Second minister in tax-haven row

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The Independent Online
TONY BLAIR faces a new row over the tax status of his ministers today after revelations that the millionaire businessman Lord Sainsbury of Turville is receiving income from an offshore tax haven.

The Tories will today table a series of questions in the House of Commons to demand full details of a series of trusts in the British Virgin Islands that benefit the former supermarket tycoon who was made Science minister this year.

The claims come just days after the Paymaster General, Geoffrey Robinson, was again called on to resign for his own failure to declare all his financial interests.

The controversy flared after it emerged that Lord Sainsbury, the richest man in the UK with a fortune of more than pounds 2bn, had an "income stream" from the Caribbean-based trust.

Any profits on the trust, believed to be worth several million, are exempt from the UK's 40 per cent capital gains tax, as well as local corporation taxes.

The Department of Trade and Industry said yesterday that the trust's main beneficiaries were relatives of Lord Sainsbury and some charities, but admitted that he received income personally.

However, the DTI stressed that the minister paid taxes on the income he did receive and denied that the trust was in any way "underhand".

Lord Sainsbury, who is said to have donated more than pounds 2m to the Labour Party, headed the Sainsbury's supermarket chain until he was made a minister last July.

The Labour peer then placed all his pounds 1.4bn stake into a blind trust to avoid potential conflicts of interest with his role at the DTI.

Despite a reference to his "overseas trusts", there was no mention of his interest in the trust in the British Virgin Islands, a fund which is administered from Switzerland.

The shadow Trade and Industry Secretary, John Redwood, said he would table a series of Commons questions today on the minister's role in the DTI and his private interests in the wake of the "amazing revelations".

"We need a clear statement from the Government on its attitude to offshore tax havens. Does it wish to sustain its dislike of off-shore arrangements?" he said. "If so, why do so many ministers have such arrangements?"

A spokesman for the DTI said that the trust in question mainly held US investments which were not owned by Lord Sainsbury but from which he did receive payments.

"The capital beneficiaries are mainly his relatives and charities," he said.

The revelations follow intense efforts by the Tories to force the resignation of the Paymaster General. Mr Robinson's ministerial career is believed to be on a knife-edge after he gave a 55-second Commons apology for failing to declare a trust in Guernsey.

In a statement issued last night, Lord Sainsbury said he had consulted House of Lords officials about declaring the trusts in its register of members' interests and was advised not to.

"I do not own the assets in these trusts but I do receive the income. I have paid full UK income tax at the top rate on all the income of the trusts," he said.

"There are two trusts. One was created before 1991 and paid no capital gains tax until the tax changes introduced in the Budget of 18 March 1998, since when it has been liable to UK CGT. The other was created after 1991 and has always paid UK CGT."