So let us be fair here

OK, so this is worth a giggle:

Labour Party Properties Limited (LPPL), which owns a £6.3m portfolio of properties, has paid no corporation tax since 2003.

But there\’s a clear an obvious reason for it:

In those eight years the company has received a total of £8.7m in rents but declared losses of £279,000.

If you don\’t make a profit then you don\’t owe any property tax. Simples.

This applies to the Labour Party just as it does to Amazon. Called the rule of law……

21 comments on “So let us be fair here

  1. “And in news today, we can reveal that a property company that lets most of its stock at below market rent, and indeed exists to do so, doesn’t make much profit.”

    This may have crossed the line from stupidity to dishonesty.

    Having a go at Hodge over Stemcor OTOH is fair game.

  2. If you are not hoping to make money from selling the company, you are making long-term losses, how long can you keep running, legally, as a company?

    The Guardian only manages it because of Autotrader, yes? (And the limitation of losses because of the public sector jobs ads.)

  3. “If you are not hoping to make money from selling the company, you are making long-term losses, how long can you keep running, legally, as a company?”

    I would cautiously say directors can keep it going until such time as creditors are put at risk, and as long as the shareholders don’t mind.

    But who says is making long term losses? It lets some stuff at commercial rates, and the rest to local Labour party associations, working mens’ clubs. I’d guess it aims to break even, charging as much as it can to commercial, and as little as it can to the Labour connected.

    PS “dishonest ” comment was not directed at the host, who spends his time pointing out that there are good reasons companies don’t always pay taxes. More at the original article.

  4. “In those eight years the company has received a total of £8.7m in rents but declared losses of £279,000.”

    A Labour party source was quoted as saying the company was run on a not-for-profit basis. You don’t say!

    But being more serious, Luke is probably right: Labour owns this outfit, and will basically be pulling in non-Labour space rentals to cross-subsidise Labour-affiliated organisations. So long as it can keep paying the cleaners and so on out of its rents, everyone will be happy. Nothing to see here, move along…

  5. No!!!

    You neo-liberal with outmoded fact-based, supposedly “objective” analysis and “letter of the law”.

    The spirit of the law requires the Courageous State to confiscate the. Property and then hand it back when we realise it belongs to the Progressive Consensus and so couldn’t possibly be involved in tax avoidance and anyway Parliament allows it so its OK, unless Starbucks is renting it in which case we should change the law, that’s what I’m saying. That is all.

  6. Confused.

    How can you have rents of £8+ mn on a portfolio worth £6mn and make losses. Annual rent is typically in the range of 5-10% of the value of the property, isn’t it?

  7. Luke, you are right and I’m an idiot who can’t read.

    Still, that’s >1 mn per year which is more than 20% of the property value per year. Something is still fishy

  8. Emil, doesn’t say what assets they had for the whole period.

    Could be letting their lawyers and a/cants charge juicy fees to prop co, cheap to party.

    Btw, there is a well known forensic accountant (whose surname I forget) called Emil. If that’s you, why not get their accounts and have some fun?

  9. It sounds like it’s making losses because it is renting out some of its portfolio to other bits of the Labour party at less than market value.

    I’m a bit out of date, but don’t the transfer pricing rules now say that you have to calculate taxable profits on an arms length basis even where the other party is another UK entity?

  10. Richard: last time I checked, a political party was in government when those rules were written. I wouldn’t be prepared to bet against there being an exclusion covering political parties and subsidiaries.

  11. Emil, shame. I’m sure you’re a star at whatever you do.

    Did anyone see the other Torygraph scoop? Wind turbines blight house prices. Or as the Graun would say “Wind turbines generate modest amounts of electricity, *and * provide affordable rural housing.”

    Translate to fracking – “produces gas, and makes rural homes cheaper.” Winner.

  12. The bit I loved best was the “quotes” “enclosing” the “administrative” “expenses”.

    Said it before boys, if you think you can “deduct” your “expenses” from your “reimbursements” and get tax “relief” whilst pursuing this line, well, it just ain’t right.

    Get a really meaty bit of investagitive journalism under your belt and swallow the £40,000 tax bill, then let’s see which way they dangle…

    Mind you, the £100k L&P was worth a shout…

  13. Are we not all in support of the view that a person has the right to do what he likes with his own property within the constraints set by the law?
    If I own a property and want to let it to someone whom,I think needs it for a trivial rent, why should I not do so just because my name is the Labour Representative committee of the TUC?

  14. John77, you can of course.

    But I think in law if that person is a company then it might have to pay tax as if it had rented it at full market value. Which they don’t seem to have done here.

  15. Hmm; interesting.

    It’s probably a Medium-Sized Enterprise (turnover 10-50 million euros, including “linked enterprises”; the Labour Party’s total turnover is around the £30m level).

    In which case they don’t have to use arms-length transfer pricing in calculating their tax until HMRC issues a notice instructing them to do so.

    Taxation (International and Other Provisions) Act 2010 s166 etc.

    It would then become interesting (for tax lawyers anyway) to see whether Labour Party branches are sufficiently “controlled” by head office in order to be connected with Labour Party Properties Limited, requiring them to use arm’s length pricing.

    I have a vague memory of a very old court case holding that Conservative Party branches are not regarded in law as being under the control of Central Office, but I suspect the parties’ internal constitutions now give much more control to the centre than they did then.

    But in any case the moral position is clear – the law generally requires companies to pay tax as if it had charged full market-value rents, and anything that gets them out of that requirement is a “loophole”.

    Now I’m quite relaxed about using tax loopholes, but most of the Labour Party isn’t.

  16. @ Richard
    Agree with second comment: in my youth local Conservative Parties could and did disagree vehemently with Central Office, but local Labour Parties were on a much tighter lease so we ended up with Trotskyites trying to join the YCs (or young Liberals if there was a local group) because they had been banned from the Labour Party Young Socialists.
    I’m not old enough to remember Mac losing the Conservative whip in 1936 but I know his constituency party backed him in disregard of Central Office.

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