The British National Party (BNP) could face prosecution for breaking electoral law over its annual accounts after it filed financial records which its accountants refused to sanction and the far-right group's own leader admitted were "inadequate".
The party has been fined £1,000 by the Electoral Commission after it filed its accounts for 2008 nearly six months after the original deadline and warned that it must provide further information after the BNP's independent auditor declared the records did not "give a true and fair view" of the state of its finances.
The accounts, which are prefaced by a statement from the party leader Nick Griffin insisting that 2008 was "the most successful" in its history, show that the BNP made a loss of more than £80,000 that year despite a substantial leap in its income from donations to more than £660,000. Its expenditure ballooned from £662,000 to £1.1m.
The book-keeping wrangle with the elections watchdog raises fresh questions about the financial controls of the party after Mr Griffin appealed for extra donations and warned earlier this year that it was "suffering acute financial pressure" following a fall in its income and a £600,000 bill for its campaign in the June European elections. Electoral law requires all political parties with an income or expenditure in excess of £250,000 to provide fully audited annual accounts with a sliding scale of fines for late submission and separate criminal sanctions against the party for the financial period in question if satisfactory records are not provided.
In his preface to the accounts, Mr Griffin blamed upheaval in the headquarters operations of the BNP and said there had been a subsequent "outsourcing" of its record-keeping to a chartered accountant "with the aim of presenting acceptable accounts for 2009". It has now been fined five times in the past two years for breaking rules on filing financial records. Admitting that the party was once more in breach of the rules, Mr Griffin said: "We recognise that it is not acceptable to present inadequate accounts."
The BNP's auditor, whose name is blanked out on records published on the Electoral Commission website but who works for a Staffordshire firm of chartered accountants called Silver & Co, said the party had not submitted sufficient records to a provide a "true and fair" view of the party's 2008 results. In a statement, the auditor said: "In our opinion it cannot be said the accounts comply with the requirements of the Political Parties, Elections and Referendums Act 2000 [PPERA] as adequate records have not been made available."
The Electoral Commission said it was considering the options available to it, including an eventual prosecution. A spokesman said: "We have reviewed the statement of accounts and have concerns about them. We have written back to the party requesting additional information. Until we have received that information we cannot say what further action will be taken."
Under the PPERA, failure to provide audited accounts is a criminal offence. A party's treasurer for the period covered by the financial records can be fined up to £5,000 unless they can prove that all reasonable steps were taken to secure accurate accounts.
Campaigners say there has been an increased professionalisation of the BNP's administration following its electoral gains, including the election of Mr Griffin and a colleague in the European elections this summer, although it still relies on small-scale donations from members and commercial activities to fund most of its activities. It received only two donations above £5,000 between July and September this year, one of them for £5,105 from Eileen Sheridan-Price, a one-time winner of Miss UK and a former acquaintance of the Kray Twins.
A spokesman for the BNP said: "We do not have the resources of other political parties to get through the enormous amount of red tape that surrounds these tasks. We have now appointed a chartered accountant and we are hoping to have this year's accounts signed off by February. We don't expect to have a repetition of previous problems."