Labour's 'tax dodge' on sale of HQ saved £210,000 stamp duty

The Labour Party has been accused of depriving taxpayers of hundreds of thousands of pounds in stamp duty in the sale of its London headquarters, despite the Chancellor's clampdown on stamp duty avoidance schemes in his mini-budget last week.

The Independent on Sunday has learnt that Labour sold its Westminster headquarters this year using a specially created company. The device, which Labour insists is a normal commercial transaction, cost the Treasury about £210,000 in lost stamp duty.

Had the property been sold on its own, the buyer would have had to pay £240,000 in stamp duty but by selling the company which owned it, the purchaser would have to pay only £30,000 - 0.5 per cent in stamp duty instead of 4 per cent.

Opposition politicians say the transaction contradicts Gordon Brown's stated aim to stop stamp- duty avoidance schemes. Last week, the Chancellor announced "a package of measures aimed at ensuring ... that all individuals and companies contribute their fair share to the provision of public services".

Labour sold the property for £6m, enabling it to pay off some of its debts at the end of August and make a £500,000 profit. Labour sold a company it created to hold the property, 16 OQS Ltd, to Executive Offices Group, which provides serviced offices to companies and business people visiting the UK who require offices, secretaries and IT support of a high standard. The company, owned by Morgan Stanley Real Estate Fund, is combining the Old Queen Street building with an adjoining building on 5 Birdcage Walk.There is no implication that Executive Offices Group has acted improperly in any way.

Accounts of 16 OQS Ltd show that the company had substantial "tax losses" before it was sold. These could, in theory, be claimed back.

The legal owner of Labour's headquarters is still, according to the Land Registry, Labour Party Properties (Two) Ltd, because the registration has not been changed. But Labour sources confirmed that the name of the company was changed to 16 OQS Ltd before the property was sold. A Labour figure said this was done because the party did not want to sell a company with the name Labour in it.

The Westminster headquarters were regarded as too small and cramped for the party's needs. Security experts are believed to have said it was not sufficiently secure for the Prime Minister to work there during the general election campaign. Before the last election, the party moved to Victoria Street.

Lord Oakeshott of Seagrove Bay, a Liberal Democrat Treasury spokesman, yesterday asked Mr Brown to investigate. "For the governing party to use a device like this is the unacceptable face of tax avoidance," he said. "The Labour Party has deprived taxpayers of £210,000 in stamp duty."

A Labour Party spokesperson said: "The sale of 16 Old Queen Street was conducted entirely appropriately and on usual commercial terms; any suggestion otherwise is not only grossly misleading but absolutely untrue."