Labour’s shadow Treasury chief faces questions over tax affairs

The man in line to be number two at the Treasury in a Labour government is facing questions over his tax affairs after it emerged he set up a personal service company through which he was paid for a second job.

Darren Jones, the shadow chief secretary to the Treasury, has channelled more than £10,000 in fees for legal work into The Office of Darren Jones Ltd, entitling him to minimise the tax paid on his earnings.

Mr Jones said “all taxes have been paid” on his earnings through the company but would not say whether he had paid income tax – which would have been charged at 40 per cent – or corporation tax, which was charged at 19 per cent at the time.

The Conservatives said Mr Jones should come clean about whether he used the company to pay less tax.

Labour has said it will raise £5 billion a year by tackling tax avoidance, and if the party is elected Mr Jones will be one of the ministers in charge of public spending if he is given the role he has been shadowing.

Using personal service companies to minimise tax liabilities is legal, but Mr Jones would leave himself open to accusations of hypocrisy if he had used his own firm to avoid paying income tax.

‘Needs to answer’

Dame Harriett Baldwin, chairman of the Treasury select committee, said: “While genuinely self-employed people use this legitimately, the shadow chief secretary to the Treasury, a full-time politician, needs to answer whether he used it to pay less tax at the same time as his party is demanding higher taxes for everyone else. It is particularly problematic given that he seeks to be in charge of public spending.”

As well as paying a lower rate of tax at source on earnings, the use of personal companies can also be used to legally avoid paying National Insurance contributions.

There is an added benefit for anyone earning close to £100,000, as people who pay income tax at source start to lose their tax-free personal allowance of £12,570 once their earnings go into six figures. Mr Jones’s salary as an MP was £91,346 before Parliament was dissolved.

As well as being paid at least £10,470 for legal work he carried out for the law firm Kemp Little, Mr Jones used his firm to accept a further £52,000 in donations between March 2018 and October 2019, which he says was for Labour Digital, described as “the home of digital and technology policy for Labour Party members and supporters”, and which Mr Jones previously chaired.

A spokesman for Mr Jones said: “All taxes have been paid, all rules complied with, and appropriate declarations of interest made to the House of Commons as required. There is no suggestion otherwise.

“The Office of Darren Jones Ltd is now closed and no longer used.”

Charitable fund

Separately, Mr Jones set up a charitable fund, The Henacre Trust, which he has declared in the Commons register of members’ interests.

It is a charitable fund, rather than a charity in its own right, and is managed by the Quartet Community Foundation, a grant-giving body based in Bristol.

Despite holding around £20,000 in donations, the Henacre Trust appears to have made few grants since it was launched in 2019.

Its website listed four charities that would receive funds, but the only grant any of the four lists from the Henacre Trust is £110, given to the North Bristol Advice Centre in the 2019-20 financial year.

A spokesman for Mr Jones said: “Mr Jones has not used charitable donations to receive tax benefits for himself.

“Following the Covid pandemic, a grant-making pilot was undertaken with a number of third-party charitable organisations across Bristol. The demand for these grants was not as expected.

“Mr Jones does not want to be directly involved in deciding on grants, given his political position, and has been working with the Quartet Community Foundation on designing a new scheme for grant making.

“As you have identified, the grants are used to fund charitable projects such as the North Bristol Advice Centre.

“All monies raised will be used for the original intended purpose and, in the meantime, interest earned on the account is recycled back into the fund for charitable purposes. No further fundraising will take place until Mr Jones has approved a new grant-making scheme.”

A Labour source said Mr Jones had not used the company to reduce his tax liability.