Boris Johnson and Ken Livingstone in on-air tax row

Ken Livingston and Boris Johnson clash over taxes. Courtesy LBC

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London mayoral rivals Boris Johnson and Ken Livingstone have clashed over their tax affairs in an on-air row.

Mr Livingstone says claims he avoided some tax by being paid via a company were "smears". His rival had used "the same arrangement" when an MP, he said.

In an LBC radio debate, Mr Johnson called him "a bare-faced liar" adding: "I always paid full income tax."

Mr Livingstone later closed a website attacking his rival, saying the contest had become "dark and negative".

The clash followed weeks of claims Mr Livingstone was paid via a company, Silveta Ltd, so he was only liable for corporation tax at 20%, rather than paying full income tax.

The issue has been raised several times at Prime Minister's Questions by Conservative MPs keen to support Mr Johnson's re-election bid on 3 May.

'Exact same position'

Mr Livingstone said his arrangement was not a "tax avoidance thing" and to suggest otherwise was a "smear", adding: "I pay my income tax on everything I get."

Start Quote

I have never used a company to minimise my tax obligations.”

End Quote Boris Johnson London mayor

But he said he had to pay three members of staff and "you can't do that just on some casual arrangement": "Nobody in Britain employs people and pays income tax on the money they pay them."

He said he and Mr Johnson had been in "the exact same position", as Mr Johnson had a TV production company called Finland Station when he was an MP.

"We both had media earnings, we both put them through a company. You don't avoid tax on that, you have to pay tax on the money you take out."

Mr Johnson, the incumbent mayor who unseated Labour's Mr Livingstone in 2008, interrupted, saying: "No! That's not true, that's not true... the guy's a bare-faced liar."

He said he was "briefly" a director of the company but said it was not right to say he had used it to avoid paying income tax: "I have never used a company to minimise my tax obligations."

'Heat not light'

Lib Dem candidate Brian Paddick told Mr Livingstone he had "chosen a way of avoiding paying high levels of tax" and said Mr Johnson would "personally benefit" from the government's reduction in the top rate of tax.

He said the debate had contained "a lot of heat but not much light".

Start Quote

I suggest to Boris Johnson therefore that he and I work together to raise the tone and spirit of this election”

End Quote Ken Livingstone

Green Party candidate Jenny Jones added: "Just for the record, I have one salary and I happily pay tax on it - it's a social thing."

Following the radio debate, Mr Johnson is reported to have sworn at his Labour rival in a lift - a source close to the mayor told the BBC he had been justifiably angry because of "nasty, personal and vindictive lies".

Mr Johnson is understood to have privately explained his tax arrangements to Mr Livingstone three weeks ago and asked him to stop making the claims.

Later, in a blog entry, Mr Livingstone said he was closing his attack website and urged Mr Johnson to do the same.

"Those of us who are leading candidates in this election have a duty to the electorate to rein it in and direct it to the issues at stake for Londoners," he wrote.

"We must take account of Londoners - the people we are trying to talk to. We need to afford them the respect to have a decent discussion about how we address their concerns, their quality of life, the squeeze on their living standards, the future direction of their neighbourhoods and home city.

"I suggest to Boris Johnson therefore that he and I work together to raise the tone and spirit of this election."

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