Labour tax-dodge row donor at centre of new controversy

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  By Martin Kelly
 
A businessman who claimed he was advised by the Labour party on how best to structure a donation in order to avoid paying tax is at the centre of another tax-avoidance controversy involving another company he is a director of.
 
John Mills caused a storm last week after it emerged he had donated £1.65m worth of shares to the Labour party, the largest donation the party has received this year.

The businessman claimed he had done so after being advised by Labour party officials that donating shares, as opposed to cash, was the most tax-efficient way to make the donation. 

Leading accountants calculated that the cost to HMRC was over £700,000.  It was also revealed that Mr Mills himself would have faced paying £1.5m had he made the donation in cash.

The revelations led to a storm of criticism being aimed at Labour leader Ed Miliband who had recently attacked internet firm Google for alleged tax avoidance. 

Speaking in January, the Labour leader had attacked the “scandalous” situation that saw companies make huge profits but pay no tax: “We will end this situation where people can get away with making big profits in Britain and for no reason at all and with no justification not paying any tax.  It’s wrong and frankly it’s an insult to hardworking taxpayers in this country.”

Following the revelations surrounding Mr Mills, Miliband was forced to deny claims that his own party would not pay tax on the dividends from the shares donated to Labour by the businessman.

However it has now emerged that Mr Mills has links to another company which it is claimed has been used for tax-avoidance purposes.

The Labour donor is a director of Tamar Films LLP, a company run by Ingenious Media.  Last December Ingenious Media were accused of “running rings” round HMRC.

The accusation was made by Labour MP Margaret Hodge, who went on to brand the company “immoral” and claimed it was one of many companies “exploiting a well-intentioned tax relief to try to get individuals to mitigate their taxes”, an accusation denied by the firm.

However, it has now emerged that following a seven year HMRC inquiry, Ingenious is to go before a tax tribunal next year.

In a separate development Newsnet Scotland can also reveal that Mr Mills is a Trustee of Politics and Economics Research Trust (PERT), a charity set up by the right wing Taxpayer’s Alliance.  The setting up of the charity helped secure 40% tax subsidies on donations it received, 90% of which eventually went to the Taxpayer’s Alliance in the form of grants.

In December 2009, Labour’s John Prescott attacked the scheme claiming PERT, which also avoids corporation tax, was “exploiting taxpayers”.

“This body ought not to be subsidised to pursue its political goals.  They have now become properly the non-taxpayers’ alliance.” he added.

The Taxpayers’ Alliance has strong connections to the Conservative Party and is one of the most influential pressure groups in the country.  It regularly attacks what it claims is waste in government and has consistently called for lower taxes. 

The Charity Commission’s records show that PERT was established as the Taxpayers’ Alliance Research Trust in 2007, before changing its name to the Politics and Economics Research Trust.

The charity is also strongly anti-European and has links to the right wing anti-European party UKIP.

Records show that John Mills was a Trustee at the charity from its creation in 2007.  Other Trustees include UKIP backer Patrick Barbour.  A former Trustee of PERT is Malcolm Pearson who is also known as Lord Pearson of Rannoch and who is the former leader of UKIP.

As well as donating over one and a half million pounds in shares to the Labour party, John Mills is also funding a Labour party rebel group which is calling for an In/Out vote on the UK’s EU membership.

Mills, who has said he wants to see a “much looser” relationship between the EU and the UK, is bankrolling the Labour for a Referendum campaign and claims to have the support of up to 20 Labour MPs, one of which is Glasgow MP Ian Davidson.

Mills is the brother of David Mills, who is the husband of Labour MP Tessa Jowell.  Like his brother, Mills is a former Labour councillor in Camden.  He founded JML, which stands for John Mills Limited, in 1986.  It now has a turnover of £67 million.

The businessman is also a director of Labour for a Referendum Limited and Labour for Britain Limited.

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