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Friday, July 26, 2013

Labour, bang to rights again?

Today's Times reports on yet another one of those difficult issues for Ed Miliband, stating that Labour paid no corporation tax last year despite being in surplus for its sixth year.

The paper says that three months after Ed Miliband criticised irresponsible tax avoidance, it has emerged that his party reduced its corporation tax bill from £561,000 to zero by offsetting expenses and tax losses held over from 2011:

Both the Conservatives and the Liberal Democrats paid tax in 2012, although the corporation tax bill for the Lib Dems was only £15, following a profit of £66 on their investments and commercial activities. Almost all their money comes from donations, which are not taxable.

The Tories paid £521,000 tax in 2012 after generating £1.46 million pre-tax profit.Labour’s failure to pay corporation tax comes despite accounts showing that the party’s finances are on their soundest footing for years.

The party reported income of £33 million, meaning it generated a surplus of £2.8 million, up from £1.1 million the year before. Its debts came down from £7.5 million in 2010 to £1.9 million by 2012. Its accounts confirm that corporation tax is due: “The party is treated as an unincorporated association for tax purposes and is therefore liable to corporation tax on its investment income.”

Labour’s accounts reveal that it could have faced a tax bill of £561,000, but a series of tax deductions meant that it paid nothing. The party does not break down how it calculates these deductions, but separately the accounts reveal that past tax losses are being held over. At the end of 2012, the party carried forward tax losses of £103,000, compared with £37,000 losses held over the year before.

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