Tax row peer 'did nothing wrong'

Lord Levy says he is the victim of a dirty tricks campaign

Labour has dismissed newspaper allegations about the tax details of one of its main fundraisers, multi-millionaire ex-music impresario Lord Levy.

The Sunday Times says that during the financial year 1998-99 the peer was a basic rate taxpayer who paid about £5,000 to the Inland Revenue - the same as someone earning the national average salary of £21,000.

I have absolutely nothing to hide

Lord Levy

But the peer says he is the victim of a dirty tricks campaign and the details must have been obtained "unlawfully".

Labour's Lords leader, Baroness Jay, said Lord Levy "did nothing that was wrong", and she queried the manner in which the tax details were obtained.

She is a friend of the peer and rejected suggestions that he was an unelected, unaccountable foreign policy adviser to Labour.

Baroness Jay: Peer did "nothing that was wrong"

He is a leading patron of charities in Israel and she said his political connections in the Middle East were "valued very highly" by Prime Minister Tony Blair.

An attempt to prevent The Sunday Times revealing Lord Levy's £5,000 tax bill was halted when the High Court ruled against him at a hearing on Friday.

The judge, Mr Justice Toulson, said there was a clear public interest in revealing Lord Levy's tax affairs because his party had repeatedly condemned tax avoidance schemes.

Lord Levy has fiercely denied any involvement in tax avoidance.

"I have absolutely nothing to hide," he told BBC Radio 4's The World this Weekend.

He said he had paid more than £2.5m in taxes in 1988 when he sold his first business.

"I paid the tax, I did not take a year out, I did not leave the country like others, I paid the tax and that £2.5m in '88 is worth many, many more millions today," he said.

Asked to explain why he paid only £5,000 in tax last year, he said: "I have most of my capital invested in two very, very nice residences, which don't bring me any income.

"I have always earned other fees, directors' fees, under PAYE. I started a second business, I sold that in 1997 and then for the next two years I basically lived off capital."

Lord Levy said: "The Sunday Times happened to pick on a year when the tax position was totally, totally out of focus."

Apart from a holiday home in Israel and a small bank account, which was covered by UK tax laws, he did not maintain off-shore assets, he added.

Failed injunction bid

He confirmed that he had applied, unsuccessfully, for an injunction to restrain publication of this information.

"I was advised by my legal advisers that there was a very important principle at stake here, because of the behaviour of the press and the fact that they were able to obtain, in unquestionably a wrongful manner, my tax records," he said.

The government has pledged to abolish tax loopholes

The peer has said he will report the Sunday Times to the Press Complaints Committee.

The Conservative Party said the matter should be looked into by Lord Neill's Committee on Standards in Public Life.

Shadow foreign secretary Francis Maude said he was sure Lord Levy's tax affairs were "perfectly legal" but added that many people on modest incomes would raise "an ironic eyebrow" since Labour had raised their tax bills.

The committee responded that it did not deal with tax issues.