HM Revenue & Customs has not made the savings it forecast from a contract with Mapeley that expires in 2021, the National Audit Office has revealed.

Yesterday, central government auditor the NAO released a report on the 20-year deal HMRC predecessors Inland Revenue and HM Customs & Excise signed with Mapeley STEPS Contractor Limited in 2001. HMRC transferred 60% of its properties to Mapeley in that deal and planned to save £1.2bn.

The NAO said in the eight years so far the contract has cost £312m than was first forecast. It said HMRC needed a long-term plan to manage the private finance initiative deal if it is going to make any savings.

The Inland Revenue and HM Customs & Excise merged to form HM Revenue & Customs on 18 April 2005.

Under the deal, the bodies transferred ownership of 592 properties to the Mapeley company with the aim of saving £1.2bn by reducing running costs and reducing the size of the estate.

However, the NAO said that to date the contract had cost £312m more than was originally forecast because HMRC has vacated fewer buildings than expected and lost money on unrecoverable VAT payments.

To achieve savings on its estate HMRC is planning to vacate a significant number of its buildings by 2011.

The report said: “Eight years on the Department has not achieved value for money on the contract so far, as it has not realised all the benefits available from the deal. Nor will it achieve value for money over the 20 years of the deal unless it strengthens its management of the contract.”

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