David Cameron tells Ed Miliband: Repay '£700000 of tax avoided' on John Mills ... - Telegraph.co.uk

Describing the donation as "tax efficient", he said the form of the donation was agreed with figures in Labour's fund-raising team.

Referring to the donation, Mr Cameron told MPs: "Then what do we hear this week from the Labour party that they are give tax avoidance advice to their donors."

He added: "That is what they have been doing - £700,000 of tax avoided because of what Labour advised their donor to do.

"He asked me to calm down but frankly I can't calm down because this is money that ought to be going into our health service, it ought to be going into education, it ought to be going into training young people. So I want to challenge him – will you give the money back? Yes or no? It is very simple."

News of the donation prompted Mr Miliband to be accused by the Tories of "rank hypocrisy" because of the Labour leader's recent outspoken attacks on tax avoidance by big multinational companies.

Accountants spoken to by The Daily Telegraph have suggested that if Mr Mills had chosen to make the donation in a in a single cash dividend rather than shares, he would have had to pay dividend tax of 30.5 per cent, or £724,710, to the Exchequer.

Mr Cameron then quoted back the Labour leader's remarks in April when Mr Miliband said that "tax avoidance is a terrible thing".

Mr Cameron added that Mr Miliband added that "if everyone approaches their tax affairs as some of these companies have approached their tax affairs we would not have a health service, we would not have a health system".

Mr Cameron added: "That is the shameful state of the Labour party today."

Asked a series of questions about the donation, based on the Prime Minister's comments in the House of Commmons, a Labour spokesman: "As we have consistently made clear: the Labour Party is paying tax on this donation.

"What is also clear is that Christopher Hope and The Daily Telegraph are no longer interested in the truth on this story but in pursuing a propaganda campaign."

Telegraph's questions to Labour, emailed at 3.24pm, Wednesday 12th June:

Please can I ask:

Will Labour be repaying any tax avoided on the donation from John Mills? If not why not?

Does Labour accept that agreeing "tax efficient" donations starves the Government of money for vital public services?

Why is tax avoidance OK for Labour but not OK for some other companies?

Labour's response, emailed at 4.33pm, Wednesday 12th June:

As we have consistently made clear: the Labour Party is paying tax on this donation. What is also clear is that Christopher Hope and The Daily Telegraph are no longer interested in the truth on this story but in pursuing a propaganda campaign.