Ken Livingstone accused of high level tax avoidance

Ken Livingstone is the latest public figure to be accused of using a personal company to potentially avoid paying higher rate tax, according to the Sunday Telegraph.

The revelations are particularly embarrassing for Mr Livingstone who has in the past spoken out against tax avoidance and accused senior members of the Tory party of ‘exploiting every tax fiddle.’

 Andrew Gilligan of the Sunday Telegraph revealed that Ken Livingstone, Labour’s candidate for the London mayoral election, earned £232,000 in 2009 from personal appearances, speechmaking and hosting a radio show.  The income was paid directly into a new company set up by Mr Livingstone and his wife Emma Beal who are the sole shareholders.  Accountants say that this move appeared to allow Mr Livingstone to pay corporation tax at 20% rather than income tax at up to 40%.

Ken Livingstone is also able to split his income 50-50 with his wife, even though it was earned entirely by him, saving further tax, and pay Mrs Livingstone from company funds as his “assistant”.

Mr Livingstone’s accounts, for 2010, show he has almost £320,000 in cash in his company, Silveta Ltd, with earnings of £284,000 invoiced in that year alone. By leaving his earnings in his company, a shareholder can avoid large amounts of income tax.

Accountant and tax avoidance expert Richard Murphy said: “Mr Livingstone chose not to pay out this profit to himself and his partner and, as such, the profits would only have been subject to corporation tax at 21 or 20 per cent in the company. Higher taxes would very likely have been paid on this income if it had been paid to the shareholders in 2009.”

Mr Livingstone said: “The company has paid [corporation] tax and when it pays me you pay an amount that is effectively the same rate as you would have done on income tax.”

However, accountants say that this is incorrect. If Mr Livingstone did decide to take any money from the company by paying himself and his wife a dividend, he would make additional tax savings.

Richard Mannion, national tax director at accountants Smith & Williamson, said there was nothing illegal about what Mr Livingstone was doing.   However, he added: “Given what Mr Livingstone has said about tax avoidance that takes you into a whole different area of what is legally correct and what is morally correct.”

Last week, The Sunday Telegraph revealed how the broadcaster Moira Stuart, the face of HM Revenue and Customs’ advertising campaign, has avoided tax by channelling payments through a personal company.

Mr Murphy, who is a supporter of Mr Livingstone, said: “Personal companies like this should be reformed so the income they earn is taxed on their owners as if it were part of their own income. That way, tax, and National Insurance if appropriate, could not be avoided by putting a company between a person and their income.”

  • Date posted:
  • Share:

View all articles

the ability to identify problems and offer solutions quickly and painlessly!

Barbara, Oakham

His thoughtful, friendly and professional approach is excellent

Gareth, Oakham

Andrew has proved to be entirely trustworthy and has produced consistently reliable tax returns for me

Mr F from Lincolnshire

© 2019 Arcus Taxation Accountants is the trading name of Arcus Associates Ltd. Registered in England & Wales Company No. 05065405.

privacy / cookies

website cms powered by csb internet

01572 770552