Alex Salmond defends limited company set-up

The tax affairs of Alex Salmond MP have been called into question by a Sunday newspaper after it disclosed that he uses a Personal Service Company.

Set up last February, the company has Mr Salmond as its sole shareholder, who “channelled” earnings through it of £126,000 from a total projected income of £211,000, The Sunday Telegraph reported.

“The only reason to do this is to save tax,” an unnamed tax adviser told the paper. “There is nothing Mr Salmond is getting commercial protection from. Why else would you do it?”

The adviser’s comment about ‘protection’ seems to relate to the limited liability status that a PSC can offer, but it is the structure’s potential tax saving that is behind the paper’s rebuke.

In fact, the ‘special report’ by Sunday Telegraph reporter Andrew Gilligan estimates a £35,000 saving from Mr Salmond choosing to – legally – set up a limited company.

It has been set up to “separate my parliamentary income from my income from publishing and journalism and for no purpose of tax avoidance,” Mr Salmond was quoted as countering.

He also told the paper that all the expenses he set against tax via the company – The Chronicles of Deer Ltd – were “entirely legitimate and necessary”. His PSC also pays VAT.

But the broadsheet said that while Mr Salmond pays tax and NI “in the normal way” on his £85,000 income from being an MP and MSP, he “now faces a charge of hypocrisy.”

Referring to last year’s general election manifesto, the ‘special report’ elaborates by stating that Scotland’s former first minister vowed to “crackdown on tax avoidance”.

Mr Salmond also campaigned on a pledge to ensure the wealthy should not be able to avoid paying income tax on large chunks of their earnings.

The article subsequently says the ex-SNP leader is inside the top 0.2 per cent of all Scotland’s earners. The piece also says that if he was taxed as an individual, Mr Salmond would pay £88,500 in tax and NI (not the £53,500 he is expected to pay).

“[I] have no intention of paying less tax,” Mr Salmond reportedly said in response to the paper. “That is not the purpose of the company and indeed I will make sure I do not.”