POLICE chiefs have handed a £2.25 million contract to a company that has 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 Newcastle-upon-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.”
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