Tories help firms that find ways to avoid tax

THIRTY-EIGHT Conservative MPs work for companies or firms that give advice on tax avoidance - despite Kenneth Clarke's Budget assurance that it was an activity 'which this Government has never helped'.

Among them are the former Chancellor Norman Lamont; David Hunt, the Secretary of State for Employment, and Sir Edward Heath.

Their links are shown in the latest Register of Members' Interests. None of the organisations listed concentrates solely on tax advice. As part of their service, however, they tell clients how to reduce their tax liability through loopholes or offshore investments.

There is no suggestion that such a service is illegal or improper - tax avoidance is legitimate. Nor do the MPs necessarily give advice on tax matters. No opposition MP discloses such an interest.

Many of the MPs felt there was no conflict in their roles, emphasising the difference between tax avoidance and illegal evasion. However, Alistair Darling, Labour's City spokesman, said that when the Commons returned in January and debated the Finance Bill, Labour would demand the exclusion from voting of the 38 Tory MPs. 'We will restate our objections to people tied to this industry being allowed to vote on tax matters.'

A spokesman for Norman Lamont, who is a director of the merchant bank N M Rothschild, said: 'We've more important things to do than talk about stupid things like this.'

Others maintained that the firms did not do such work. 'The last thing Arthur Andersen does is tell people how to avoid paying tax,' said Sir Edward Heath, who sits on the accountancy firm's public peview board - effectively, its board of non-executive directors. 'They advise on obligations, not how you should avoid them.'

But asked if the firm gave advice on tax avoidance, Ruth Granville, in Andersen's public affairs office, said: 'Yes, of course, we do.' The firm covered all aspects of tax planning.

David Hunt, the Secretary of State for Employment and a partner at the solicitors Beachcroft Stanleys, read a statememt by the firm. 'It is a wholly professional firm providing legal advice to clients, particularly corporate clients, on a range of subjects including tax. The firm is certainly not involved in the promotion of artificial tax schemes.'

The findings, based on a study by the Independent on Sunday of the latest Register, are bound to fuel Labour arguments that Tory vested interests lie behind the Government's refusal to shut all tax loopholes. Mr Darling accused the Government of 'granting tax favours to people who are already substantially wealthy. Every penny they avoid in tax is a penny extra for the rest of us'.

For some months, Gordon Brown, the Shadow Chancellor, has been pressing for closure of the loopholes, which he says have cost the public purse pounds 8bn.

A few, notably paying employees in gold bars and avoiding stamp duty on property deals, were shut in last month's Budget. The rest remain open and include: foreigners bringing money in without paying tax on it; wealthy Britons claiming overseas residence to avoid capital gains tax; creating offshore trusts to escape capital transfer tax; and issuing shares, rather than paying dividends, to avoid corporation tax.

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