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Ashcroft comes clean over non-dom tax status

By Gary Gibbon

Updated on 01 March 2010

Ten years after becoming a lord and after giving £5m to the Tories, Michael Ashcroft finally comes clean about his tax status, admitting he is a "non-dom". Gary Gibbon reports.

Conservative donor Lord Ashcroft (credit:Getty Images)

The Conservative peer Lord Ashcroft, who is one of the party's biggest donors, has finally revealed his tax status.

That means the billionaire businessman has avoided paying any British tax on his international earnings. His statement appears to indicate that he will start doing so "soon".

According to one estimate, Michael Ashcroft has saved £180m in UK taxes by not being a full UK taxpayer.

Ever since he became a lord 10 years ago, Ashcroft's tax status has been in question. He got his peerage 10 years ago after a "clear and unequivocal" assurance that he would take up permanent residence in the UK.

He has given some £5m to the Tories, targeted on marginal seats, and he once boasted that he might be the biggest party donor of all time.

'Candid about his tax status'
Conservative shadow education spokesman Michael Gove told Channel 4 News he did not believe Lord Ashcroft's tax status could prejudice a fair election.

He pointed out that a number of people had given money to other political parties who were also reported to be non-domiciled.

"There are lots of people who give money to the Labour party whom it is reported are non-domiciled."

And he stressed, "to correct a point of fact", that "Lord Ashcroft is not the major donor to the Conservative party… He's given less than 1 per cent, I think, this year."

He went on: "Lord Ashcroft will be conforming with the requirements of the law – a law that David Cameron pushed for and a law change that David Cameron has secured.

“And Lord Ashcroft has been, off his own bat – all credit to him – more candid about his tax status than lots of people who support other political parties.

"We have as a principle in this country absolute respect for the privacy of the relationship between any individual and HMRC.

"Lord Ashcroft has voluntarily chosen to disclose his position. There are others on whom the spotlight will now fall in the public realm."

'Issue is not about other non-doms'
Justice Secretary Jack Straw told Jon Snow that the law on non-dom donations to political parties had been changed – the law in question would come into force next year.

He conceded that the law he introduced in 1999, requiring donations to political parties to come from UK-registered voters, should have been strengthened earlier.

"Meanwhile," he went on "the issue is not about any other non-doms who lawfully are making donations.

"The issue, very specifically… is about unique undertakings which Lord Ashcroft had to give because of his unique position of having been turned down for a peerage, which has not affected anybody else."

The justice secretary said that it was the fact that Lord Ashcroft was right at the heart of the Conservative party’s overall election strategy.

"This is not an issue of legality, it’s an issue of propriety."

Reality behind the wall of silence
Political editor Gary Gibbon writes: "It's the reality just about everyone thought lurked behind the wall of silence on this issue which Lord Ashcroft had effectively decreed.

"It had put Tories, especially David Cameron, in the position of looking weak and cowed by the man who rejoices in his Bond villain image and who bankrolled the party through some lean years and now masterminds the marginals fight as party deputy chairman.

"Lord Ashcroft's donations tower over the Labour non-dom donations, he is a much bigger political figure, shaping the next election result, or if you believe some Labour critics, 'buying it'.

"So this is a bigger story than the Tories, trying to rally the party and regain a wider poll lead, might like."

Complying with election law
Following a campaign by Labour MP Gordon Prentice, the Cabinet Office was ordered by the information commissioner on 1 February to reveal the undertaking Ashcroft made when he became a peer within 35 days.

According to election rules, individuals have to be registered to vote in this country but do not need to pay UK tax in order to donate to a political party.

The Electoral Commission is currently investigating whether donations to the Conservative party by Lord Ashcroft's company, Bearwood Corporate Services, comply with UK election law. More than £5m has been donated through the company since February 2003.

A spokesperson could not give any indication today of when the watchdog would conclude the formal investigation, which was started a year ago.

At the weekend, Lib Dem Home Affairs spokesperson Chris Huhne wrote to the election watchdog to urge them to report on their findings before the general election, which is widely expected to be held on 6 May.

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