The most senior business leader to back Ed Miliband has been accused of avoiding tax over a multi-million pound company loan.
Dale Vince, a green energy tycoon said to be worth more than £100 million, took £3.2 million out of his own company through an interest-free loan that one tax expert described as a “tax avoidance arrangement, in all likelihood”.
The allegation is potentially embarrassing for Mr Miliband, who has gone on the offensive, accusing David Cameron of being a “dodgy prime minister surrounded by dodgy donors” who have avoided paying tax.
Mr Vince’s company, Ecotricity, announced last week that it was donating £250,000 to the Labour Party, riding to the rescue of Mr Miliband who was under fire for his failure to find a single significant business figure to back him.
The latest Ecotricity accounts, posted on Friday at Companies House, show Mr Vince has been loaned £3.2 million by his own company. The loan is interest free and there is no time limit stipulating when it must be repaid.
The loan allows Mr Vince – who made his fortune building wind farms and solar parks and selling green electricity to 150,000 customers – to use the income without paying personal tax on it, other than a much reduced sum as a benefit in kind.
Richard Murphy, a chartered accountant and tax expert, said: “What the loan does is potentially advance money at a lower rate of tax than would be the case if he was paid a dividend or a salary now.
“Deferring when the tax is paid is one of the major methods of tax avoidance. This therefore looks to be a tax avoidance arrangement.”
Mr Miliband yesterday renewed his attack on Mr Cameron in a key note speech to the Welsh Labour Party conference in which he accused the Prime Minister of “turning a blind eye” to tax avoidance. Mr Miliband is now promising fresh penalties and the closing of tax avoidance loopholes in an attempt to capitalise further on what Labour believes is a election-winning issue.
But, last night, Grant Shapps, the Conservative Party chairman, accused Mr Miliband of “barefaced hypocrisy” in taking a donation from Mr Vince’s company.
Mr Shapps said: “Ed Miliband is a hypocrite of the worst kind: his bankrollers, the Unite union, have paid no corporation tax in years; the Labour Party themselves have dodged as much tax as possible on his watch, and now here’s another example of his barefaced hypocrisy.”
The company loan given to Mr Vince is completely legal and relatively routine, allowing those who take advantage of the mechanism to delay when they pay tax on income earned through their company.
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