TaxPayers’ Alliance reports Ken Livingstone to HMRC over tax irregularities
Mar 2012 18

When details of Ken Livingstone’s tax arrangements first emerged, I wrote about my concerns on my blog. I said that “…for Ken Livingstone to throw around accusations of tax dodging one minute then rely on his accountants to minimise his own burden the next is clearly hypocritical.”

Following further revelations, we have decided that it is only appropriate to report Mr Livingstone’s tax irregularities to HMRC for them investigate formally. Hopefully this investigation will be swift, so voters in London’s Mayoral election can know the full facts when they cast their ballot in May.

Here is the text of the letter I sent to HMRC today:

I write to request that HMRC conduct an investigation into whether Mr Ken Livingstone, through his company Silveta Ltd, has been setting disallowable expenses against tax.

HMRC rules state that to be set against tax, company expenses must be “wholly and exclusively incurred for the purposes of the trade.”

In response to publicity about his channelling his earnings through Silveta, Mr Livingstone has stated that he has employed three people, two of whom remain currently employed.  Mr Livingstone has made clear that he treats these expenditures as allowable expenses. On BBC London’s Vanessa Feltz show on Friday, 16 March, http://www.bbc.co.uk/podcasts/series/vanessa, he said:

“I’ve formed a company, and you have company expenses, travel, research and you employ people. And I’ve employed three people at different times over this last four years. And after you’ve had all those expenses, then the money you pay yourself I’ve paid tax on.”

One of the people he employed, he made clear, was an economist to work on his re-election campaign. He said: “Literally you can’t, if you’re running for mayor, off the top of your head come and say I’m going to cut the fares – you need to employ someone to go through their [TfL’s] books. I got a really well-established economist who’d worked in the public and private sectors, who spent a long time ploughing through – imagine the size of the accounts of TfL – who cam back and said, yes you can make a fares cut. It takes time to do that and you need to employ people to do it.”

In an interview on BBC Radio Five Live, Pienaar’s Politics, on Sunday, February 26, Mr Livingstone said: “The other thing is I’ve used that [company money] to pay for people to work on the campaign for mayor.”

In an interview on the Andrew Marr show, BBC One, on Sunday, March 11, http://news.bbc.co.uk/1/hi/programmes/andrew_marr_show/9704407.stm, Mr Livingstone said: “I employ people. I mean that fare scheme we’ve come up with, it took someone, a talented economist, to sit down and spend a lot of time going over the books. I’ve got people handling the media. I employ at the moment two people.”

Mr Livingstone has declared to the Electoral Commission a donation to the Labour Party of staff time worth just over £19,000. His campaign states that this is for three months’ work of two staff. This implies that the staff were paid a total of £76,000 on a full-year basis.

It is my belief that the employment of an economist to come up with policies for Mr Livingstone’s re-election campaign and the employment of “people handling the media” for the campaign cannot be expenses incurred “wholly and exclusively” for the purposes of Silveta’s trade.

HMRC rules are clear that the purpose of the company is a matter of fact, determined by the revenues it raises and the objects set out in the Articles of Association. Silveta Ltd’s Articles of Association state that the Company’s objects are:

(a)     (i) To carry on business as a general commercial company.                   

(ii) To carry on any trade or business whatsoever and to do all such things as are incidental or conducive to the carrying on of any trade or business by it.

(iii) To undertake all or any of the following objects.

None of the following objects (b)-(z) specify political campaigning, the promotion of candidates, or anything related to the London Mayoralty or tube fares. Nor, clearly, can a political campaign be defined as a trade or business.

Silveta Ltd’s purpose is, as Mr Livingstone has stated, to handle his own personal earnings from “after-dinner speaking, TV stuff and all that” and not to further his re-election campaign. There is no evidence that Silveta Ltd received any revenues from its analysis of City Hall’s books, or the promotion of Mr Livingstone as mayor.

It appears clear to me that the salaries of a media assistant and an economist/policy adviser are not allowable expenses under HMRC rules.

Matthew is co-founder and Chief Executive of the TaxPayers' Alliance. He is also founder of the civil liberties campaign Big Brother Watch, and in 2011 headed up the successful NOtoAV referendum campaign.



  • johnincheshire

    Well done Matthew. It needed someone to do it and it’s to their shame that no one else has done so. Let’s hope the tax man now does his job and thoroughly investigates Mr Livingstone’s tax affairs.

  • Blarg1987

     I agree with this point, however I will ask considering a former PM or several have set up a tax avoidence scheme via buying a property through a company and living in it, will the TPA monitor the coalition’s policy to prevent this from happening and so paying their fair share of tax?

    And to name an individual, according to the papers one person was former PM Margaret Thatcher, I look forward to the next few weeks where the TPA will be ensuring she pays her fair share of tax :) .

    • http://www.annaraccoon.com/ SadButMadLad

      Tax avoidance is legal. There is nothing wrong in what Ken Livingstone is doing by using a company to handle his personal services. So there is nothing wrong with former PMs using tax avoidance. In fact it is the right of every citizen to minimise their tax affairs.

      Where Ken has gone wrong is in using his company for political campaign purposes. That is the point of having a HMRC inquiry.

      • Blarg1987

         The budget next week will make some tax avoidance scheems illegal including the one I mentioned so yes it is right to ask and ensure the TPA does keep an eye on this including all politician adn former PM’s.

        • MooG

          What? You’re just making it up as you go along now.

          The Budget’ll contain a review of small business taxation, but movement is towards the revocation of IR35 and the like. Which will be A GOOD THING, HMRC admitted that raised quite dismal amounts (as low as 1% of anticipated revenues), certainly less than the would justify its harmful effects on small business.
          Ken’s irregularities arise from his campaigning, not simply because he operates a personal service company (which itself is an unfortunate side effect of an overly-complicated tax system).

  • Kevan

    So he’s not just a hypocrite with his tax avoidance, but he’s also been getting taxpayers to subsidise his election campaign?

    Figures. He’s always seemed a slimy bastard to me.

  • Will-o-the-wisp

    Funny that the small contractors are targeted by IR35 and that HMRC persecuted Arctic systems, yet politicians and Office holders in local Government, all of whom are paid out of taxes, get away without HMRC interest, and , more to the point get to pontificate on the ‘morals’ and ‘unfairness’ of avoiding tax.  Listening to Margaret Hodge talk of morality and fairness  makes me laugh – MPs, the biggest tax dodgers of all – they even exclude themselves from the laws that apply to the rest of us!   Why have we no party that espouses lower taxes – I”m not happy paying toward the £17K  that Chris Huhne pocketed because his criminal prosecution meant he had to step down from Governement, nor to give jobs to friends and family of politicians in Quangos.  Mind you they need the money, how else can they pay out the £5000.00 required to stand for a Police Commissioners role – another ‘job for the boys’ disguised as democracy.

  • Pingback: Ken Livingstone’s Tax Hole Gets Even Deeper Twice Prosecuted for Non-Payment of Taxes - Guy Fawkes' blog

  • http://www.allkins.co.uk Dominic Allkins

    Ken’s avoidance of tax is perfectly legal (and to be applauded in my book) his use of the company to fund his campaign without declaring so is definitely illegal.

    I also hear a rumour (and it’s nothing more that that at the moment, that his company may not have been VAT registered. Only a rumour though.

    If it wasn’t then that is illegal.

    • http://www.facebook.com/profile.php?id=100001562069017 Nigel Seccombe

      Maybe he doesnt sell his wares in UK or they are VAT exempt.

      My boss Richard Bateman of Liskeard always put ALL his income into his own PENSION company never paid taxes because his associates were self employed and no contract no accounts. He lives in a palacial home in Menheniot far away from prying eyes a millionaire member of the USA million dollar round table and was once the victim of a desperate man who got 4 years inside for threatening to kidnap Bateman’s son in return for £30,000 He owes many associates commissions earned during their association with him and probably owes HMRC milliuons in EVADED taxes BUT FSA wont touch him.

  • Mike

    Blarg1987
    I read the thing about avoiding stamp duty by buying a property through a company. When I studied for my accountancy exams (20+ years ago) this meant you as an individual were getting a benefit in kind from the company equal to the ratable value. While I understand rates are long gone it seems a risky strategy as 1) if its not current tax law it would be easy to reintroduce 2) it only save money for the person buying your house 3) the tax would be due whether or not you live in the property (as you have the right to live there) 4 you can argue that if there is a couple both have to pay the tax.

  • Adam

    I’m generally in agreement with much of what the TPA comes up with, and I really dislike Ken Livingstone and more importantly his ‘values’. However, I don’t agree with you here – these expenses should be fully deductible. This is just propaganda – this article is what I’d expect from the Daily Mail

    • http://www.facebook.com/profile.php?id=100001562069017 Nigel Seccombe

      The voice of reason AT LAST!

  • Tarquin

    Absolutley right to bring this to the notice of HMRC.  Withn his arrogance, deviousness, unacceptable outbursts, and now this illegal commercial tax avoidance ruse, Livingstone is a totally unsuitable mayoral candidate and London can do without him.  He’s going to lose anyway………….

  • http://www.facebook.com/people/Andrew-Smith/1386738275 Andrew Smith

    But has anyone reported him to the Electoral Commission as I recall his Financial Statements or his own comments disclosed that staff were working on his campaign.  That is to be reported as a donation and it is not tax deductible.

    And what about the firm of accountants who drafted and filed the non-compliant Financial Statements – are they qualified accountants, if so has their institute been told of their negligence?

  • bigal4u

    Typical of Livingstone, the biggest hypocrite ever to darken County Hall, one law for him, and one law for others.
    You should she the film of when the BNP tried to interview him.
    He ran into a chip shop, and hid in the back storeroom!!.

  • steveatkinson

    I like it, good shout Matthew, though how typical of the lousy Labour party is this !!!!!!!!.

    • http://www.facebook.com/profile.php?id=100001562069017 Nigel Seccombe

      Far less so than Pastie liar switch houses to evade taxes but no one touches School boy millionaires who don t pay 45% taxes do they?

  • Sterling77

    Livingstone cannot be trusted. He goes around in his own nasty Leftie world thinking he can dupe and take the electorate for granted. That says much for his arrogance and approach to this Mayoral election and his true declaration of income. As Mayor, he abused his position  by inviting terrorists to speak and has offended millions. He recently said on the BBC, that whilst GLC leader, he advised Mrs. Thatcher to put broadband in every home and city. He forgot to mention that the GLC was disbanded in 1986, four years before broadband became available. Let us hope the tax-man closes this loophole. Well done.

    • http://www.facebook.com/profile.php?id=100001562069017 Nigel Seccombe

      Inspector Grim of the Thin Blue Line always said Namby Pamby lefty up your nose commie crushing boring oh what the heck Raymond what do I do now?

      Just vote for the best craftyest little politician you can think of 

      AT LEAST HE HAS A BRAIN!!!

  • BtlrKth

     Well done Mathew.

  • GeoffreyB

    As far as Livingstone’s abuse of tax law is concerned, HMRC
    should take him to the cleaners. Congratulations to TPA for disclosing his
    schemes.

     

    Livingstone must never be trusted.  Long ago, when there was a GLC election Labour was led by a
    “moderate” called Armstrong.  Almost as
    soon as the result was announced, with Labour having won, the hard left ousted
    Armstrong and replaced him with Livingstone. Clearly this was pre-planned.  Armstrong was rewarded by being booted up to
    the Lords and London was saddled for years with the dishonest and incompetent Livingstone.

     

    Livingstone helped to make Labour unelectable while he was
    an MP, by supporting the militant tendency, which ripped the heart out of Labour,
    which was out of office for thirteen years as a result.

     

    He invariably lends his support to those who oppose our way
    of life and are prepared to use extreme violence to achieve their aims, for
    example, the IRA who bombed us and subsequently, a Muslim preacher who
    advocates wife beating and murder of Jews in Israel by suicide-bombers.

     

    A week or so ago, he pledged to make London, in his words,
    “a beacon of Islam”.  As an atheist, why
    is he pandering to one specific religious minority and why Islam?  Why not a beacon of Christianity?  Or Buddhism?  Even of Judaism? 

     

    This man sucks up to any minority who he thinks might help
    him to be elected as Mayor, and once in power, insults anyone whose views do
    not agree with his.

     

    He acts like a schoolboy who thinks it is clever to disrupt
    lessons by being cheeky to teacher.  He
    has failed to reach a mature adulthood and his best course of action would be
    to leave public life and find a good psychiatrist.

     

     

    • http://www.facebook.com/profile.php?id=100001562069017 Nigel Seccombe

      Yes yes but the fact is he has not done anything to invoke HMRC or Police HAS HE!

      • GB

        You seem to be a Livingstone Groupie.  If not, why are you rejecting every criticism of him on this site?  The man is not and never has been honest.   Try and concentrate and remember the abuse of funds he allowed when he was leader.  Money was handed out to groups that curiously disappeared from view.  There was no accountability for this money, not Livingstone’s money, but OURS.  He has never run any organisation that has to produce a profit and a net cash inflow.  He is a useless appendage on society and has some very unpleasant friends, such as IRA bombers and Muslims who advocate the murder of Jews.  Nice man, isn’t he?  So, Mr Seccombe (or are you Livingstone himself, writing incognito?) look at his record and start thinking, rather than blindly defending this dreadful man.

  • malcolm

    Well done Matthew. This sickening hypocrisy needs to be exposed. It is typical of arrogant left wing politicians to lecture the rest of us then do the opposite. Let’s hope HMRC follow this through.

  • tiredtrucker

    The more I look at the Labour party the more I am reminded of George Orwell’s “Animal Farm”.

    • http://www.facebook.com/profile.php?id=100001562069017 Nigel Seccombe

      I think you may have confused yourself Animal Farm was about Communism not Labour Socialism We are after all very social people or are you the only one who is not?

  • Derek

    Very odd behaviour for someone who masquerades as a socialist.

  • Bernard

    I should also like to know how much he was paid when he was writing for one of Murdoch’s papers. He even posed proudly for a snap sitting at this desk.

  • DonnaTxx

    Lib/Lab/Con have a history of corruption, the British people should demand better. “fool me once shame on you, fool me twice shame on me”

  • http://www.facebook.com/profile.php?id=100001562069017 Nigel Seccombe

    Perhaps you could do the same for David Cameron flipping ownership of his parliamentary home to avoid capital gains taxes on a house in London whose expenses were paid by tax payers.. George Osborne ditto also for allowing his father in law to own a Scottish island via the Bahamas to avoid taxes. 

    Richard Lionel Bateman  IFA registered of Scawns Menheniot Liskeard for evading years of taxes and denying claims of commission frauds on Anton Packheiser Malcolm Peers Roger Wilmot in 1984/6

    Graham Murray of Highcliffe Financial Services also Moneywise in Bournemouth Dorset.  Michael Wolfe magistrate!!! of Winchester Financial Services Poole Dorset. 

    In fact you may wish to make you and your company really famouse by investigating most life Investment and conveyancing companies run during the 1990s