Embarrassment for Labour after two councils found to have avoided £12m in tax

Posted On: 
8th November 2017

Jeremy Corbyn has been accused of hypocrisy after two Labour-run local authorities are reported to have avoided paying millions of pounds of tax.

Jeremy Corbyn last week said those avoiding tax should apologise
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Separate purchases by Sefton Council in Merseyside and Warrington Council are said to have saved a combined £12m in stamp duty – after the authorities bought sites from companies registered in low-tax countries.

The Times revealed that Sefton bought the New Strand shopping centre in Bootle through a Luxembourg-registered company for £32.5m in May of this year – saving £1.6 million in stamp duty, alongside insurance against the possibility that the taxman might chase them for payment at a later date.

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Meanwhile in July Warrington council agreed to pay more than £200m for a business centre in Cheshire through an offshore company – saving nearly a whopping £10.5m in stamp duty.

The revelations come days after the Labour leader said those dodging tax – as exposed in the Paradise Papers – should “not just apologise for it but also recognise what it does to our society”, while calling for a major inquiry into tax avoidance.

“If a very wealthy person wants to avoid taxation in Britain, and therefore put money into a tax haven somewhere, who loses? Schools, hospitals, housing, all those public services lose and the rest of the population has to pay to cover up the deficit created by that,” Mr Corbyn said.

Sir Vince Cable, leader of the Liberal Democrats, said yesterday: “The Labour leadership has spoken loudly about stamping out tax avoidance yet Labour-run local authorities have avoided stamp duty through complicated tax structures when speculating in commercial property.

"The… stance appears somewhat hypocritical until they have their own house in order.”

Labour said: “We’re committed to changing the current tax environment and to tackling tax avoidance.”

Sefton council said: “We paid all the tax due and will continue to do so. The council bought the company that owned the asset as this was the corporate structure that was marketed for sale. 

Warrington council said: “The only tax not being paid... is a one-off payment of stamp duty land tax. This position was discussed in detail and followed extensive due diligence and external advice to the council. To complete the acquisition in a timely manner the council agreed to leave the business offshore as trying to complete the deal and bring it onshore would have delayed the purchase.”