Taken from that well known communist mouthpiece The Economis:
Lord Ashcroft’s tax status
Out of the closet
The Conservative donor ends a decade of speculation
Mar 4th 2010 From The Economist print edition
DAVID CAMERON’S fluency deserts him when he is forced to talk about Lord Ashcroft. The Conservative leader rarely sounds as ill at ease as he did on March 2nd, when he was asked to respond to the admission by the Tories’ deputy chairman that he is non-domiciled in Britain for tax purposes. Lord Ashcroft (shown below) may have clarified matters because the government, prodded by a freedom of information request, was about to.
What price glory?
The vexed question of his tax status goes back a decade, to when he got his wish and became a peer of the realm. He had twice been rebuffed due to concerns that he spent much of his time in Belize, a former British colony. On March 23rd 2000 he gave a written assurance that he would “take up permanent residence in the UK again” by the end of that calendar year.
To many, this implied that he would be taxed in Britain on all his income, not just that which is generated domestically or remitted from abroad. William Hague, then Tory leader, had earlier written to the prime minister, Tony Blair, saying that this change of residence would cost the businessman “tens of millions a year in tax”. After his written promise, however, Mr Ashcroft had what he calls a “dialogue” with the government that resulted in “permanent residence” being taken to mean “long-term residence”. This let him continue paying tax on his British income only.
Currently non-doms can be peers (though a bill now going through Parliament would change that). Labour and the Liberal Democrats also have non-dom donors. But Lord Ashcroft and firms associated with him have at times been the Tories’ biggest. Bearwood Corporate Services and Flying Lion gave a total of almost £4.2m ($6.3m) in cash and kind (such as research and travel) between the first quarter of 2006 and the last quarter of 2009. Another firm, Lanners Services, lent £3.6m in 2006.
Lord Ashcroft became the party’s deputy chairman in 2005 and has joined Mr Hague, now the shadow foreign secretary, on foreign business. Importantly, he runs Tory campaigns in critical marginal seats.
A pressing question for senior Tories is just when they discovered his tax status. On March 3rd Mr Hague said vaguely that he has known about it “over the last few months”. A more basic conundrum is why they cling to so controversial a figure at all. After investigating Bearwood to determine whether it carries on business in Britain and is thus entitled to fund political parties, on March 4th the Electoral Commission cleared its donations—a total of £5.1m since February 2003. But Lord Ashcroft is often at odds with the Belize government over his business activities there.
As the Tories have wooed other donors, Lord Ashcroft’s financial importance has dwindled. He provided just over 1% of Tory funds (including public money) in 2009. But Mr Cameron has kept him close. One theory is that the influential Mr Hague feels a loyalty to Lord Ashcroft, whose money was useful during his own leadership. Another is that Mr Cameron himself feels indebted. Soon after the general election of 2005, Lord Ashcroft published a study showing that voters were repelled by the party’s image rather than its policies. The information was crucial to the cause of Tory modernisers and helped one of them, Mr Cameron, to be elected leader.
On March 4th the House of Commons public administration committee said that it would hold a hearing on Lord Ashcroft’s ennoblement. He has hinted anyway that he will renounce his non-dom status to stay in the chamber. The real headache is for Mr Cameron. What he knew and when about Lord Ashcroft is a big question, but perhaps a less interesting one than why the normally ruthless Tory leader has tolerated this thorn in his side for so long.
