A controversial property deal between the tax office and an offshore company has not delivered the savings promised, auditors have found.

HM Revenue and Customs' (HMRC) failure to adequately manage the contract under which it transferred ownership of 60 per cent of its estate to Mapeley has contributed to the arrangement costing £312m more than it was forecast to, the National Audit Office (NAO) has reported today.

It is not the first time that the deal has hit the headlines. Soon after the contract was signed in 2001, it emerged that contractor Mapeley STEPS Limited is registered in Bermuda and therefore does not pay UK tax.

Some of the additional cost in the contract has come from the need for HMRC to reimburse Mapeley £138m for "unrecoverable VAT costs arising from the complex lease arrangements" on some buildings, the auditors noted.

Conservative MP Edward Leigh, chairman of the Commons public accounts committee who will now investigate the matter, said "what had started poorly has shown no signs of improving".

The NAO report has highlighted HMRC's failure to commit enough legal and commercial resources to the management of the contract, leaving it reacting to risks rather than planning for them.

The department has also only now begun to develop an estates strategy, even though the benefits of the Mapeley deal lay in HMRC reducing the number of buildings it occupies.

Ironically, the department's compilation of a plan to vacate a significant number of buildings has coincided with the economic downturn and a slump in the property market to put "financial pressures" on Mapeley, the NAO said.

The department faces "significant costs" if Mapeley defaults on the contract, the auditors' report continued. Estimates for unpaid rent and suppliers range from £40m-£110m, and there would be other "substantial costs" in ongoing estates management and increased rent liabilities.

The NAO notes that HMRC, which stands to save £900m if it sticks to its existing vacancy plan, "does not yet have an agreed way forward with Mapeley".

One solution put forward by the NAO, is for the Treasury and the Office of Government Commerce (OGC) to encourage other departments, public bodies and local authorities to take up the space that HMRC vacates.

But the contract has not been a complete failure, the report found. HMRC used penalty clauses to deal with Mapeley's failure to meet maintenance demands and deducted an average of £56,000 from facilities payments; a 2005-06 benchmarking exercise showed the HMRC to have lower estate costs than many other departments; and the contract, made with Inland Revenue and Customs and Excise in 2001, also made the 2005 merger of the two departments go smoothly.

While the department believes that the report recognises the amount of value extracted from the contract, a fact noted by auditors in the report, a spokesman accepted that "there is much more work to be done to ensure that the contract delivers all it can to our staff and taxpayers".

Work already in progress, as recommended by the NAO, includes talks with Mapeley on how senior managers can be more involved with the contract, efforts to reduce the number of different property databases within HMRC, more lawyers and commercial experts working on the contract, and the development of a joint HMRC-Mapeley estates strategy.