TNAG-2968-FCO40-4247-Future-of-Hong-Kong-British-Consulate-General-inclusion-of--1993 — Page 8

Mrs Barnes Jones

HKD

HONG KONG: BRITISH CHAMBER OF COMMERCE

M Morais 14/12

Grown - Levery time we cleop

qt one

Monster's

head,

2 move rear up! I am getting

sensously fed

up

with the

Bcc/Bc4 project and concerned about the growing complications.

66

MST

14/12

بی

1. Thank you for your minute dated 9 December. As I told you over the telephone, I need to consult Mr Popplestone before giving a definitive answer to your question.

2. In the mean time I have enclosed an extract from our main reference work "Government Accounting". You will see from paragraph 32.1.15 that we must account for a "gift" when a non-government department uses Government buildings at a rate less than the full market value. The problems are agreeing what the full market value would be and the appropriate time over which the present value should be calculated. We then need to seek Ministerial agreement or possibly inform Parliament (para 32.1.14).

We will need to make it clear why the British Chamber should be housed within the building.

3.

Calculation of the value of the gift becomes more complicated if allowing the British Chamber of Commerce to use our building results in us suffering a future loss of flexibility and thus increased costs.

4.

OED/hongkg, bcc

Ala Moott

A.J.Wootton

RFD

OAB 2/119

210-6090

10 December 1993

CC:

Mr Brinkley

Mr Popplestone Mr Smith, OED

1

MILD

406/13

!

RECE

15 DEC 1993

INDE.

Disposal Assets 32.1.13-32.1.17

32.1.13 First the department should obtain the approval of the Treasury, subject to any powers of

delegation to which the Treasury has agreed.

Transfer of assets

32.1.14 A transfer of an asset (including the assignment of a lease) at less than full value should be accounted for as a gift. The value of the gift will be the difference between the open market value and the price at which it is transferred. The procedure for dealing with gifts is set out in chapter 34. Departments' attention is drawn in particular to the need for Parliament to be informed 14 clear sitting days in advance (34.1.4) in all cases where the value of a gift exceeds £100,000 or the gift is of an unusual nature. This procedure should be followed rigorously. Advice on the valuation of stores which are to be the subject of a gift is contained in paragraph 36.2.28.

Use of assets (which do not involve transfer)

32.1.15 Where a body other than a Government department is allowed to use Government assets such as land or buildings (in cases where the Government retains ownership of the freehold or other interests) in return for a consideration which is less than the full market value the income foregone should be accounted for as a gift by the department. In deciding whether Parliament needs to be notified in advance, the department should calculate the present value of the concession taking account of the length of time for which it is expected to run.

ACCOUNTING FOR PROCEEDS FROM DISPOSALS

32.1.16 Receipts from the sale or transfer of assets should either be appropriated in aid of the department's Vote or surrendered to the Consolidated Fund as extra receipts (CFERs), following the guidance set out in chapter 22. Where there is no provision in Estimates receipts should be surrendered as CFERs unless the Treasury is prepared to agree to the presentation of a Supplementary Estimate and there is time for one to be presented. The receipts should be accounted for on a gross basis. Sale expenses should not be netted off the sale proceeds but should be accounted for as an expenditure item.

DISPOSAL BY NON-DEPARTMENTAL BODIES OF ASSETS WHOLLY OR PARTLY FUNDED BY GOVERNMENT GRANTS

32.1.17 Where assets acquired or improved by a non-departmental body with the aid of Government grants are disposed of the proceeds, or an appropriate proportion of them if the grant was for less than the whole cost of acquisition or improvement, should be surrendered to the Consolidated Fund as extra receipts unless specific Treasury approval to an alternative arrangement has been obtained. Details of the steps to be taken to ensure that the Exchequer's position is properly protected in such cases are described in chapter 13 dealing with the provision of grants and grants in aid (see paragraphs 13.4.1 to 13.4.3).

Amendment No. 5

Government Accounting 10/1992

CODE 18-77

Mr Wootton, RFD

Reference

blu 15/im for Debbie

59

HONG KONG:

1.

BRITISH CHAMBER OF COMMERCE

Please see my minute of 23 November. I hope you can now agree that the land element can be discounted (see also Alex Smith's manuscript minute of 26 November) and that we can go with option (ii) in your minute of 17 November, ie that the Chamber would pay depreciation plus capital return at either 6% or 8% (you calculate this as coming to £27,352 or £34,190 depending which rate is applied).

2.

Could you let me know your views? I would like to be able to give the BTC the go ahead to speak with the Chamber.

M Barnes Jones.

Deborah Barnes Jones

Hong Kong Department

MULD 406/13

RECT

10 DEC 1993

WH 312

270 2068

9 December, 1993

cc Mr Smith, OED

Mr Popplestone, RFD

Mr Twigg, Joint Directorate

INDE!