Although of course this isn\’t tax avoidance: it\’s tax compliance.
John Mills gave the party shares in his shopping channel company, JML, valued at £1.65?million in January. In an interview with The Telegraph, Mr Mills said that the donation was made in shares rather than cash so the tax on the deal would be significantly reduced.
Describing the donation as “tax efficient”, he said the form of the donation was agreed with figures in Labour’s fund-raising team.
Mr Mills said that if he had given £1.65?million from his own income he would have had to pay nearly half of that sum to the taxman.
Or,in order to get that same sum to the Labour Party he would have had to sell twice the shares, pay the tax and then gift over the remainder. It\’s a celver and totally legal method of doing it.
Labour can only sell the shares if Mr Mills, who is the company’s majority-shareholder, agrees.
The party is the only external shareholder among around 40 shareholders in the company, which has sales of more than £100?million a year.
As long as Labour continued to make a loss, it will not pay any levy on the dividend payments, because losses are not taxed by HMRC. A further advantage is that the shares in JML will make Labour’s accounts look healthier by shoring up its balance sheet.
That last sentence might be the most important. With the auditors crawling all over the Co Op Bank it would be nice for Labour to have some assets to place against their overdraft at that bank…..
But even though this is tax compliance I can\’t wait for the insistence that this is just as moral as placing one\’s shares in the family company into a trust to avoid inheritance tax.