Miliband’s spokesman called on the work and pensions secretary to retract his comment or face being known “for his dishonesty as well as his incompetence”. He said the senior Conservative was “bringing politics into disrepute” by repeating a lie.
The row broke out after Duncan Smith repeated claims that Miliband’s mother used a deed of variation on his father’s will that could have minimised inheritance tax.
The Labour leader has made it clear that no tax was avoided as a result of the arrangement.
But Duncan Smith told the BBC: “Labour … are completely at odds with each other and can’t seem to get their lines right, whether it’s on the health service or whether it’s on people who pay tax, let alone the man who runs the Labour party, who seems to have managed to have avoided tax as well.”
Having already denied that Miliband engaged in any tax avoidance, the Labour spokesman said: “Iain Duncan Smith brings politics into disrepute by repeating what is a straightforward lie. Ed Miliband has made sure all taxes due have been paid.
“Mr Duncan Smith should retract and apologise today. If he does not, he will be known for his dishonesty as well as his incompetence.”
The party also suggested the Conservative party was seeking to distract from the fact the government is under pressure over its tackling of tax avoidance.
“The people admitting to avoiding tax are Tory donors and the people refusing to act to tackle tax avoidance are Iain Duncan Smith, George Osborne and David Cameron,” a Labour spokesman said.
The government is under particular scrutiny over the its handling of tax evasion uncovered at HSBC’s Swiss private bank. Some of the bank’s legitimate clients have been found to be Tory donors.
Labour is demanding to know the extent to which the Treasury was aware that HMRC had decided to take a light-touch approach to seeking prosecutions for those suspected of tax evasion.
George Osborne, the chancellor, has avoided questions on the issue for a week. At the same time, the Conservatives have seized on newspaper reports about the tax affairs of Miliband and Ed Balls as a distraction, including whether the shadow chancellor kept tax receipts for a window cleaner.
Osborne spent Tuesday at a meeting of the European economic and financial affairs council discussing the Greek eurozone crisis.
In a letter to Osborne on Tuesday, the shadow chancellor asked whether the selective prosecutions by HM Revenue and Customs had been approved by the Treasury.
He pointed out that detailed information was passed to the coalition government in May 2010 about 1,100 HSBC clients allegedly guilty of tax evasion or avoidance and yet since then there had been just one prosecution.
Balls wrote: “In November 2012 a senior HMRC official told the Times that the government had adopted ‘a selective prosecution policy’ towards cases related to HSBC. Later that month HMRC told the public accounts committee that ‘another dozen’ criminal prosecutions were to follow. However, there have been none since.”
Balls questioned why David Gauke, the Treasury financial secretary, told the Commons that the government had been provided with the data on HSBC activities in Switzerland by French authorities “under very strict conditions” – when the French finance minister has since suggested otherwise.
Balls also asked Osborne to explain how Downing Street came to claim last week that “no government minister” had any knowledge of what happened at HSBC, yet the chief executive of HMRC, Lin Homer, has since said she believed ministers were in fact informed about these files after they were received.
This article was written by Rowena Mason , political correspondent, for theguardian.com on Wednesday 18th February 2015 14.29 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010