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George Osborne letter to Ed Miliband over donor's taxes

June 6, 2013 11:48 AM
In Politics Home
Originally published by East Midlands Liberal Democrats

Dear Ed,

You said in April last year that 'tax avoidance is a terrible thing'. In relation to the tax affairs of Google, you said last month that there is a 'culture of irresponsibility'. You went further still and pointed to the consequence if everyone avoided tax: 'If everyone approaches their tax affairs as some of these companies have approached their tax affairs we wouldn't have a health service, we wouldn't have an education system'.

Yet it is reported in today's Telegraph that the Labour Party has gone to great lengths to help your biggest donor, Mr John Mills, avoid paying tax on a political donation. He told the Daily Telegraph that he donated in shares to avoid tax: 'To be honest with you, it is the most tax efficient way of doing this. Because, otherwise, you get no tax relief on donations to political parties for understandable reasons'. Mr Mills has said that this decision 'came out of a discussion I had with [the Labour Party] about the best way of doing it'. He praised the model of donating and welcomed your 'sensitive' compliance and legal team.

The Labour Party registered a donation of shares in JML worth £1.65 million in January 2013, from Mr John Mills. By making a donation in shares rather than as a single cash dividend, it has been reported that Mr Mills managed to avoid a potential tax charge of £724,710. Alternatively, it is estimated that to make a donation of £1.65 million in cash Mr Mills would have had to earn £3.1 million, and pay £1.46 million to HM Revenue and Customs.

The tax affairs of individuals are a matter for them and HMRC. My questions are for you and the Labour Party rather than Mr Mills. Can you confirm that the Labour Party advised Mr Mills on how to avoid tax on his donation? As leader of the Labour Party, and given your previous statements on tax avoidance, such actions by your party appear to be directly at odds with your public statements.

Most importantly, will you now pass the amount of tax that has been avoided to the Exchequer? As you say, this is money that is needed to fund vital public services such as the health service and our schools.

I am sure you appreciate the severity of this report for your party, and the importance of the questions raised. I look forward to your response.

Yours sincerely,

George Osborne