Richard Tice is facing calls to explain his tax affairs after a report alleged that his property company used a loophole in the UK’s real estate investment trust regime to avoid nearly £600,000 in corporation tax between 2018 and 2021, claims the Reform UK deputy leader says reflect entirely legitimate tax planning.

The Sunday Times reported that Quidnet REIT Ltd, the property investment company run by Tice, paid no corporation tax on multi-million-pound profits during that period after entering the REIT regime and benefiting from a three-year grace period, despite allegedly never meeting a key requirement to stop being a closely held company. The newspaper’s calculation of the tax saving could not immediately be independently verified.

Tice, the MP for Boston and Skegness and Reform’s spokesperson for business, trade and energy, said he had complied with all relevant rules and dismissed the coverage as a politically motivated attack.

Under UK rules, real estate investment trusts do not pay corporation tax on qualifying property income and gains, provided they meet conditions set by HM Revenue and Customs, including a requirement that they are not controlled by five or fewer participators after an initial start-up period. They must also distribute most of their property income to shareholders, who are then taxed individually.

Quidnet, which was listed on The International Stock Exchange in Guernsey in 2017, entered the REIT regime in 2018. Its 2021 audited accounts state that the company was in breach of one REIT rule and that correspondence from HMRC confirmed it ceased to be a REIT on 9 August 2021. From the following day, the company became subject to normal corporation tax on its taxable profits.

The Sunday Times said the company had remained effectively under Tice’s control through a concentrated ownership structure involving related entities, meaning it never satisfied the “non-close” condition that is central to the REIT regime. The report also alleged that dividends were routed through six entities linked to Tice, including an offshore trust and several dormant companies, with four of those entities paying no tax on the dividends they received.

There is no suggestion in the report that Tice acted illegally. The issue is whether the arrangements amounted to aggressive but lawful tax avoidance by exploiting a grace period designed to allow new REITs time to broaden their shareholder base.

In a statement to The Sunday Times, Tice defended the arrangements and said voters should be “reassured” to have a “successful businessman who knows how to make money for shareholders” overseeing Reform’s economic brief.

He later wrote on X: “I must thank the Sunday Times and Dan Neidle for their detailed article confirming that my tax planning was entirely legitimate. The libellous headline is the work of a desperate Establishment trying to smear me and Reform.”

Labour seized on the report, with party chair Anna Turley calling on Tice to explain the arrangements to both the public and HMRC.

“Richard Tice urgently needs to explain himself — to the British public and to HMRC,” Turley said. “Why has he gone to such extreme lengths to avoid paying his taxes, and has all the tax he owes been paid?

“If these claims are true, it looks like Reform’s deputy leader is just in it for himself — not for working people who couldn’t even dream of earning the kind of money he appears to have hidden from the taxman. Nigel Farage needs to decide whether that’s what he wants Reform to stand for.”

The row is likely to intensify scrutiny of Reform’s leadership, not least because Tice and Nigel Farage have previously attacked other politicians over their tax affairs. Opponents are framing the latest allegations as evidence of hypocrisy, while supporters argue that taxpayers are entitled to arrange their affairs within the law and that any fault lies with the rules rather than those who use them.

Quidnet’s published accounts show that after losing REIT status in August 2021 it began recording corporation tax liabilities in the ordinary way. The company has said in more recent filings that it hopes to re-enter the REIT regime in future.

Neither HMRC nor Quidnet had announced any enforcement action on Sunday.