Labour MP Margaret Hodge challenged over family firm’s tax

Conservative MP Pritti Patel has written to Mrs Hodge demanding she re-assess her position as Chair and explain why the steel trading company founded by her father and run by her brother has paid almost no tax in the UK.

In the letter, seen by The Daily Telegraph, Ms Patel says she has “serious concerns over [Mrs Hodge’s] position” and that Mrs Hodge had a duty to “both meet, and be seen to meet, the standards to which [she held] others to account”.

In recent weeks, Mrs Hodge has been one of the fiercest critics of tax avoidance practices employed by large multinationals such as Starbucks, Google and Amazon, reports The Telegraph.

On Monday, London Mayor Boris Johnson added his voice to the debate, calling plans for a mansion tax absurd when global firms such as Google were getting away with paying no tax.
Last week, Mrs Hodge accused Amazon, Google and Starbucks of being “immoral” by funnelling profits out of the UK.

But according to Ms Patel, Stemcor has also been engaging in a series of controversial tax avoidance measures in the UK, including “transfer pricing”.

“Given the very serious accusation you made of Starbucks,” writes Ms Patel “that they were ‘exporting profits to minimise tax’,” it raises serious concerns that “a seemingly similar approach [has been] taken by Stemcor.”

Stemcor, where Mrs Hodge declares a “registrable shareholding” was founded by Mrs Hodge’s father Hans Oppenheimer. It employs 2,000 people in 45 countries with a turnover of more than £6.3bn. In the UK, where Stemcor is based, the company generated £2.1bn of sales with £65.2m of profit in the year ending December 2011.
It paid just £157,000 in tax to the Exchequer last year, equating to just 0.01pc of the revenues it booked. Stemcor’s UK tax contribution makes up only 2.7pc of the tax it pays globally, despite generating about one-third of its revenues in Britain.
In the letter to Mrs Hodge, Ms Patel writes: “As Chair of the PAC, you have to be able to hold people to account for their decisions and judgement. My primary concern is that without answers to these questions, you would not be able to carry out your role. There is legitimate concern that your leadership might detract from the objectivity of the inquiry [into Starbucks, Amazon and Google] and could undermine both the authority and integrity of the Committee.”

On Monday, Mrs Hodge said: “I have never played any role in the running of the company, or in any financial decisions. As a responsible shareholder, I have regularly sought, and received, assurances that Stemcor pays its fair share of taxes in the UK.”
She added her direct holding was 1.26pc while shares are held in trust for her family, children and grandchildren.

Separately, broadcaster BSkyB was reported to have avoided £40m a year in tax through the use of loophole involving the publication of a magazine. Until last year BSkyB ascribed a small element of TV subscription fees to payment for its Sky magazine, which was VAT exempt. The company stopped publishing the magazine shortly after the loophole was closed.

Sky said in a statement: “The TV listing magazine that Sky used to publish was, in common with all newspapers and magazines, zero-rated for VAT. Sky directly contributes more than £1bn a year in tax – a total of 1.4pc of all taxes paid by the 100 largest FTSE companies. We’re proud of the significant – and growing – contribution we make to the British economy.”