A Brief History Of Labour Tax Avoidance

labour bashing time

Labour want to turn the latest tax avoidance headlines into a moral issue – but they should get their own house in order first, writes Lee Jenkins.

If the narrative of some is to be believed the Tories have a near monopoly on tax avoidance.

Yet not to be outdone by their opponents on the government benches, the Labour Party and the wider movement that supports it have themselves found it convenient to take advantage of legal loopholes and other tactics to avoid the worst of HMRC’s avarice.

Shadow Foreign Secretary Hilary Benn, of Syria speech fame, played a deft hand to minimise inherent tax related to the family’s £4.1 million home. But let’s not forget that Labour Party MPs have prior form in this area – the family business of Margaret Hodge, set up by her father and run by her brother and in which she also owns shares, paid tax of just £163,000 on revenues of more than £2.1billion in 2011. Then of course there’s the mercurial Red Ken who sheltered his earnings in a company so he could save £1,000-a-week in tax. This is the same Ken Livingstone who owns 99 percent of a company twice prosecuted for non payment of taxes.

In 2013 it was revealed that a property company run by the Labour Party, imaginatively named Labour Party Properties Limited, which earned millions of pounds in rental income, paid no tax for a staggering eight years.

The most successful leader in the history of the Labour Party, Tony Blair, clearly picked up a few tips during his extended stay in politics. In 2012 we learned that Blair’s company Windrush Ventures paid only £315,000 in tax on an income of over £12 million.

Businessman John Mills donated £1.65 million of shares in his company JML to the Labour Party, which then had to be chased by HMRC for payment of capital gains tax. Accountants pointed out that Labour could also have saved over £80,000 in tax by accepting the donation from Mr Mills in shares, and not in cash because different capital gains tax rates are paid by individuals and companies.

Labour supporters’ hypocrisy on tax even reached as far as their celebrity backers – Art Malik employs his wife as the secretary of his media company, a well known and well used little trick to get around certain taxes. Russell Brand (remember him?) even threatened to sue over accusations of tax dodging claims.

The Trade Union movement remain the primary source of income for Labour, so it’s only prudent that Labour ensure every tax avoidance tactic is deployed to guarantee the party can fight the good fight. In 2011 and 2012 Public Sector union heavyweight Unite paid no tax despite owning £51.6 million of stocks and shares. Indeed, ten unions affiliated to the Labour Party raked in almost £10 million from memberships in 2013, but none paid any corporation tax. These unions are able to exploit an obscure provision in tax legislation allowing them to offset costs such as sick pay, accident compensation and employment tribunal costs against their income. Very savvy.

Even leaving the trade unions aside, PriceWaterhouseCoopers, or PwC as they’re known on the street, are the biggest non-union backer of Labour. Not only is PwC renowned for helping its clients avoid tax, but it donated £386,605 worth of staff secondments to Labour, again avoiding the tax that a cash donation would have generated. Some Labour MPs including Chuka Umunna and Rachel Reeves have started to publicly question the cosy relationship between PwC and Labour.

And of course it would be rude not to include Labour’s most sympathetic broadsheet – The Guardian. The Guardian Media Group’s used a tax-exempt shell company registered in the now infamous Cayman Islands to avoid paying corporation tax when it sold its fifty per cent stake in Auto Trader to Apax Partners in 2008. GMG continues to enjoy the fruits hundreds of millions of pounds invested, perfectly legally, in offshore hedge funds over the years.

It’s important to restate that tax avoidance is legal, widespread, and inevitable in a country with a complex tax system. But if Labour want to turn it into a moral issue they might want to get their own house in order first.



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