Thursday, 6 June 2013

So what's the problem here?

A donation to the Labour Party:
John Mills gave the party shares in his shopping channel company, JML, valued at £1.65 million in January. In an interview with The Telegraph, Mr Mills said that the donation was made in shares rather than cash so the tax on the deal would be significantly reduced.

Describing the donation as “tax efficient”, he said the form of the donation was agreed with figures in Labour’s fund-raising team.

Mr Mills said that if he had given £1.65 million from his own income he would have had to pay nearly half of that sum to the taxman.

Asked why he made the donations in shares, Mr Mills said: “To be honest with you, it is the most tax efficient way of doing this.
It seems pretty sensible to me, at least the tax efficiency part. Labour will end up with a regular income through dividends until such time as they are sold or the company goes bust. Long term, it'll probably be quite lucrative for them and make their cash flow a bit more predictable. Quite why you would voluntarily hand over a share of everything that you'd worked hard for to Labour, or indeed any political party I find rather odd though, but each to his own I guess.

The problem here though is that it's started a minor pissing match with George Osborne. It's pure politicking rather than trying to make a serious point but shows just how daft that this whole tax debate has got; that now, not taking a course of action that would maximise revenue to the Treasury is being termed tax avoidance.

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