The Sun just got schooled by Labour for failing to understand basic tax law

In a laughable attempt to smear the Labour Party, the Sun just suggested that Labour was avoiding corporation tax. The Labour Party immediately shot down the “nonsense” article:

Nonsense. As the accounts make perfectly clear, the Labour Party made no taxable profits therefore no corporation tax was due. We pay all the tax that is due and always will. #ChangeTheMedia https://t.co/DKgGy1K1AU

— Labour Press (@labourpress) August 23, 2018

The Sun‘s claims

The Sun’s article claimed that Labour wasn’t paying any corporation tax despite having a £1.4m surplus. The article implied that Labour is holding potential profits as surplus in an effort to avoid showing taxable profits. As the Sun correctly points out, Labour generated a record £56m income in 2017. This is a product of the party’s ever increasing membership and subsequent subscription fees. In 2015, the party’s membership was around 200,000; as of January 2018, it stood at 552,000.

Paul Monaghan, chief executive of Fair Tax Mark, explained that Labour is not taxed on these membership fees:

Income derived from members is not subject to Corporation Tax, as for Trades Unions and Charities. This is not tax avoidance as the law is clear that no tax is due. From what read, there is no story here – at all!

— Paul Monaghan (@PaulJMonaghan) August 23, 2018

So untaxed membership fees, if not spent by the party, are likely to be rendered surplus. Monaghan argues that this is the same for trade unions and charities. Corporation tax is only due on taxable profits. Labour didn’t have any taxable profits.

Change the media

As The Canary has previously reported, a 1999 report showed that Sun owner Rupert Murdoch paid zero net tax on his UK holdings for the 11 years previous – despite making nearly £1.4bn in pre-tax profits.

Meanwhile, the Labour Party has vehemently fought for greater tax transparency and justice. The party revealed its 17-point plan to clamp down on tax avoidance back in May 2017. The plan includes an immediate enquiry into tax avoidance, the sanctioning of abusive tax havens, and public filing of large company tax returns.

The Sun‘s article does raise the question as to why the billionaire-owned media attempted to take Labour down with this non-story. If the Sun sincerely wanted to crack down on corporate tax dodgers, then there’s plenty to choose from.