Ukip leader Nigel Farage admits tax haven fund was a 'mistake'

MEP is revealed to have set up a trust fund on the Isle of Man

Mr Farage said he paid a tax adviser to set up the Farage Family Educational Trust 1654 on the Isle of Man (PA)

The leader of the UK Independence Party, Nigel Farage, has admitted he made a mistake after setting up a trust fund in an off-shore tax haven.

Mr Farage, who last month used his role as an MEP to criticise those who evade tax, said he paid a tax adviser to set up the Farage Family Educational Trust 1654 on the Isle of Man, according to the Daily Mirror.

He reportedly did not profit from the fund, according to the report, and said that he actually ended up worse off after opening the scheme.

The MEP told the Mirror: "My financial advisers recommended I did it, to have a trust really for inheritance purposes and I took the advice and I set it up.

"It was a mistake. I was a completely unsuitable person for it. I am not blaming them, it was my fault.

"It's a vehicle that you chuck things in through your life that you don't need and you build up a trust fund for your children or grandchildren.

"It was called an educational trust and could have been used for grandchildren's schools fees, things like that.

"It was a mistake for three reasons. Firstly, I'm not rich enough to need one and I am never going to be. Secondly, frankly, the world has changed. Things that we thought were absolutely fair practice 10 years, 20 years ago, 30 years ago aren't any more. Thirdly, it was a mistake because it cost me money. I sent a cheque off to set it up."

Mr Farage reportedly transferred his shareholding in Farage Limited to the Trust in 2003, meaning it owned 33 per cent in the company, which then later rose to 50 per cent.

However, when confronted, he insisted he was not a beneficiary, and the firm's accountant confirmed that all £969,000 dividends went to Mr Farage's brother, Andrew.

Companies House documents reveal the offshore trust remained a shareholder of Farage Limited until 2011, the Mirror said.

Mr Farage insisted he shut it down in 2007 or 2008, saying: "I sent a cheque off to set it up, out of my own taxed income, and basically just through administration fees that money disappeared."

Only last month Mr Farage had told fellow European Parliament members that their "common enemy" was "rich people, successful companies evading tax," attacking European bureacrats earning £100,000 a year and paying 12 per cent tax under EU rules.

He said at the time: “It is tax fraud on an absolutely massive scale. How can that be deemed to be fair?

“How can people struggling – the 16 million unemployed in the eurozone – look at these institutions, not only paying people vast sums of money but allowing them tax and pension benefits on a scale not seen else in the world?”