year af­ter year vir­tu­ally wipe out all profit.” Po­lice Scot­land has spent al­most £9m on con­sul­tants in the last four years, in­clud­ing £3.3m to ac­coun­tants Ernst & Young to plot ef­fi­ciency sav­ings be­tween 2017 and 2022. The force has also cre­ated a string of non-uni­formed posts to man­age the change, in­clud­ing ap­point­ing ex-banker David Page as deputy chief of­fi­cer on a salary of £173,000. How­ever more than 100 po­lice sta­tions have shut their doors to the pub­lic or had their open­ing hours cut to save cash and 999 con­trol cen­tres have been closed. Mean­while, of­fi­cers have com­plained of grow­ing stress as they grap­ple with old equip­ment and in­suf­fi­cient cell spa­ces. Scot­tish Labour’s Jus­tice Spokesper­son Daniel John­son MSP said: “There are clearly ques­tions of due dili­gence from the Scot­tish Po­lice Au­thor­ity in sign­ing this deal. “The ac­counts of the com­pany in­volved are highly un­usual and, given the im­por­tance of this con­tract, it is es­sen­tial ev­ery pos­si­ble check has been made. Given the SNP gov­ern­ment’s his­tory of mis­man­ag­ing pro­cure­ment, this would not be the first time pub­lic money has been squan­dered through bad prac­tice. “This de­ci­sion should be in­ves­ti­gated by Au­dit Scot­land.” Bloom said: “We are a rel­a­tively new com­pany, grow­ing quickly, so we have em­ployed sig­nif­i­cant num­bers of peo­ple to pro­vide ex­cel­lent ser­vice at low costs to cus­tomers and to keep ahead of de­mand. “We pay tax on prof­its and, since we are in­vest­ing, this is cur­rently quite mod­est. The cor­po­rate tax rate is a mat­ter of pub­lic record and Bloom is com­pli­ant with UK cor­po­rate tax rules and guid­ance.” Po­lice Scot­land said Bloom was be­ing brought in as a sub-con­trac­tor as part of a wider con­tract for ser­vices that had al­ready been signed so no due dili­gence on the com­pany was nec­es­sary. A spokesman added: “This par­tic­u­lar con­tract pro­vides for spe­cial­ist re­sources with skills and ex­per­tise that are not avail­able within Po­lice Scot­land to sup­port the Polic­ing 2026 trans­for­ma­tion pro­gramme.” A Scot­tish Gov­ern­ment spokesper­son: “Th­ese pro­cure­ment con­tracts are a mat­ter for Po­lice Scot­land and the SPA. The Scot­tish Gov­ern­ment treat all com­pa­nies’ tax obli­ga­tions very se­ri­ously.”

Po­lice Scot­land re­cruits on pa­rade at Tullil­lan HQ

Adam Ja­cobs’ com­pany Bloom has paid lit­tle tax in the last three years

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