Billionaire Tory peer Michael Ashcroft avoided tax as non-dom
Billionaire Tory peer, Michael Ashcroft, has not paid income tax on his vast overseas earnings for over 10 years.
The revelation of his non-dom tax status, dragged out through the Freedom of Information Act, is an acute embarrassment for the Tories. It proves the party's deputy chairman, who is playing a pivotal role in the election campaign, was passing laws in the House of Lords while avoiding tax on most of his fortune.
It also adds to the impression in voters' minds of the Conservatives as a party for the very rich.
When he was awarded a peerage, 10 years ago, Lord Ashcroft gave a “clear and unequivocal assurance” that he would become a permanent UK resident.
William Hague, the former Tory leader who nominated Lord Ashcroft for a peerage, hailed that assurance as being worth “tens of millions” to the British Treasury, as the peer started paying UK taxes on his vast wealth.
But Lord Ashcroft has now disclosed that under a deal he brokered with the tax authorities he became a “long-term resident” of the UK, without being “domiciled” here. The distinction meant that he did not need to pay tax on the bulk of his fortune, which was made abroad, provided that he did not bring it into the country.
In a statement posted on his website yesterday, Lord Ashcroft said that during private negotiations with the UK tax authorities, “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. I agreed to this and finally took up my seat in the House of Lords in October 2000. Throughout the last 10 years, I have been declaring all my UK income to HM Revenue. My precise tax status, therefore, is that of a non-dom.”
He also published the text of the letter he wrote to Mr Hague in March 2000, in which he promised “to take up permanent residence” in the UK by the end of that calendar year. He added that he had given his backing to a plan by David Cameron which would prevent any peers or MPs from having non-dom status and that he plans to remain in the House of Lords “for many years to come”.
His statement was welcomed yesterday by Mr Cameron, who 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'.”
Lord Ashcroft was first nominated for a peerage by Mr Hague in 1999, but he was rejected by the Honours Scrutiny Committee because he was a tax exile. On his website he refers to Belize, in Central America, as his home.
For years he has resisted giving any information about his tax status, but relented yesterday knowing that the Cabinet Office was going to put out information later in the day.
Yesterday Jack Straw, the Justice Secretary, accused the Tories
of concealing the truth about their billionaire donor for a decade.
He said: “Instead of paying tax in the UK on all his earned income, Lord Ashcroft has been channelling millions into the Conservative Party.”
Labour and Liberal Democrat candidates have protested for years over the amount of Ashcroft money being lavished on marginal seats.
His companies have donated £5.2m to the party since 2001.