When you have already spent half a million pounds on rent, £300,000 on furniture and £2.3m paying your staff, an extra £8m on unexplained “administrative expenses” might seem to be stretching credulity, but that is what Tony Blair has told Her Majesty's Revenue and Customs, which as a consequence has received a rather smaller cheque from the former Prime Minister than it might have expected.
Records sent to Companies House reveal a substantial leap in Tony Blair's income in the year ending March 2011, but such a rise has not been passed on to the taxman. One of his many companies and partnerships, Windrush Ventures, declared a turnover of £12m, up from £8.5m the year before. But Mr Blair's accounts claim that just over £1m of this is profit, the rest written off as "administrative expenses", with no further explanation given for some £7.74m of the total. With the corporate tax rate at 28 per cent, this left Mr Blair with a tax liability of only £315,000.
Windrush Ventures is one of at least 12 companies and partnerships controlled by Mr Blair, who is thought to have channelled tens of millions of pounds through his various firms since leaving Downing Street in June 2007.
There is no suggestion that Mr Blair's tax affairs are in any way illegal. His accounts are audited by KPMG, one of the world's biggest accountancy firms, but their details are kept secret using a complex structure of companies and partnerships.
The arrangement is eerily similar to those which so angered him when he campaigned for the Labour leadership in 1994. "We must tackle abuse of the tax system," Mr Blair said then. "For those who can employ the right accountants, the tax system is a haven of scams, perks, City deals and profits.
"We should reward people who work hard and do well. We should not make our tax rules a playground for revenue avoiders and tax abusers who pay little or nothing while others pay more than their share." A City accountant from one of the "big four" auditing firms, who did not want to be named, said: "It is mystifying why the administrative expenses should be so large. £8m worth of expenses would be very hard to explain – perhaps that's why they remain unexplained.
"Given that money is all offset against tax, I would think more explanation would be necessary."
The revelations have drawn criticism from within Mr Blair's party. The Labour MP John Mann, who was highly vocal during the MPs expenses scandal, said: "All MPs and ex-MPs should pay their full tax and not use any tax avoidance schemes of any kind. The principle is absolute, particularly for politicians and former politicians."
Paul Flynn MP, an outspoken critic of Mr Blair, said: "He's doing no worse than what was expected of him.
"He's a shallow politician who manipulated his party and his country for his own ends."
A spokesman for Mr Blair refused to comment on the accounts, but said: "The Windrush accounts are prepared in accordance with the relevant legal, accounting and regulatory guidance. Tony Blair continues to be a UK taxpayer on all of his income and all of his companies are UK registered for tax purposes."
Mr Blair has come in for regular criticism for his extensive earnings and business activities since leaving office. He is on a £2.5m annual retainer with the American investment bank JP Morgan, a £500,000 annual salary advising the finance company Zurich, and earns at least £2m a year from his commercial consultancy Tony Blair Associates, which advises foreign governments including Kuwait and Kazakhstan.
He also charges up to £100,000 per speech on the after-dinner circuit, including one to a conference of toilet roll manufacturers in Florida, on top of the pension he receives as a former prime minister and taxpayer-funded armed police protection.
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