THE UK Government should stop doing business with British companies which register in Bermuda and other low-tax jurisdictions.

That was the call from UK Government MP Austin Mitchell, who also urged the head of the British tax collection agency to resign over a controversial purchase made by a Bermuda company.

Sir Nicholas Montagu, chairman of the Inland Revenue, came under fire from Mr. Mitchell because the Revenue sold its estate of more than 600 buildings to Bermuda-based Mapeley Steps Ltd. and later admitted it had wrongly announced that the sale had been made to a British company.

The $350-million sale caused major embarrassment to the British Government, which had pledged to get tough on tax avoidance.

Mr. Mitchell, the outspoken Labour MP for Great Grimsby, said: "It puts UK companies at unfair disadvantage when there are bidders from tax havens.

"Government should follow America and not do business with companies if they have offshore registration - that's a simple way to control the situation.

"This Government was elected pledging to crack down on tax evasion and avoidance.

"It's even more important to tackle this now because the market is in downturn and the stock market is collapsing."

In March, 2001, the Inland Revenue announced it had signed a deal with UK-registered Mapeley Ltd., to transfer the ownership and management of its properties. In fact, the Revenue had sold the 600 buildings to Mapeley Steps Ltd., of Bermuda.

Sir Nicholas apologised for his department failing to inform ministers that the buildings were to be sold to a company based in a low-tax jurisdiction, before the contract was signed.

Mr. Mitchell, speaking to UK national radio, said: "He made fools of the Government. He should go."