Danny Alexander & the Telegraph: not paying something that’s not due is not a story

So here are the facts as we know them about Danny Alexander and the Daily Telegraph‘s allegations:

• In 1999 – 2006 Danny Alexander and his wife owned one property (in London)
• In 2005 he became an MP
• In 2006 he bought a house in his constituency. That house has been designated his main home for Parliamentary expense purposes.
• In 2007 they sold their property in London and bought another one. They haven’t paid capital gains tax on the sale.

Capital Gains Tax rules says that you don’t have to pay Capital Gains Tax when you sell  your main home. If that was all they said then they’d be an issue because it’d look like at the point of sale he was saying one home was his main home for tax purposes and another was his main home for expense purposes. And on those grounds Lib Dems should criticise him, because that’s what many of us have criticised other MPs for doing.

But – and it’s a whopping big but – it’s not actually the truth.

That’s because, as Mike Smithson has pointed out, Capital Gains Tax rules say that if the property was your main home up to three years before you sold it, you don’t pay the tax. Three years before 2007 takes us to 2004. In 2004 there was just the one property owned and he wasn’t an MP.

So, as Mike puts it Danny Alexander “essentially is being accused of not paying a tax when no tax was due”.

And so my confusion. Front page splash story that someone doesn’t pay tax which the taxman says they don’t have to pay is not exactly a scandal. Especially when there’s not being any careful making of arrangements to minimise tax such as switching round which home is defined as which or using front companies or using overseas arrangements of anything like that. Even the Daily Telegraph says, “There is no suggestion that Mr Alexander has broken any tax laws”.

The Daily Telegraph does try to dress this story up as being about a “loophole” being used. But it’s a bit like attacking someone for not paying income tax on all their income because they’ve used the shocking loophole of claiming their personal allowance. I mean you could have decided to ignore the tax rules, skip over a significant part of how the system operates and just paid up some extra income tax couldn’t you?

Danny Alexander’s case is simple, clear and straightforward arrangement: you own a home, you sell it, the taxman says “no capital gains tax to pay” and so you don’t pay any.

(If you feel so moved, insert comments about the tax affairs of the owners of the Telegraph here; if such a straightforward situation as Danny Alexander’s is deemed worthy of criticism, what does that mean about the tax arrangements of the Barclay brothers?).

Of course, the Telegraph has a bit of form on page 1 splashes that turn out to be very different. During the election they ran a big page 1 story about Nick Clegg’s financial affairs. As I blogged then:

Benedict Brogan has taken to the Telegraph blog to defend today’s coverage and comes up with this:

“The likelihood must be that it is evidence of disorganisation, nothing more, but don’t know that yet.”

Even if you agree with the first part of the sentence, that’s a remarkably weak excuse for a huge front page splash of a story. Oh we don’t know. And there’s most likely nothing wrong. So we’ll just splash it all over page one.

Ah bless.

Decent Telegraph journalists (and there are many) will be wondering about why they’ve twice ended up with their paper running big front page stories which fit a particular political agenda and which don’t stand up to scrutiny. And nervous Telegraph journalists should worry about the drip drip damage to their paper’s reputation. All newspapers face a tough future working out how to get the public to pay for their output in some form or other; repeatedly damaging people’s trust in your ability to get stories right is no way to secure your future.