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Friday, 24 December, 1999, 07:05 GMT
Treasury stands by Timms

Stephen Timms Stephen Timms' stake is a potential embarrassment

The Treasury has denied one of its ministers is involved in a conflict of interest arising from his financial connections to an information technology company.

It seems extraordinary it would take so long to rearrange his financial affairs
Shadow Chancellor Francis Maude
Stephen Timms, financial secretary to the Treasury, is in the process of completing the transfer of a 3.7% stake he and his wife hold in the company, Ovum Ltd, into an arms-length trust.

His stake in the firm is a potential embarrassment because the Treasury is working on a change to the tax regime, known as IR35, which its critics claim will damage small IT consultancies while benefiting larger operations such as Ovum.

Mr Timms, 45, the Labour MP for East Ham, built up his stake in Ovum during the eight years he worked for the company before becoming an MP in 1994.

'Advanced stage'

It is understood he issued instructions as long ago as last March, when he was a social security minister, to divest himself of the shareholding, after seeking advice from the permanent secretary at the Department for Social Security.

The Treasury said the transfer process was "at an advanced stage of completion", and that as far as Mr Timms himself was concerned the shares had not been in his name since the end of last month.

A spokesman said Mr Timms had not received any dividends since being a minister, and would not benefit from the divestment of the shares.

He said Mr Timms had acted properly in seeking and acting on the advice of his then permanent secretary.

And he stressed Mr Timms did not have direct policy responsibility for IR35. "He is not the minister responsible for this particular policy issue," the spokesman said.

'New tax burden'

But Shadow Chancellor Francis Maude said the length of the transfer process put Mr Timms in an embarrassing position.

"It seems extraordinary that it would take so long to rearrange his financial affairs," Mr Maude told The Times.

The government has argued IR35 is necessary to stop widespread tax avoidance by professionals in the IT field.

It will prevent them from gaining a tax advantage by describing themselves as self-employed when in fact they are effectively on long-term contracts with particular companies.

The Opposition claims it will heap a damaging new tax burden on small companies.

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