Most forms of legal tax avoidance are ok, says Nigel Farage

http://www.theguardian.com/business/2014/jun/04/legal-tax-avoidance-ok-nigel-farage

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Nigel Farage has said most legal tax avoidance is "ok" after being questioned about why around £45,000 of income was paid into his private company rather than a personal bank account.

While denying he used the company to avoid any tax, the Ukip leader said nobody voluntarily paid anything to HM Revenue and Customs and defended the practice of reducing a tax bill within the law.

He made the remarks to the Southend Echo, which raised questions about his tax affairs and the registration of his private company, Thorn in the Side, to the address of his Essex accountants. He has previously rejected allegations that the company – of which he is the only director and 100% shareholder – could be used to reduce his tax bill.

"This firm of accountants did a lot of business with City brokerage companies and was recommended to me," he told the newspaper.

"No one voluntarily pays any additional income to the Inland Revenue. Most forms of legal tax avoidance are ok, but clearly some are not."

He dismissed criticism of the setup, saying it would not save money on his tax bill: "To receive money personally I have to pay 40%. Corporation tax at 20% is for retained profits [kept in the company] only, therefore the criticism is ridiculous."

Using personal services companies is perfectly legal but their use by civil servants potentially to reduce tax bills has been criticised by George Osborne, the chancellor, and Danny Alexander, the chief secretary to the Treasury. Being paid into a company can help reduce a tax bill substantially as personal income taxes can be higher than the amount paid through corporation and dividend taxes.

It comes as Farage spent the day before the Newark byelection at a travel and tourism conference in Malta, rather than campaigning with the Ukip candidate, Roger Helmer. His absence from the last few days of the campaign is likely to fuel speculation that Ukip has given up winning the Nottinghamshire seat, where the parliamentary poll will be held on Thursday. David Cameron and Osborne have both visited the constituency in recent days.

There was speculation that Farage himself could have stood in the seat vacated by disgraced Tory Patrick Mercer, who stepped down following a lobbying scandal. However, Farage said he wanted to stand in the south-east next year and to concentrate on the European election campaign, which saw Ukip come first to the humiliation of the other parties.

In Newark, though, Tory candidate Robert Jenrick is firm favourite to top the poll, after the Conservatives threw all their resources into defending their 16,000 majority. A stream of ministers, MPs and activists has bombarded the town over the last few weeks and a poll by Lord Ashcroft, a former Tory donor, has the party 15 points ahead of Ukip, while Labour trail seven points behind that.

Helmer, who was recently re-elected as an MEP for the East Midlands, insisted he does not believe the poll and claimed the local Ladbrokes is taking more bets for Ukip.

The 70-year-old has been criticised during the campaign for some of his controversial views about homosexuality, which he claims he has now accepted, and rape, after once suggesting in a blog that a victim should share some responsibility if she established a reasonable expectation of sex in her boyfriend's mind.

Another new Ukip MEP, Nathan Gill, representing Wales, was also under scrutiny after he admitted employing dozens of workers from eastern Europe and the Philippines. He denied that this presented any conflict with Ukip's opposition to "open-door immigration", saying the party "never said it wants to stop all immigration – it wants to limit the numbers".

"My focus at the time was to employ people who would enable us to fulfil as a business the care contracts we had. I can see how this could look bad, but it's a case of 'damned if you do and damned if you don't'," he told the Western Mail.