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North west councils refute tax avoidance claims

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Two Labour-run councils accused of using offshore arrangements to avoid tax on the purchase of commercial investments have defended their actions.

The Times reported this morning that Sefton MBC and Warrington BC had avoided a combined £12m of stamp duty on the purchase of The Strand shopping centre and Birchwood Business Park, respectively.

The newspaper said the revelations had led to Labour leader Jeremy Corbyn being accused of “hypocrisy”. The Labour leader has this week been highly critical of organisations and individuals revealed to have avoided tax through offshore arrangements.

Warrington is reported to have avoided almost £10.5m in stamp duty on the £200m purchase of the business park.

In a statement the council acknowledged it had not paid stamp duty due to the asset being held offshore by its previous owners. It said it had not sought to bring the business onshore ahead of the acquisition as doing so would have delayed the purchase.

A spokesman said: “Currently the council has taken the decision to hold Birchwood Park offshore. It was made clear, when the purchase was made, that this would be kept under constant review by the council’s leadership.”

Sefton is said to have avoided £1.6m of stamp duty by purchasing the Luxembourg registered company that owned the shopping centre rather than buying the asset itself. The asset was purchased for £32.5m, primarily to generate an income for the council. 

In a statement the council said this was the “corporate structure that was marketed for sale” and the vendors had “refused to sell us the New Strand itself”. The council has committed to liquidating the corporate structure and brining the asset into its direct owenership.

A council spokesman said: “In no way has there been any avoidance of tax relating to the purchase of The Strand shopping centre. We paid all the tax due and will continue to do so regarding this important asset.”

Last week LGC reported on the growing trend for councils to invest in property in order to generate an income. 

 

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