Did Conservative peer Lord Ashcroft quit the House of Lords to become a non-dom?

A document seen by The Independent shows that a week after he resigned from the Lords he sold 350,000 shares in an American company - netting him $11.2m

Conservative peer and multimillionaire Lord Michael Ashcroft has made £7.6m by selling his shares in an American company; if he was still sitting in the Lords he would be liable for £2.1m in tax (Getty)

The Conservative peer Lord Ashcroft is facing questions over whether he resigned his seat in the House of Lords to restore his non-dom status and reduce his UK tax bill.

On the final day of last month Lord Ashcroft announced that he intended to step down from the Lords because, he said, his business activities did not permit him “to devote the time that membership properly requires”.

Lord Ashcroft, a multimillionaire who made much of his fortune in the Caribbean, had previously given up his status as a non-domiciled resident in the UK in 2010 in order to retain his seat in the House of Lords following a ruling that all members had to be fully UK-resident for tax purposes.

But a document seen by The Independent shows that a week after he resigned from the Lords he sold 350,000 shares in an American company netting him $11.2m (£7.6m).

As a full UK tax payer Lord Ashcroft would be expected to pay capital gains tax of 28 per cent on the sale – costing him £2.1m. However, as a non-dom he would not have to pay tax on the shares as they were in an American company and would be regarded by HMRC as foreign earnings.

The sale was also completed at the start of the new financial year, meaning Lord Ashcroft could re-assert his non-dom status having resigned from the Lords at the end of the previous financial year.

Margaret Hodge, the Labour chair of the Public Accounts Committee, questioned why the system could allow individuals who lived and had business interests in the UK to opt in and out of non-dom status.

“It cannot be right that the system allows people to opt in and out of non-dom status depending on their circumstances in any given year,” Ms Hodge said.

This is not just about one individual. But the case seems to demonstrate yet again the absurdity of allowing non-dom status in the tax system.

“On a broader point I believe that people should respect Parliament’s intent and pay their fair share according to ability into the common pot for the common good,” Ms Hodge added.

Lord Ashcroft’s decision to resign his seat in the House of Lords was greeted with surprise given his continuing interest in UK politics.

He is still spending hundreds of thousands of pounds on polling during the General Election campaign and owns several political websites including Conservative Home. He is working on a biography of David Cameron.

In a statement at the time, Lord Ashcroft said he was resigning following a statement from the Lord Speaker Baroness D’Souza, who said that any Member of the House of Lords who can “no longer contribute meaningfully” should retire.

“I agree with the Speaker, and have concluded that my other activities do not permit me to devote the time that membership of the Lords properly requires. Accordingly, I have today written to the Clerk of the Parliaments giving notice of my resignation,” said Lord Ashcroft.

He added that he would continue his involvement in politics through Lord Ashcroft Polls and his publishing interests: Conservative Home, Biteback Publishing and Dods.

Parliamentary records show that while Lord Ashcroft did not contribute to any debates during the last session of the Lords, he has been active in scrutinising the Government in other ways.

Since June last year he has asked over 50 questions of ministers on subjects ranging from EU budget contributions, Britain’s overseas territories and benefits fraud.

Labour have questioned the timing of Lord Ashcroft’s resignation and the share deal that was revealed in filings to the American Securities and Exchange Commission.

This showed he had disposed of two tranches of shares in ABM, a facility management company, on 6 and 7 April this year. Lord Ashcroft is described in the document as a direct or indirect beneficiary of the shares.

As the shares were sold at the start of the new tax year, if Lord Ashcroft were to declare himself non-domiciled for tax purposes to the HMRC he would not have to pay capital gains tax on the income.

A spokesman for Lord Ashcroft declined to comment on his tax affairs. However, sources close to the Conservative peer said it would be “wrong” to draw any conclusions from any specific activity, pointing out that Lord Ashcroft had always had significant business interests across the world.

Company accounts: Taxing issue for Crosby

A British company run by the Conservative’s election guru Lynton Crosby lost more than £1 million in two years, public records show.

Accounts filed by Crosby Textor Ltd reveal that the firm, owned by Mr Crosby and his business partner Mark Textor made losses of £511,000 in 2014 and £510,000 in 2013.

Another company also owned by Mr Textor and Mr Crosby is recorded as making a profit of £449,000 over the same period. The filings would suggest that overall Mr Crosby’s operations in the UK have been loss making over the period – despite the substantial contract with the Conservatives to run the party’s election campaign which was agreed in 2012.

Mr Crosby’s financial affairs have come under a spotlight after it emerged he is a director and a shareholder of firms based in the tax haven of Malta. One of the companies – Rutland Ltd – was set up by Bentley Trust, a firm specialising in “wealth management” and “legitimate mitigation” of tax.

Despite being based in the tax haven of Malta, 90 per cent of Rutland Ltd’s interests are understood to lie outside Malta.

Mr Crosby’s spokesman told The Independent that he had never avoided or attempted to avoid paying his full tax obligations in the UK.

“It has been a matter of public record… that Lynton Crosby pays tax in the UK, on his UK earnings, at exactly the same rate as any UK citizen,” he said. “Rutland is a legitimate Malta-based company that fulfils its tax obligations in Malta. Its fully audited accounts and directorships have been public for years. Rutland has never done any business in the UK, nor paid wages or dividends to anyone in the UK. It has not received fees from any UK company, body, entity or individual.”

MATT DATHAN AND OLIVER WRIGHT

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