Ken Livingstone fails to lie his way out of trouble

The Labour leader, Ed Miliband, was forced to defend Ken yesterday as the story about his tax avoidance showed no signs of dying away. KenCo had “paid every pound of tax he is required to by law,”  Miliband insisted, a defence that sounded to depressed Labour supporters horribly like those MPs saying that “all my expenses were within the rules.” Even this may not be true, in fact – watch this space!

Like a faster version of woodworm, Ken’s decision to pay corporation tax (20%) rather than income tax (up to 50%) and National Insurance (up to 9%) on his huge earnings is steadily undermining his campaign’s foundations. The influential, non-partisan Politicalbetting website yesterday asked: “Should/could Ken be replaced as Labour candidate?” Another respected commentator, Gary Gibbon, political editor of Channel 4 News, asked on his blog: “Why did Labour pick Ken?” As Gibbon writes, Miliband “must have his head in his hands over the tax story. This is a turnout election and it’s vital Labour’s activists don’t get disenchanted with the candidate’s money-saving schemes and down tools.”

After being attacked in the New Statesman, The Observer, The Independent and on the Labour Uncut website last week, KenCo was the subject of further criticism by his own side yesterday. One London Labour MP told the Evening Standard that Ken should release his financial records to “draw a line” under the affair. In the same piece, a “Labour insider” called on him to be more “open about his  financial dealings.”

Given some of the things I’ve been told about Ken’s finances, this seems unlikely. Instead, the Bank of Livingstone has been printing more of its favourite currency – lies – in an emergency attempt to prop up the KenCo share price. Livingstone claimed on Sunday that Boris Johnson had “exactly the same arrangements to handle his earnings from television.” As Boris has categorically said today, this is untrue:

No income earned by me has ever been paid to a “service” company, through which a person or person’s freelance earnings can be channeled so that they pay corporation rather than income tax. To suggest otherwise is a complete and utter fabrication.

I think Ken must be referring to a company called Finland Station, also known as Black Rock, of which Boris was a director between April 2006 and May 2008, his only directorship that I can trace (apart from ones connected with the mayoralty). I naturally looked into this company before doing my story on Ken, to check that Boris was not up to the same tricks.

There appear to be three key differences with Ken’s affairs. First, Finland Station is not a personal company like Ken’s Silveta – its other directors are two TV people for whom Boris presented a couple of documentaries before he became mayor. No member of his family is a director; he can’t do the profit-splitting trick with his wife that Ken can. Second, and again unlike Ken, only a tiny amount of money appears to have passed through Finland Station. In the year 2006/7 it was dormant – that is, no money passed through it. In the only trading year in which Boris was a director, 2007/8, it made profits of just £207 (less than a thousandth of Ken’s) and there was cash held in the company of £11,374 (less than a twentieth of Ken’s current cash pile.)

The accounts, as with so many of these small companies, including Ken’s, are uninformative; it is possible that more than we know could have been going on under the surface. But the third, clinching difference is as follows: throughout the time Boris was a director of Finland Station, he was also an MP, and was therefore required to declare his relationship with it in his register of interests. He did register a payment from it (of £30,000, it later emerged) on January 28, 2008 – but this was a payment from the company to him as its contractor, not, as with Ken, a payment into a company. It would have been subject to income, not corporation, tax under any interpretation whatever of the rules.

There was a minor controversy about Finland Station during the last mayoral election, when it emerged that though Boris had declared that he had been paid by it, he had not declared his 33% shareholding in it. He amended his register entry and apologised. This gave his spokesman a further opportunity to say that no dividends had been paid by the company and Boris had never received anything other than the £30,000 fee from Finland Station. (In the four years since he still hasn’t, according to his mayoral register of interests.)

Boris’s parliamentary register of interest entry for his last year as an MP, 2007/8, makes clear that in addition to the Finland Station dosh he earned further sums of between £360,000 and £415,000 for columns, books, broadcasting and speeches that year. There is no trace of any of these sums being passed through Finland Station or any other company and we can only conclude that what Johnson says about his tax affairs is true.

This also gives the lie to something else that KenCo said on Sunday – that “almost everybody in the media who’s not employed by one person directly has the same arrangements [as me.]” If you’re using media people as moral lode-stars then you really are in trouble, Ken – but in fact the vast majority of the freelance journalists I know, just like Boris, do not have Livingstone-style personal companies. They fill out tax returns and pay income tax. So do I, as it happens, on the freelance income I earn (my Telegraph pay is taxed under PAYE.) Unlike Ken, I don’t see how you can slag off the government, publicly-subsidised shysters and tax-dodgers for a living but not pay your taxes.

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