Commercial Investments Review Shetland

Commercial Investments Review Shetland

Currently the Shetland Islands Council (the Council) is involved in providing commercial investments through the Council’s General Fund under the terms of the Local Government Scotland Act 2003, as permitted by the section 20, the power to advance well being.

CONTRACT NOTICE – NATIONAL
SERVICES

1 Authority Details

1.1

Authority Name and Address


Shetland Islands Council

Exectutive Manger Economic Development, Solarhus, 3 North Ness ,

Lerwick

ZE1 0LZ

UK

Douglas Irvine

+44 01595744932

douglas.irvine@shetland.gov.uk

+044 01595744961
www.shetland.gov.uk

1.2

Address from which documentation may be obtained


Shetland Islands Council

Exectutive Manager Economic Development, Economic Development, 3 North Ness ,

Lerwick

ZE1 0LZ

UK

Douglas Irvine

+44 01595744932

douglas.irvine@shetland.gov.uk

+044 01595744961
www.shetland.gov.uk

1.3

Completed documents must be returned to:

As in 1.1

2 Contract Details

2.1

Title

Commercial Investments Review

2.2

Description of the goods or services required

Background:

Currently the Shetland Islands Council (the Council) is involved in providing commercial investments through the Council’s General Fund under the terms of the Local Government Scotland Act 2003, as permitted by the section 20, the power to advance well being.

Formerly the Council used the vehicle of the Shetland Development Trust (the Trust) to undertake commercial investments. This system operated until 2008 when a decision was taken, to make the Council sole trustee of the Trust and that all Trust assets, except the existing loan book be transferred to the Council. Advice at that time suggested that these arrangements would provide a tax benefit to the Trust.

In the meantime, new lending has been made through the Council budget of £3m for financial year 2013/14. The Council loan portfolio cost value as at 31 March 2013 was £2.96m.

As at the 31 March 2013 the Trust’s portfolio was made up of £2.89m of loans, £18.68m of quota, £6.29m of equity and £0.592m of fishing licences. These are the cost values of the portfolio (or considered market value in the case of the quota), provisions are calculated in the annual accounts to represent net value carry forward. In addition, the Trust had a cash balance of £3.069m made up of £2m cash and £1.069m surpluses.

The surplus funds are for distribution to beneficiaries with a charitable status. The beneficiaries should be able to recover tax paid by the Trust on the surplus distributions made to them. As at the 31 March 2013 the Trust’s tax pool, available for recovery by surplus beneficiaries, was £1.069m. There is £0.748m of the surplus funds committed.

NOTE: To register your interest in this notice and obtain any additional information please visit the Public Contracts Scotland Web Site at http://www.publiccontractsscotland.gov.uk/Search/Search_Switch.aspx?ID=277055.

The awarding authority has indicated that it will accept electronic responses to this notice via a ‘Tender Submission Postbox’ facility. Further details of this facility are available at http://www.publiccontractsscotland.gov.uk/PostBox/Postbox_Explain.aspx?ID=277055.

Suppliers are advised to allow adequate time for uploading documents and to dispatch the electronic response well in advance of the closing time to avoid any last minute problems. The postbox closes precisely at the time stated.

2.3

Notice Coding and Classification

151000 Business
151400 Financial
209999 other Financial Services
281300 Legal Opinion

120 Highlands and Islands

2.4

Total quantity or scope of tender

Scope:

The Council is seeking to identify the best method to invest in local businesses to stimulate economic growth in Shetland. This requires a review of the previous decision to transfer assets from the Trust to the Council to ensure best value and the adoption of the most tax efficient model.

Engagement is required from external experts in taxation and legal advice to ensure the most appropriate mechanism is recommended. It must be remembered that the Council is the sole trustee for the Trust so when making decisions as the Trustee with regard to the future of the Trust it must act in the best interests of the Trust rather than the Council.

In order to assess the most appropriate structure for lending the following scenarios require to be assessed:·

-Winding up the Trust and lending solely through:

-the Council; or

-a new or existing charitable body with the same objectives as the Trust;

or

– a new company limited by guarantee.

– Disaggregating the assets of the Trust and identifying the most appropriate organisation(s) to own the individual assets which include the loan portfolio, equities, cash, surpluses, quota and licences. These organisations may include:-

– the Council

– a new or existing charitable body with the same objectives as the Trust

– a new company limited by guarantee

– the existing Trust

– a third party

Assessment of the best course of action is required relating to the remaining Trust assets and future economic development commercial investments. In particular it is essential to know:-

-The tax liability resulting from any transfer of assets, including the situation if the Trust is left in a non-trading state as a result of the assets being transferred to another body and subsequent impact on surplus/income.

-The legal costs of transferring assets.

– Ways to consolidate the Trust’s assets and the Council’s lending portfolio to ensure the best mechanism for future investment.

The assessment of these elements needs to be done using forecasted income and expenditure so that figures can be calculated to assist the understanding of the scenarios referred to above.

All tax liabilities should be considered including direct tax, indirect tax, VAT, inheritance tax (and business property relief) and capital gains tax or any other relevant tax charge.

Tenders are required for the provision of:

Tender A

The provision of taxation advice relating to each of the above scenarios. This should include the provision of projected tax liabilities for each option. A recommendation should be made on the best future structure for the provision of commercial investments.

Start Date – September 2013

Completion Date – 31 October 2013

Meeting with Project Team: to be agreed at time of tender award.

Tender B

Based on the finding of tender A advice should be given as to the legal implications of the options and recommended future structure for the provision of commercial investments. This should include an estimate for the cost of adopting the options, a list of the legal work required and an estimate of timeframe to deliver the legal work required.

Start Date – Following the completion of tender A, 31 October 2013

Completion Date – 30 November 2013

Meeting with Project Team: to be agreed at time of tender award.

Bids are invited for each tender separately. If appropriate a joint bid for the services may be considered.

3 Conditions for Participation

3.1

Minimum standards and qualification required

Please ensure you provide a detailed description of any similar work undertaken in recent years.

Tenderers must provided evidence of current Employers and Public Liability Insurances at a minimum level of £10,000,000 and £5,000,000 respectively as well as evidence of current Professional Indemnity Insurance.

4 Administrative Information

4.1

Type of Procedure

Single stage – Any candidate may submit a tender.

4.2

Reference number attributed to the notice by the contracting authority

ED 2/13

4.3

Time Limits

a) Time-limit for obtaining documentation 12-09-2013

b) Time-limit for receipt of completed tenders
12-09-2013  Time  12:00

c) Estimated award date 16-09-2013

4.5

Language or languages in which tenders or requests to participate can be drawn up

EN

4.6

Tender Submission Postbox

The awarding authority has indicated that it will accept electronic responses to this notice via the Tender Submission Postbox facility. Further details are available at http://www.publiccontractsscotland.gov.uk/PostBox/Postbox_Explain.aspx?ID=277055

5 Other Information

5.1

Additional Information

Further information:

Must be fixed price for the commission, but details of the calculation broken down for each tender separately.

We expect the output to be a written report detailing the pros and cons of each scenario with the projected financial implications of each option.

A meeting with the project team to present the options and recommendations of each tender should be allowed for in the tender.

(SC Ref:277055)

5.2

Additional Documentation

5.3

Publication date of this notice

05-09-2013