Why doesn’t Boris come clean about his own tax affairs?


by Sunny Hundal    
11:09 am - April 4th 2012

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At the LBC debate yesterday – Ken Livingstone and Boris Johnson traded barbs about their tax affairs. You can watch the video below, and I’ve written a piece for the Guardian on why Boris hates being challenged.

Ken raised an interesting point: that Boris has also used a similar arrangement, which could be used to avoid paying extra taxes.

So Boris should come clean about his own affairs, surely?

First some context – here is how the exchange went on LBC (via Left foot Forward)

KL: “No, Boris, you had Finland Station, when you was an MP, that handled your television work, because I assumed, are you saying you didn’t have a company called Finland Station, are you saying that’s a lie?”
BJ: “If you’re saying I’d had a company to avoid paying income tax I’m afraid you are absolutely…”
KL: “But I haven’t got a company to avoid paying income tax, like you, I had a company to handle my media.”
Nick Ferrari: “Did you set up your own company called Finland Productions or whatever it might have been?”
BJ: “I have never used a company to minimise my income tax arrangements.”
KL: “That wasn’t the question.”
NF: “Have you set up a company called Finland Independent Films?”
BJ: “There was a TV production company which I was briefly a director of, yes, but I…”
KL: “To handle your TV income…”
NF: “You didn’t use it to explore tax efficiencies?”
BJ: “Absolutely not.”
NF: “No, efficiencies?”
BJ: “No.”
NF: “Always, you paid the full amount?”
BJ: “I always paid full income tax.”

But Ken has also always paid the full income tax that he is required to do. The questions asked of Boris are slightly different.

1: Did he pay income tax on all of his earnings from Finland Station? Can he categorically say that he didn’t receive any income through dividends and instead pay capital gains tax of 18% (rather than paying income tax at 40%)

2: When he sold his shareholdings in Finland Station to David Jeffcock and Barnaby Spurrier – did he pay income tax on the money that he received at 40%, or capital gains tax at 18%?

3: Did he employ anyone?

The point is simply this – there is absolutely no evidence whatsoever that Ken Livingstone employed people simply to avoid paying taxes. He set up a Ltd company to employ people, as is normally the case.

As an accountant has already pointed out - Andrew Gilligan’s attack on Ken is “simply bollocks”.

If Boris is going to throw mud, then he should also answer questions levelled at him.

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About the author
Sunny Hundal is editor of LC. Also: on Twitter, at Pickled Politics and Guardian CIF.
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Reader comments


The letter from Boris’ accountants makes interesting reading, as I’ve noted here:

http://zelo.tv/HZ9Pm0

It raises more questions than it answers. If Johnson released his tax return, he should be able to steal a march on Livingstone and show that he paid rather more in Income Tax than Ken paid himself last year.

So why not go ahead and release it?

2. Paul Newnan

If there was mud then it would have been slung you have nowt.

Incidentally is anyone able to see any difference between philandering anti semitic corrupt person A – Livingstone

….and philandering anti semitic corrupt person B- Galloway

never in the same room are they …….

These letters were issued yesterday from Johnson’s accountants. I’m not quite sure what more people are looking for when they ask him to “come clean”.

http://www.scribd.com/doc/87822996/Boris-Johnson-Accountant-Letter-2
http://www.scribd.com/doc/87822943/Boris-Johnson-Accountant-Letter-1

If anything, this whole sorry affair demonstrates the need to both simplify our tax system and educate people more on how taxation works. I mean, both candidates are accusing each other of doing something that is not only legal but encouraged by HMRC! It’s utterly ridiculous how much of a non-story this should be! Even the news channels have been reporting the facts of the tax system wrongly.

If we could get back to policy affecting London instead of arguing about non-smear smears, I’d appreciate it. And that goes for both camps. I think Jenny Jones is coming out pretty well in all this.

1: Did he pay income tax on all of his earnings from Finland Station? Can he categorically say that he didn’t receive any income through dividends and instead pay capital gains tax of 18% (rather than paying income tax at 40%)

Eh? Dividends are taxed as income not capital gains and, given Boris’s level of income, would have been taxed at 42.5%, not 18%.
http://www.hmrc.gov.uk/taxon/uk.htm

He’d have paid capital gains on the shares that he sold, provided that they were worth anything.

The difference between Finland Station and Ken’s company is that Finland Station made TV programmes. Livingstone’s company’s product was just him.

The point is simply this – there is absolutely no evidence whatsoever that Ken Livingstone employed people simply to avoid paying taxes.

Well, that’s not quite the allegation is it? The point is not whether it was Ken’s sole intention to avoid taxes, the point is whether, through using this corporate arrangement, Ken did avoid taxes. And the only reason that’s even mildly interesting is that Ken has called people who avoid their taxes unfit even to vote, let alone stand for office.

Oh, and Tim, I love your “astonishment” that Boris uses an accountant. He was effectively self-employed for years, with sources of income from print journalism, TV work and his MP’s salary (MPs are classified as self-employed, rather than employees). Of course he used a sodding accountant. I have friends who earn magnitudes less than Boris who use an accountant – and that’s because they’re self-employed.

The distinction being drawn is between a company that trades in the usual way and a service company.

The letter from Boris’s accountants makes it very clear that Finland Station was a trading company – where-as Ken Livingstone’s description of Silveta’s activities suggest very clearly that it is a service company.

Ken Livingstone’s descriptions include paying his wife for secretarial and other support, paying for political research and making contributions to his campaign. According to him, the income into the company came from Ken Livingstone’s activities – and were it simply put through a self-employment return, he would not have the advantage of retaining profits within the company or making payments as returns on capital rather than as income. This is done while he is denouncing others for ‘avoiding’ tax and even suggesting that some should be hanged – hence the charge of hypocrisy (which appears to me to be entirely within the category of ‘fair comment’).

Boris’s accountant reports that there were no dividends from the company and no returns on capital – so the answers to your first 2 questions appears to be simply and straightforwardly, ‘No’. Boris did not even receive remuneration from the company as a director and was merely paid for production fees which were then declared as self-employed earnings in his tax returns.

As to the third, it is an essential feature of a tv production company that is trading that it employs people in the course of production. It is simply not relevant.

That you appear to confuse the two as Ken Livingstone does, is either a matter of ignorance or deliberate deceipt. In Ken Livingstone’s case, I simply do not give him the benefit of the doubt and where he says that Boris is doing the ‘same thing’ as him, I simply say that he is deliberately lying.

“The point is simply this – there is absolutely no evidence whatsoever that Ken Livingstone employed people simply to avoid paying taxes. He set up a Ltd company to employ people, as is normally the case.”

I notice that you’re very cleverly changing the accusation – even bringing in Livingstone’s defence!

The accusation is that he set up a company to pay less tax than he would have had he not set up the company. The employment of people is a red herring.

And the idea that you set up a ltd company to employ people is daft. He could have employed them as a sole trader. Why might you set up a company?

1. Most people set up a company to make a separation of their assets so if the business goes under then the creditors don’t come after you personally.

2. A few people set up companies to avoid or minimise tax.

Given the nature of KL’s business, it is difficult to see how it could go bankrupt: there is no substantial capital at risk in providing speeches etc. Which leads me to suspect that it is reason 2. which is more plausible in this instance.

What I don’t understand about this post is the notion that people should pay as much tax as they can. That there is some virtue in paying more tax than is required and some vice in paying as little as legally possible.

If we accept that human beings are generally motivated by their own economic interest (which is not to say that there is no such thing as altruism) the payment of as little tax as possible is eminently sensible.

It is even more sensible when you consider how governments spend it.

@4

I am not astonished, but thanks for confirming that you’re looking in.

8 – well, you linked to it, so it seemed only fair to go and read it! And this was the bit I meant:

The latest letter of support for Bozza has come from his accountant. You read that correctly: he has used the services of an accountant since the 1990s, the kind of thing he would do if he worked through his own limited company.

But using an accountant is really the sort of thing you do if you’re self-employed. Tax returns are complicated if you’re not an accountant, and it makes a great deal of sense to outsource that sort of work to someone qualified. I don’t need one, because I’m just straightforwardly employed. My freelance and self-employed friends all use one (mostly the same one actually, we were at Uni together).

It’s sweet to see you all sticking up for Ken by trying to shift the story, but I don’t think it really washes here.

All this just proves that tories can never run on policy. Because their policies are for the top 1%. So instead they smear their opponent’s with things that they do even more. The lies in the tories manifesto are now coming home to roost.

All tories who use the NHS are hypocrites. All tories who have ever claimed any govt benefit ( my experience is they are first in line) are hypocrites. Funny we never hear about that.

Remember it’s only class war when the poor fight back. The tories preferred position is constant class war against the poor.

12. MarkAustin

@7. pagar

The issue isn’t tax avoidance, it’s hypocrisy. Ken Livingstone has often said that this sort of thing, whilst legal is wrong.

He’s now flailing around trying to drag Boris Johnstone into the matter—who as far as I can see has done nothing remotely like this, and, in any case has no form in opposing such tax devices.

“But Ken has also always paid the full income tax that he is required to do.”

And there was silly ol’ me thinking you didn’t like tax avoidance.

Well if the issue is hypocisy lets debate Boris family values, or how about people living off the state? Ie Boris’s mates the bankers. Or Boris on crime, trying to shut down investigations into the Murdoch crime family.

When it comes to hypocisy Boris has got shed loads of it.

Not sure why anyone would wish to defend or vote for either of the tax-avoiding idiots. Ken also seems to be a hypocrite and anti-semite while Boris is an old skool toff to the core.

‘None of the above’ again I’m afraid.

This blog is increasingly coming across as a mere for Ken Livingston and the Labour Party.

The point is that neither Livingston nor Johnston are being accused of doing anything dodgy. But Livingston is accused of being a big fat hypocrite for denouncing tax avoidance when he is doing the same thing.

Just as MPs don’t generally have their private lives scrutinised until they get on their moral high horse about “family values”, the same applies to candidates and their tax affairs.

Boris Johnston doesn’t make a big song and dance about tax avoidance, so nobody (apart from Liberal Conspiracy and the Labour Party campaigns committee) cares about whether he uses a company to avoid tax.

Livingston makes an unholy stink about tax avoidance, so the public is rightly interested in his own tax affairs.

Got it?

18. margin4error

Ken’s been pretty clever here.

He was attacked over his tax arrangements by Boris’ campaign team a while ago.

That was damaging to Ken even though he did nothing illegal and it was all done publicly.

This blow out has utterly defused that problem for Ken by pointing out that Boris (and indeed most rich people) do no different – and by raising the prospect of Boris being rather negative, and not being willing to face scrutiny of his own affairs.

In otherwords the story has become about Boris getting angry about people talking about his tax situation. That’s a lot better for Ken than the story being about Ken’s tax situation.

Non of which is particularly nice and little of it has much to do with how best to improve the lives of Londoners. But the public have a right to vote on whatever basis suits them.

In otherwords the story has become about Boris getting angry about people talking about his tax situation.

I think that’s only true if it’s clear that Ken was telling the truth when he said that Boris used the same arrangement. But since it looks like that’s simply not true (and has been followed quickly by Ken’s “let’s just be nice to each other” letter), I suspect this might instead add to the “Ken can’t help lying” narrative.

@ 17 Sandman

“This blog is increasingly coming across as a mere for Ken Livingston and the Labour Party.”

And you’ve only noticed thiis now? LC ceased long ago to be a serious place of reasoned discussion, and became a propaganda mouthpiece for Labour, Livingstone, the unions and assorted other hard left tendancies. Indeed, as Sunny refuses to deny, I suspect that this website is at least part funded by one of the unions. He is certainly always unswervingly “on message.”

As you rightly say, it looks like Ken has a company purely for tax avoidance reasons. In that at least he has done nothing illegal. That he used that company to do work and donate funds for for party purposes without putting it on a register of interests *might* be illegal. The real point though is that Ken has been saying one thing about rich people avoiding tax, yet the slimy little hypocrite has been doing exactly that.

Boris also has been part of a company, but it looks less likely that that company was used mainly for the purposes of tax avoidance, as Ken’s was. Regardless, he hasn’t attacked the use of tax avoidance schemes.

That also said, did anyone listen to how many other outright lies Ken told on the LBC show? Police numbers, crime rates, congestion charges and fare increases from his 2004 manifesto and how about denying he paid public money to his lover’s company, when the evidence is there in city hall accounts for all to see?

Can he not tell the difference between the truth and a lie, is he simply a habitual liar or is he really so far gone he is now downright delusional??

margin4error,

Non of which is particularly nice and little of it has much to do with how best to improve the lives of Londoners. But the public have a right to vote on whatever basis suits them.

In the meantime, politicians pretend to wonder why people are increasingly disengaged from mainstream politics, and pretend to investigate persuading people to re-engage.

22. margin4error

TimJ

Having read quite quite a lot of papers (as my job requires me to do) I think the stand out point, and especially so from headlines and pullout quotes, has been Boris getting angry.

You might want the story to be about Ken lying – just as I’d quite like the story to be who will get the Tube running best – but at the moment the strongest theme has been a big shift from “ken has dodgy tax practices” to “Boris gets angry about his dodgy tax practices”.

Hence the Boris response today was to announce he wants to claw London’s taxes back for the capital. Ken has been arguing for that since the 80s, but if the main theme was that Ken’s a liar, Boris would definately not be trying to distract everyone with bland unattainable gesture policy positions.

20 The stupidest troll in the world. ” LC ceased long ago to be a serious place of reasoned discussion, and became a propaganda mouthpiece for Labour, Livingstone, the unions and assorted other hard left tendancies. ”

Which is why you spend loads of time here writing endless drivel about how much you hate this site. Unlike you, I spend no time on right wing sites complaining about the fact that they are, err right wing sites.. That is because unlike the tory trolls i’m normal.

If pretend jounos like Gilligan did his job we would not need to bother. But he is not a journalist but Boris’s bitch.

24. White Trash

This isn’t about either/or. They are all no-good and only in it to serve their own interests. No wonder most people switched off a long time ago.

Tim Jerk shows us how biased the tory media is. And my, my, how many more of the media they control.

All that media spinning for the tories, and they still only managed 36% of the vote. Nice to see another family values tory using the F word. What was that someone said about hypocrisy? Boris has got bucket loads of the stuff.

27. Dick the Prick

@26, fair play about the hypocrisy angle but everyone does sweary rants; Tucker’s Law is one of the finest bits of political satire available and, if anything, for Boris, who’s meant to be some polyglot of classical trainig to repeat ‘you fucking liar’ is a bit dull really.

http://www.youtube.com/watch?v=N5p27Lr8y2s

28. margin4error

TimJ

note – there’s a difference between a story about Boris calling his rival a liar and stories about Ken being a liar.

29. Richard T

So anyway, Boris has published as promised; Paddick has published as promised (nice pension mate!); Jenny J. has published as promised; and Ken has publ-

Hang on, what’s this peculiar letter?

Are you there, Ken?

Hello?

Sunny, can you help us out here?

26 – yeah, damn that Tory Mirror.

28 – agreed but the story isn’t “Boris defends tax avoidance company” it’s “Boris says Ken is lying”. And today they publish their returns and, um, Ken was lying


Reactions: Twitter, blogs
  1. Liberal Conspiracy

    Why doesn't Boris come clean about his own tax affairs? http://t.co/0tntAfQl

  2. Samuel Tarry

    RT @libcon: Why doesn't Boris come clean about his own tax affairs? http://t.co/Gn3f5tkf

  3. sunny hundal

    Why doesn’t Boris come clean about his own tax affairs? http://t.co/ZYWpOu2U

  4. Martin Shovel

    RT @sunny_hundal: Why doesn’t Boris come clean about his own tax affairs? http://t.co/NkQCbh46

  5. MerseyMal

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  6. Geoffrey Pearson

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  7. Alex Braithwaite

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  15. Fight For Democracy

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