HM Revenue & Customs will not save as much as expected from its decision to transfer ownership or leases of around 60% of its estate to a private contractor, the National Audit Office revealed today. In 2001, HMRC planned to reduce its running costs and save up to £1.2bn by reducing the size of its estate and handing 591 properties over to property investment and outsourcing company Mapeley. But a report released today by the NAO says that HMRC has not achieved value for money on the contract as it had 'no long-term plan and has not obtained all available savings'. 'The existence of the contract allowed for a smooth estates merger, following the merger of the two departments [Inland Revenue and Customs & Excise] in 2005. HMRC has the flexibility to vacate up to 60% of its estate over the 20-year contract, allowing it to save up to £1.2bn. But it has not recognised the contract as a major strategic asset nor committed appropriate commercial skills to managing it,' said the NAO in a statement. It added: 'As a result, the total possible savings available now amount to £900m. To date, the contract has cost £312m more than originally forecast, as a result of fewer instances than forecast of vacating buildings, unrecoverable VAT payments, and changes in requirements. 'To achieve savings on its estate, HMRC is now planning to vacate a significant number of its buildings by 2011. This vacations programme creates areas of specific financial pressure for Mapeley, exacerbated by the economic downturn and falling property values. HMRC does not yet have an agreed way forward with Mapeley. If Mapeley were to default on the contract, HMRC could incur significant one-off and ongoing costs.'