THE leader of Kirklees Council has strongly defended himself after his tax arrangements came under scrutiny.
Mehboob Khan was forced to respond after a newspaper questioned him about tens of thousands of pounds paid into his personal consultancy.
He receives allowances for his work as Kirklees Council leader and for key roles with West Yorkshire Fire Authority, the Local Government Association and the local health trust.
Clr Khan – a 40 per cent higher-rate taxpayer thanks to the number of allowances he receives for his public sector roles – is also said to have obtained more than £48,000 from the Audit Commission.
This amount was paid into his Excol Consultancy, for which Clr Khan has now revealed the last three years trading profit and tax information.
In 2009/10, for example, more than £1,500 was paid by him in tax on more than £5,000 of profits.
This reduced to £1,068 for 2010/11 and to £19 in 2011/12 – reflecting the scaling back of his private duties since becoming the full-time council leader.
In recent weeks tax avoidance has become a major political issue with Starbucks, Google and Amazon having to defend themselves regarding their arrangements.
Yesterday, Robert Oxley, campaign manager of the TaxPayers’ Alliance said: “Clr Khan needs to be open and transparent about both his work and pay from the Audit Commission which has been funded by taxpayers.
“Any suggestion that he has avoided paying tax on payments for work in the public sector will go down very poorly with hard-pressed families who don’t have the option to exploit Britain’s complex and cumbersome tax code.”
Clr Khan said: “The accounts for Excol are registered with Companies House and are available for public inspection by anyone at any time.
“The income I have received, and the tax subsequently paid on it, is part of an open and transparent arrangement.
“It is common practice for the Audit Commission to engage people with specific skills for particular consultancy projects.
“The Audit Commission does not deduct income tax at source from contractors, so it is the responsibility of contractors to pay all due taxation.
“Payments went through Excol so that the correct amount of tax was paid on that company’s expenditure.
“There are no special circumstances or arrangements – my situation is reflected by millions of other people who have companies for running a private business.
“My private work has been significantly scaled back since I became the full-time council leader, but it’s vital to stress that I have done nothing different to many people around the country, including other elected representatives.
“Full corporation tax has been paid and, last year, the difference in tax paid through Excol and being deducted at source was less than £20.
“That amount was easily outweighed by my personal charitable giving of £4,000.
“All allowances from the council, PCT and Fire Authority were tax-deducted at source and not paid into Excol. The income from private work was received as gross and the profit was taxed after deductions for costs and overheads.
“This is entirely legitimate and is based on advice I took from, among others, the local tax office
“No payment received by Excol, either from the period before I was full-time council leader or since, has represented any kind of conflict of interests.
“My personal arrangements are not unusual, they are perfectly transparent through Companies House and any interests I have are reflected in the members’ register of interests held by the council.”