The shadow chancellor discovered the risks of making his tax affairs public this week.
In the wake of the Google tax settlement last week Labour’s shadow chancellor John McDonnell revealed his tax return in the Sunday Mirror.
But as eagle-eyed AccountingWEB readers pointed out when we followed up the story on Monday, McDonnell didn’t reveal all of his tax forms. What he published was a standard employment income summary form (SA102), without disclosing the Member of Parliament form (SA102MP) which MPs are required to submit.
McDonnell revealed a screen shot of his tax return on Twitter and subsequently opined in the Sunday Mirror that the Chancellor “should be open and transparent about their own income.”
McDonnell divulged his annual earnings as £61,575 and revealed his tax payment of £14,253 along with what he claimed was a screenshot of his tax return.
— John McDonnell MP (@johnmcdonnellMP) January 31, 2016
AccountingWEB readers instantly spotted McDonnell’s oversight. James Reeves questioned McDonnell’s ‘open and transparent’ stance, commenting: “That's not the Member of Parliament supplementary form (SA102MP), it's a standard employment form (SA102). So presumably this is a second job and in addition to the 67K he gets for being an MP?”
As AccountingWEB member redboam pointed out, the SA102MP allows MPs to account for allowances and receipts associated with their office. McDonnell did not include information in regards to research, accommodation, expenses, travel, and so on.
An HMRC spokesman clarified that in addition to the main employment return, MPs would be expected to fill out a SA102MP supplementary form setting out all the income, expenses and allowances relevant to their position.
In the article presenting his return, McDonnell claimed the Google tax deal had “created a lack of confidence in those politicians who manage our tax system”, adding that Google should have paid £200m a year, rather than the £130m 10-year settlement agreed with HMRC.
McDonnell said he released his tax return details “in the spirit of the ‘New Politics’”. He vowed to continue publishing his tax return every year while he seeks to become Chancellor. McDonnell said: “I think it is only fair that politicians set a good example. Especially those charged with or those who aspire to oversee the nations’ finances.”
If a politician who aspires to take charge of the tax system does not reveal how it works at the most basic, personal level, what chance does he have of unravelling the complexities that have been created by generations of his predecessors?
When AccountingWEB approached McDonnell’s press office for clarification we were threatened with legal action. Rather than taking on this community in this way, the episode suggests he might have benefited from some advice from a qualified professional before submitting his tax return to HMRC, or making it public.
McDonnell has published his full tax return without the parliamentary supplement on his website.
About Richard Hattersley
Richard is AccountingWEB's practice correspondent. If you have any comments or suggestions for us get in touch.