EXCLUSIVE: HMRC vs Brent Liberal Democrat Leader (twice) on his tax arrangements

Official Government Documents reveal that Brent Liberal Democrat Leader Councillor Paul Lorber has been subject to two tax tribunal cases last year. LINK TO CASE 1LINK TO CASE 2  The official papers are available in the public domain for download through these two links.

The Lib Dem looked to argue that certain expenditures should treated as allowable expenditures because they relate to his role and job as a Councillor. According to the document, Cllr Lorber argued,

“… I use my home on a daily basis to perform my functions.  My home has an allocated room which I use as a study for my Council work, it has desks, computer, phone etc., in addition I use other parts of my house for meetings with my colleagues and constituents.

I do not accept the ludicrous £135 “home use” allowance.  My Council Tax is around £1,500, Home Insurance is around £300, Gas and Electricity around £500, Water rates around £200 plus wear and tear etc.  Your predecessors have accepted my claims for the past twenty years.  I fail to see what has changed.”

Cllr Lorber claimed an unspecified amount for subscriptions and publications.  His claim is expressed in his letter to HMRC as follows:

“The Government is constantly passing new laws impacting on Local Government and passing on new responsibilities.  There has been a massive growth in a new “Training of Councillors’ Industry and I am flooded by constant invitations to Seminars and Training Sessions.  The only problem is that they cost at least £250 a time.

A much cheaper and better alternative is a service provided by the Association of Liberal Democrat Councillors who provide publications advising on new developments and issues and on best practice.  They also publish helpful publications to assist my Leadership and Representative role.  They also provide advice on the phone which I use regularly.  The annual subscription is around £60 and the rest is spent on publications on things like new scrutiny functions etc.”

I find it incredible that he tried to argue this where money was being spent on a Party Political associated body.

The Judgement’s response was,

“By parity of reasoning, a subscription by a councillor to the Association of Liberal Democrat Councillors in return for which the councillor gets its publications and has access to information is not “necessary”; other councillors can carry out the duties without receiving the benefits provided in return for a subscription to that Association.  We have been provided with no details of the publications obtained by Mr Lorber in return for his subscription.  We have to infer that there is nothing exceptional about them that takes them outside the general rules set out above.  Moreover, it appears to us that the material obtained by Mr Lorber is not “job specific” (i.e. to deal with the immediate problems before him) but more generally qualifies him the better to carry out the duties of his office.  For that reason we are bound by authority to disallow this expenditure.”

The most damaging part of the document is The Liberal Democrat’s Communication Expenditure and how this was entangled with his tax affairs. The Document says,

“The question here is whether the communication expenses are incurred because Mr Lorber is obliged to incur and pay for them as an elected councillor and whether he has incurred them wholly, exclusively and necessarily in the performance of those duties.

The case for HMRC, presented by Mr I Allen, is that the relevant expenditure is neither exclusively nor necessarily incurred in the performance of Mr Lorber’s duties as a councillor.  The Newsletters, he accepts, keep constituents informed as to the intentions of the councillor, but, he argues, the newsletters promote the Liberal Democratic Party specifically. Each newsletter includes a statement that it has been published on behalf of the Brent Liberal Democrats and it canvasses support for LDP campaigns and invites donations towards the cost of the campaigning leaflets.  Thus, Mr Allen argues, the expenses in question are not incurred exclusively in the performance of Mr Lorber’s duties as a councillor.  Mr Allen goes on to argue that the expenditure is not necessarily incurred in the performance of those duties.  Mr Lorber would, contended Mr Allen, be able to perform those duties as councillor if the newsletters were not produced.”

It seems that the Brent Liberal Democrat Leader has some very serious questions to answer.

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