'I don't pay full tax' – Tory funder Ashcroft comes clean after a decade

Published on Monday 1 March 2010 21:54

THE man who is believed to have bankrolled the Conservatives for decades has finally admitted he is not paying full taxes in the UK.

• Lord Ashcroft has donated more than 5 million to the Conservative Party since 2000. Picture: Getty

After a decade of avoiding questions about his residential status in Britain, Lord Ashcroft yesterday stated that he was a non-dom.

But the billionaire businessman came clean on his status only because of a freedom of information request into a "solemn undertaking" he signed to become a permanent resident in the UK when he was made a member of the House of Lords.

He had originally been rejected as a peer when put forward by the Tories because of doubts over his tax status.

Lord Ashcroft, who has ploughed more than 5 million mostly into marginal constituencies in the past ten years, claimed yesterday that the undertaking was for him to be a long-term resident and that he had not broken his promise.

But he promised to become a permanent resident and pay full tax if the Conservatives win the election.

"In subsequent dialogue with the government, it was officially confirmed that the interpretation in the first undertaking of the words 'permanent residence' was to be that of 'a long-term resident' of the UK," he said in a statement.

"I agreed to this and finally took up my seat in the House of Lords in October 2000.

"Throughout the last ten years, I have been declaring all my UK income to HM Revenue (sic]. My precise tax status therefore is that of a 'non-dom'."

His admission has reopened the debate into who should fund political parties and be active members of the House of Lords.

Conservative leader David Cameron welcomed Lord Ashcroft's statement and said he would prioritise legislation to force members of the House of Lords to pay full tax in the UK.

He said: "I am delighted that Lord Ashcroft has come out and said, 'Right, you want to know the undertakings I gave: here they are; you want to know my tax status: here it is'.

"As a result, we can now get on with the election campaign… that question that people wanted answered has now been answered."

But Mr Cameron came under fire from opponents, who accused the Tories of trying to "buy an election". Justice Secretary Jack Straw said Lord Ashcroft's surprise announcement – after years of speculation – meant he had failed to keep his promise.

He accused senior Conservatives of "concealing the truth" for a decade.

Mr Straw said David Cameron was trying to use Lord Ashcroft's money to "buy the election", while Liberal Democrat leader Nick Clegg said it was "wholly wrong" for a non-dom to fund a campaign.

Meanwhile, Home Secretary Alan Johnson said the failure to pay taxes was "unpatriotic".

However, it emerged that Labour has eight non-dom major donors, including Lord Paul, who has just been made a privy councillor.

But Lord Paul said that it was "really ridiculous" to compare his case with that of Lord Ashcroft, as he had always been open about his tax status.

SNP constitutional affairs spokesman Pete Wishart, MP, claimed that Lord Ashcroft's revelation flew in the face of Tory leader David Cameron's call for anyone in the Lords to be "resident and domiciled".

He said: "It says a great deal that it has taken years to wring this admission out of the Tories. They are obviously, quite rightly, ashamed of this revelation, which directly contradicts their public position.

"The Conservatives can pretend to be a progressive party of change, but this admission shows they are just the same old Tories: out of touch and out of favour."

However, the SNP also faced questions over donations received in the past from Sir Sean Connery, believed to be a tax exile. The party said it did not know the actor's tax status, but had not received any donations from him for some time. It also pointed out that Sir Sean was not a member of the House of Lords and had not signed a pledge to become a permanent resident.

Backer whose cash support could pay off

SINCE he was made a peer in 2000, Lord Ashcroft has donated more than 5 million to Conservative Party coffers.

On top of this he has donated 111,726.09 to individuals, mainly candidates.

However, his importance to the party goes back much further – the 63-year-old businessman is believed to have been bankrolling the party since the 1980s.

His strategy changed just prior to the 2005 general election when he started to focus his funding on marginal seats. While this had only a limited effect in 2005, the strategy has since continued.

Many believe that the result has been to give the Tories a massive boost in key target seats, which means they could still win a majority at the general election despite a recent dip in the polls.

Most of the money has gone to seats in the South of England and the Midlands.

Local parties have had to give presentations on why they should receive his support.

Earlier yesterday the Conservatives claimed that none of money had gone to Scotland. However, it later emerged that Lord Ashcroft donated 14,000 to Edinburgh Pentlands – now Edinburgh South West – prior to the 2005 election. No money has come to Scotland since then.

PERMANENT RESIDENCE OUTWITH UK

A NON-DOM is a citizen who is registered as living abroad but does not pay full UK tax on his or her earnings.

Treasury rules require a non-dom to pay 30,000 a year in tax, a fraction of the earnings the billionaire Lord Ashcroft is believed to receive each year.

The status allows British citizens to put their wealth into tax havens to protect them from paying much larger sums to Her Majesty's Revenue and Customs (HMRC).

In terms of deciding whether somebody is domiciled in the UK or not, HMRC has to decide if their permanent residence is in the UK. Crucially, it had been believed that Lord Ashcroft had promised to make his permanent address the UK when he became a peer. However, yesterday he said that he promised to make it his long-term, but not permanent residence.

Related articles:

David Maddox: Long-term mistrust of politicians risks turning permanent