Labour party finances

I believe that the Labour party accounts are due to be signed off soon and that there are fears amongst the Labour party that their accountants may feel that they have to "qualify" the accounts. Any qualification would, I presume, be a "going concern" one.

A "going-concern" qualification is an explanatory paragraph that states that the independent auditors have substantial doubts about the ability of the entity being audited to continue to meet its obligations as and when they fall due over the next 12 months.

I have blogged before, querying how long loans to the Labour party can be extended, often with the interest rolled up, before the loans can be deemed to have in fact been donations. More interestingly, the benefits of loaning or donating money to the Labour party are diminishing as the Labour party looks more and more like being on its way out of power within the next 23 months. So will the wealthy individuals who have large loans outstanding to the Labour party now decide that they would like that money back and if so how will the Labour party pay it back? If they cannot pay it back then they are "trading insolvent". Under UK law, if a company is trading insolvent, then the company directors may be liable for wrongful trading. If the director knew or should have known that the company could not avoid becoming insolvent but still continues to trade then he or she must cease to trade immediately and take steps to liquidate the company. Under UK law, trading while insolvent can trigger several provisions under the Insolvency Act 1986 which may have the effect of making directors of a company personally liable to contribute to the assets of a company.

The coming months may be rather interesting ...