Do accountants in London want a tax avoider as the next Mayor?

Accountants in London may be interested to learn that Ken Livingstone, the Labour guy who plans to stand against Boris Johnson in the forthcoming election for Mayor of London, is going to be investigated by HMRC.

Livingstone has already admitted offsetting some of his election-related expenses against tax, thus reducing his personal tax liability by thousands of pounds.

Ken Livingstone now looks like a prize hypocrite after previously making outspoken comments against people who practice tax avoidance. It transpires that he has been putting his earnings through Silveta Ltd, a personal company, in order to pay corporation tax on them instead of income tax. According to the Sunday Telegraph, this saved Livingstone more than £50,000.

Mr Livingstone has been quick to justify his actions saying the money he saved was used to hire an economic adviser and a press officer for his election campaign. In Q4 last year, he declared staff time valued at £19,202 as a non-cash donation to the Labour Party. However, accountants say that treating campaign staff as a tax-deductible company expense was against HMRC rules. Expenses can only be claimed when they are incurred wholly and exclusively for company purposes.

Silveta Ltd was set up to handle the earnings Mr Livingstone makes from broadcasting, after-dinner speaking and his recent autobiography. Its articles of association do not mention politics or the mayoral campaign.

Matthew Elliott from the TaxPayers’ Alliance has written to the Revenue’s compliance unit calling on them to investigate.

This isn’t the first time Mr Livingstone has fallen foul of the Revenue. Twice in the 1990s county court judgements were taken out against his personal company, Localaction Ltd, for non-payment of taxes.

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