Tories finally come clean on Ashcroft tax status

Party's deputy chairman has 'fulfilled the obligations imposed on him'

The Conservative Party sought to defuse the controversy over its deputy chairman, Lord Ashcroft, yesterday by confirming that he is paying tax in Britain.

William Hague, who, when he was Tory leader, nominated the billionaire businessman for a peerage, said he had been told by Lord Ashcroft that he had met the obligations placed on him when he was appointed in 1999. This included a promise to take up permanent residence in the UK. Lord Ashcroft, who has extensive business interests in Belize, is one of the Tories' biggest donors but would have to be resident in Britain because of a ban on "foreign donations". He heads the Tories' campaign in marginal seats.

Asked on the BBC's Andrew Marr programme whether Lord Ashcroft now pays tax in Britain, Mr Hague replied: "My conclusion, having asked him, is that he fulfilled the obligations that were imposed on him at the time that he became a peer." He added: "I imagine that [paying taxes in the UK] was the obligation that was imposed on him."

Two years ago, David Cameron said the obligations on Lord Ashcroft were "being met" but the Tories and their deputy chairman have been reluctant to discuss his tax status.

However, Mr Hague's clarification failed to satisfy Labour. Denis MacShane, a former minister and MP for Rotherham, said: "William Hague's assertion that the Tories' biggest backer is now, finally, resident in the UK raises more questions than it answers. For many years, Lord Ashcroft has been donating to the Tories through his companies but for how long has he been eligible to do it in his own name?" He added: "Lord Ashcroft appears to be having a huge influence over the Conservatives' election campaign and foreign policy. David Cameron needs to demonstrate transparency by revealing when Lord Ashcroft became resident. "

Mr Hague, the shadow Foreign Secretary, also urged Sir Ian Kennedy, the chairman of the Independent Parliamentary Standards Authority not to dilute the new blueprint for MPs' expenses published last week by Sir Christopher Kelly's Committee on Standards in Public Life. The authority, which has the final say, has made clear it will not be bound by the Kelly proposals and may make changes. The chairmen of the two bodies are due to meet this week.

Mr Hague said: "It would be wrong to rewrite was has now been produced. We need public confidence again in the MPs' expenses system."