Labour advising its local parties to minimise tax

Labour is instructing local parties to “minimise” tax when buying and selling properties, the Daily Telegraph can disclose.

A leaked document reveals that Labour is advising their constituency parties on how to cut their tax liability and that of the national party.

The disclosure will be hugely embarrassing for Ed Miliband, the Labour leader, who has mounted a personal crusade against tax avoidance in recent months.

It also appears to contradict previous claims by the Labour Party that “no measures” have been taken “to reduce our tax liability”.

Labour’s Property Handbook- distributed to local parties- is intended to help them manage their property arrangements, and give guidance on how they should interact with the national party.

The document, which is still available on a Labour website, states: “If a property owned by the Labour Party has a higher value when it is transferred or sold than when it was acquired, the party unit that is transferring or selling it can be deemed by HMRC to have made a chargeable gain and could be liable to pay Capital Gains Tax on that gain (even if no money changes hands).

“However, in some cases it is possible to claim exemptions and relief from CGT. In some cases where the title to property is transferred within the party it is also possible to claim exemption from paying Stamp Duty Land Tax on the transaction and ideally all property transactions will be arranged legally to minimise the party’s liability to tax and duty.”

The document adds: “It is therefore essential that professional advice about all property transactions is sought early…so as to optimise the use of tax exemptions and relief.

The Telegraph has previously disclosed that a property company run by the Labour Party has not paid corporation tax in a decade, despite collecting almost £10 million in rent.

Labour Party Properties Ltd (LPPL), which leases buildings to MPs and local parties across the country, has declared a profit in just two years since 2004.

Local parties have previously urged to hand over their properties to LPPL.

The company has paid no tax after declaring hundreds of thousands of pounds in administrative costs, including tens of thousands of pounds in fees to the central Labour Party.

That has meant that meant the firm has declared a loss in eight of the past ten years.

However, despite losses running to nearly half a million pounds over the decade, the company is regarded as a going concern by Labour.

Labour has previously insisted that it does not seek to avoid tax through its property companies.
A spokesman told the Telegraph in 2013: “No measures have been taken by the Labour Party to reduce our tax liability.”

Mr Miliband has repeatedly spoken out over tax avoidance.

In February he said: “It does not matter how much I get attacked for this; I am not backing down’ over tax avoidance, and pledge that under a Labour government ‘the same rules will apply to everyone.”

Charlie Elphicke, the Conservative MP for Dover, said: “Labour did nothing about tax avoidance when they were in Government, now they are actively advising their party members to dodge what they owe.’

“Ed Miliband’s tax hypocrisy is galling: he’s tried to sound tough for the TV cameras, but when it comes to his own affairs he says one thing and does another.

“If Miliband can’t even get a grip of the chaos in his own party, how can he possibly lead the country?”
A Labour Party spokesperson said: “The Labour Party pays all tax that is due and does not seek to avoid any tax. This guidance tells constituency parties to seek professional advice to ensure that the tax charge is computed accurately, including the correct application of exemptions and reliefs. Labour’s annual accounts are independently audited and it is completely wrong to suggest the Labour Party seeks to avoid any tax liabilities.”