Having stalled, delayed and prevaricated for as long as he could, Ken finally agreed to release his income and tax records. Unfortunately they’re entirely incomplete and this issue looks set to drag on and on. There are a number of questions to be asked. Firstly this:
According to the company accounts, which are filed with Companies House, Silveta Ltd’s total revenue in 08/09, 09/10 and 10/11 was £755,778 (as reported here). According to the above table, begrudgingly released by Ken just now, his ‘total income’ in 08/09, 09/10 and 10/11 was just £211,025. Where’s the missing £544,753?
On Newsnight last night, all candidates agreed to release their full income and tax records, in order to finally put to bed the saga of Ken’s tax avoidance. Boris has released his – showing 45.1% of his 2010/11 income went straight to HMRC – and Brian Paddick and Jenny Jones have released theirs. But, at the time of writing, there’s been nothing from Ken Livingstone. Zilch, zero, nada. Pippa Crerar says Ken is “dragging his feet”, Brian Paddick says “Ken is trying to wriggle out of the promise we all made”, Guido’s even heard rumours of “walk-out threats on Ken campaign if he doesn’t publish his tax accounts”.
This isn’t going away, Ken…
[UPDATE: 12.15pm: Incredible. Just incredible. Ken officially refusing to release his tax records.]
[UPDATE: 12.55pm: Boris's odds have shortened to 1/3 with William Hill and SkyBet in the last few minutes. Punters are now piling cash on a Boris victory.]
Having just seen the below footage of Ken’s nasty, snivelling lies about Boris’ tax affairs – each completely dismissed by Boris’s accountants – it’s frankly a marvel that Boris did nothing more than shout at Ken in the lift. Ken can try all he wants to claim the moral highground now, but until he apologises for this and every other offensive thing he’s said to and about Boris, he’s never going to be taken seriously.
In a rather desperate attempt at a distractive smear, Ken claimed during the LBC debate this morning that Boris avoids tax in exactly the same way he does. Boris flatly denied the allegations on air, and angrily accused Ken of being a “****ing liar” in the lift after the show had finished. Lefties took to the airwaves in jubilation at Boris’ apparent frustration, Ken’s own campaign team insisting that Boris had “lost his temper because he lost the debate”.
Twelve hours later, with the dust now settled, it seems clear that Ken’s claims are nothing more than lies, and that those lies have rather badly backfired. Boris’s accountants have written an open letter (see below) in which they refute Ken’s claims in full. Given this, Atul Hatwal over at Labour Uncut reckons Ken has scored two spectacular own goals – providing Boris with a moment of “authentic humanity” as he defends himself against smears, and putting the candidates’ tax affairs back at the centre of the mayoral contest.
Elsewhere, Ken’s odds lengthened with three different bookies, 65% of LBC listeners said that Boris had won the debate (compared to just 21% for Ken), and Boris’s team reported twelve lies that Ken had told during the one-hour debate (which roughly equates to a lie every time he spoke).
On a day when taxation, and varieties thereof, dominated every news outlet, you might have expected Ken ‘tax-avoider’ Livingstone to keep his head down. Not so. A couple of hours after the Budget speech was over, Ken popped up on Twitter to attack George Osborne for cutting the top rate of tax, even implying that it was in some way Boris’ fault. To clarify, Ken is complaining about a cut to a tax that he himself is refusing to pay. You couldn’t make it up.
This evening on Newsnight, Rachel Reeves proved the problem Labour now have, in attempting to attack the Tories on tax, whilst defending their tax-avoiding mayoral candidate. At the very mention of Ken Livingstone’s name, Paxman leapt on Ken’s tax avoidance and left a flustered Reeves insisting she couldn’t comment as she doesn’t have the full details…
On LBC97.3 earlier, Ken pledged that he would start paying his full tax dues if elected in May…
“If I’m elected Mayor on May 3rd, I will have no other income, so the taxman will take it straight out the salary at City Hall. We’ll just close the whole thing down.”
Firstly, Ken, for you to have no other income, are we to assume that sales of your recently-published autobiography have already completely dried up? Secondly, this scenario which you optimistically envisage is a hypocritical world away from the
five six seven (?) jobs you juggled when mayor last time (variously Mayor of London, MP for Brent East, Independent columnist, Evening Standard columnist, Morning Star columnist, after-dinner speaker, Have I Got News For You contestant etc.). Thirdly, this promise sounds just a little bit like blackmail. How about you start paying your full taxes now, and then Londoners can decide whether they want you back?
There are now a number of substantive issues concerning Ken’s ownership of Silveta Ltd, the personal company through which he has channelled over £750,000 of income since Londoners kicked him out of City Hall in 2008:
Tax avoidance. According to most estimates, Ken’s saved around £50,000 in tax, by paying just the 20%/21% corporation tax rate rather than the 40%/50% top rate of income tax. Although not illegal in any sense, it smacks of hypocrisy that a man who has argued that “rich bastards who avoid tax should not be allowed to vote”, and that top earners should pay income tax at 80%, has himself been avoiding his tax obligations.
Tax deductible expenses. One of the many excuses Ken’s tried using for the tax avoidance is that he’s spent some of the company’s money on staff for his election campaign, and that he thus doesn’t have to pay tax on that expense (he’s said it here, here and here). That’s a claim he might come to regret. As anyone who’s ever worked in business will know, there are strict and lengthy HMRC rules (see here) about what you can and can’t deduct from profit for tax purposes. Expenses are only deductible if incurred “wholly and exclusively” for the purposes of the business. So, for example, business insurance is allowable, but life insurance isn’t.
Silveta Ltd exists to handle Ken’s personal earnings. Its Articles of Association make no reference to politics, campaigning or the mayoralty. As such, the cost of Ken’s staff, or the economist he claims he employed for a while, had no relation to the purposes of the business, and can not be deducted for tax purposes. Unlike the legal-but-hypocritical tax avoidance mentioned above, the over-stating of expenses for tax purposes is illegal tax evasion.
It’s this second issue which is now getting Ken into trouble. The Taxpayers’ Alliance have rightly reported Ken to HMRC over ‘tax irregularities’, and we await the outcome of the inquiry with interest…
“Ed Miliband has a choice. Show consistency on the issue of personal taxation – politically uncomfortably though that may be for both him and his mayoral candidate – or lay himself open to his own charge of hypocrisy. Ken Livingstone’s tax affairs have already done serious damage to Ken Livingstone. Much more of what we saw yesterday and they will start to do real damage to his leader and his party.”
(Dan Hodges says Labour is tying itself in knots over Ken Livingstone’s taxes.)
Before you scroll any further down the page, I urge you to cover your children’s eyes.
As it emerged today that Ken has been revealing more than he ought to his poor neighbours, Boris has been revealing the extent of Labour’s lies over Ken’s tax scandal. Ken’s immediate riposte when challenged over his extensive tax avoidance was that everyone does it and that “Boris Johnson had exactly the same arrangements to handle his earnings from television”. Elsewhere, when challenged by Harry Cole at a press conference earlier, Ed Miliband echoed Ken’s line – Boris, he said, has a similar tax arrangement.
In a letter to Guido, Boris has angrily denied the Labour smears.
“My salary as Mayor is taxed as an employee of the GLA. In the same way as when I was an MP my salary was taxed as an employee. Any other income that I have received from outside endeavours has been received on a self-employed basis, to me as an individual (no company or other structure has been involved). No income earned by me has ever been paid to a “service” company, through which a person or person’s freelance earnings can be channeled so that they pay corporation rather than income tax.
To suggest otherwise is a complete and utter fabrication.
Of course the real point is not about my tax arrangements. It is about the hypocrisy of a man who for years has railed against those who use special arrangements to reduce their tax and who has then been caught – bang to rights – doing the very same thing himself.”
Presumably we can now expect an apology from Ken and Ed?
Gary Gibbon, Channel 4 political editor, has asked what many are now wondering: why [on earth] did Labour pick Ken? He reckons the primary reason was Labour’s poor finances meaning they needed to hold the mayoral candidacy election at the same time as their leadership election. This meant a relatively rushed timetable and a smaller-than-expected field. This bit particularly amused me:
“By the way, in that Labour leadership contest, Ken backed Ed Balls. He’s since praised Ed Miliband’s leadership to the skies but I understand Mr Miliband has had occasion to wonder whether Ken had his heart in the contest. More recently he’s been more impressed but he must have his head in his hands over the tax affairs story.”