One of the Labour party’s biggest donors is facing questions over his tax
affairs after he was accused of avoiding tax on a multi-million pound
company loan
The most senior business leader to back Ed Miliband has been accused of
avoiding tax over a multi-million pound company loan.
Dale Vince, a green energy tycoon said to be worth more than £100 million,
took £3.2 million out of his own company through an interest-free loan that
one tax expert described as a “tax avoidance arrangement, in all likelihood”.
The allegation is potentially embarrassing for Mr Miliband, who has gone on
the offensive, accusing David Cameron of being a “dodgy prime minister
surrounded by dodgy donors” who have avoided paying tax.
Mr Vince’s company, Ecotricity, announced last week that it was donating
£250,000 to the Labour Party, riding to the rescue of Mr Miliband who was
under fire for his failure to find a single significant business figure to
back him.
The latest Ecotricity accounts, posted on Friday at Companies House, show
Mr Vince has been loaned £3.2 million by his own company. The loan is
interest free and there is no time limit stipulating when it must be repaid.
The loan allows Mr Vince – who made his fortune building wind farms and
solar parks and selling green electricity to 150,000 customers – to use the
income without paying personal tax on it, other than a much reduced sum as
a benefit in kind.
Richard Murphy, a chartered accountant and tax expert, said: “What the loan
does is potentially advance money at a lower rate of tax than would be the
case if he was paid a dividend or a salary now.
“Deferring when the tax is paid is one of the major methods of tax
avoidance. This therefore looks to be a tax avoidance arrangement.”
Mr Miliband yesterday renewed his attack on Mr Cameron in a key note speech
to the Welsh Labour Party conference in which he accused the Prime Minister
of “turning a blind eye” to tax avoidance. Mr Miliband is now promising
fresh penalties and the closing of tax avoidance loopholes in an attempt to
capitalise further on what Labour believes is a election-winning issue.
But, last night, Grant Shapps, the Conservative Party chairman, accused Mr
Miliband of “barefaced hypocrisy” in taking a donation from Mr Vince’s
company.
Mr Shapps said: “Ed Miliband is a hypocrite of the worst kind: his
bankrollers, the Unite union, have paid no corporation tax in years; the
Labour Party themselves have dodged as much tax as possible on his watch,
and now here’s another example of his barefaced hypocrisy.”
The company loan given to Mr Vince is completely legal and relatively
routine, allowing those who take advantage of the mechanism to delay when
they pay tax on income earned through their company.
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