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Hague 'told recently of Ashcroft' Peer's tax status new to Cameron
(about 7 hours later)
Ex-Tory leader William Hague says he found out in the "last few months" that Lord Ashcroft changed an undertaking he made before being granted a peerage. David Cameron only found out last month that his party's biggest donor did not pay full UK tax, Liam Fox has said.
The peer agreed to become a "permanent" UK resident, making it more likely he would pay tax on overseas earnings. The shadow minister said Mr Cameron "became aware, as far as I know, of the non-dom status in the last month".
But this was later changed to "long-term resident" - a lesser commitment - after discussions with civil servants. Lord Ashcroft admitted he was a "non-dom" on Monday, following years of questions by his political opponents.
Labour's David Miliband said the peer should resign and called on Tory leader David Cameron to clarify what he knew. It had been thought he had agreed in 2000 to pay full UK tax when he became a peer. But he had agreed to be a "long term resident", a lesser commitment.
In a separate development, the Electoral Commission is shortly expected to announce the outcome of an investigation into Lord Ashcroft's company, Bearwood. 'Perfectly legal'
The probe, which was launched last January, is looking at whether Bearwood is "carrying on business in the UK" - a legal requirement for donors to British political parties. Dr Fox, shadow defence secretary, told the BBC: "I think that it's important to note that that non-dom status is a perfectly legal status, it means that people pay tax on their UK income in the UK and there are many political donors, not least in the Labour and Lib Dem parties, who enjoy that status too."
The company, which has given £4.74m to the Conservative Party since 2003, is registered in the UK, but Lord Ashcroft is known to have extensive business interests in Belize, a former British colony and tax haven.
WHAT IS A NON-DOM? British citizens with interests abroad can register for "non-domiciled" statusThis means they can be long-term residents in the UK but do not pay tax on earnings made outside the countryLong-term residents must spend seven of every nine tax years in the UKWHAT IS A NON-DOM? British citizens with interests abroad can register for "non-domiciled" statusThis means they can be long-term residents in the UK but do not pay tax on earnings made outside the countryLong-term residents must spend seven of every nine tax years in the UK
The Conservatives have insisted the donations were "legal and permissible". BBC chief political correspondent Laura Kuenssberg said it suggested that one of the Conservatives' biggest donors had not made his tax status clear to the party leader.
'Tens of millions' Lord Ashcroft's position as a "non-dom" means he did not have to pay UK taxes on most of his overseas earnings for the past decade.
Following years of questions about his tax status, Tory deputy chairman and donor Lord Ashcroft revealed this week that he had been non-domiciled for tax purposes for the past decade. The then Michael Ashcroft was refused a peerage by the political honours committee in 1999 partly because, according to a letter written by Mr Hague at the time, he was a "tax exile".
This means he did not have to pay UK taxes on overseas earnings. In letters to then PM Tony Blair, published by the Guardian, Mr Hague wrote Mr Ashcroft was "non-resident for tax purposes" but told Mr Blair: "He is committed to becoming resident... This decision will cost him (and benefit the Treasury) tens of millions a year in tax yet he considers it worthwhile."
Michael Ashcroft was refused a peerage by the political honours committee in 1999.
The Guardian has published a letter written afterwards by Mr Hague to then Prime Minister Tony Blair, acknowledging that one reason was that he "was a tax exile".
Mr Hague wrote Mr Ashcroft was "non-resident for tax purposes" but told Mr Blair: "He is committed to becoming resident... This decision will cost him (and benefit the Treasury) tens of millions a year in tax yet he considers it worthwhile."
Mr Ashcroft was given a peerage in 2000 after he signed a letter to Mr Hague promising to "take up permanent residence in the UK again", which would seem to preclude non-dom status.
FROM THE WORLD TONIGHT The World TonightFROM THE WORLD TONIGHT The World Tonight
But the peer, in a statement earlier this week, said that, after talking to government officials, "the interpretation of the first undertaking of the words 'permanent residence' was to be that of 'long-term resident'". Mr Ashcroft was given a peerage in 2000 after he signed a letter to Mr Hague promising to "take up permanent residence in the UK again", which would seem to preclude non-dom status.
But Lord Ashcroft, in a statement earlier this week, said that, after talking to government officials, "the interpretation of the first undertaking of the words 'permanent residence' was to be that of 'long-term resident'".
This was a lesser commitment which would allow non-dom status.This was a lesser commitment which would allow non-dom status.
Mr Hague, now shadow foreign secretary, told BBC Radio 4's The World Tonight: "Over the last few months I knew and, after that, of course I was very keen to support him in making that position public." Mr Hague, now shadow foreign secretary, told BBC Radio 4's The World Tonight programme on Wednesday he had only found out about the change recently.
But Foreign Secretary Mr Miliband told the BBC that Lord Ashcroft's position had become "untenable" and that he should resign. He said: "Over the last few months I knew and, after that, of course I was very keen to support him in making that position public."
He said the Conservatives had "taken hard cash from Lord Ashcroft without asking hard questions" and called on them to repay the donations. Donations inquiry
"They have known that in fact Lord Ashcroft was a non-dom, but they have not seen fit to tell the rest of us," he said. In a separate development on Thursday, the Electoral Commission said its 14-month investigation into donations by Bearwood Corporate Services, a firm belonging to Lord Ashcroft, had concluded they were legal.
"We need to know whether or not David Cameron knew and, if he did, why he didn't relay this critical fact... to the rest of us." The inquiry was prompted by a complaint from the Labour MP John Mann.
Rowdy debate The Tories said it showed their "clean bill of health with the Electoral Commission remains fully intact" and said continued attacks on Lord Ashcroft were part of "a politically motivated campaign orchestrated by the Labour Party" ahead of the general election.
The issue of Lord Ashcroft's tax status dominated a rowdy prime minister's questions session on Wednesday, in which Mr Hague stood in for Tory leader Mr Cameron. People in glass houses shouldn't throw stones William Hague
Labour deputy leader Harriet Harman, replacing Gordon Brown, challenged Mr Hague, saying: "What has happened to the tens of millions of pounds of taxes that the shadow foreign secretary promised would be paid by Lord Ashcroft?" But Labour MP Gordon Prentice said the public administration select committee had decided to hold a "special one-off inquiry" into Lord Ashcroft's peerage and his tax affairs on 18 March.
However the committee's three Conservative MPs say they will not take part in the inquiry which they said was "clearly a political tactic".
At prime minister's questions on Wednesday, when Mr Hague stood in for Mr Cameron, Labour deputy leader Harriet Harman said he had promised Lord Ashcroft would pay "tens of millions of pounds of taxes"
Insisting Mr Hague and Lord Ashcroft could not "both be right", Ms Harman added: "One of them must go."Insisting Mr Hague and Lord Ashcroft could not "both be right", Ms Harman added: "One of them must go."
But Mr Hague retorted: "If she wants to discuss the House of Lords, I'm sure she will want to explain the position of [Labour peer] Lord Paul, who was made a privy counsellor after he bought 6,000 copies of the prime minister's book on courage. But Mr Hague replied: "If she wants to discuss the House of Lords, I'm sure she will want to explain the position of [Labour peer] Lord Paul, who was made a privy counsellor after he bought 6,000 copies of the prime minister's book on courage.
"Never has so much been given for so few people to read so many words in vain.""Never has so much been given for so few people to read so many words in vain."
Attacking Labour's record, he added: "People in glass houses shouldn't throw stones."Attacking Labour's record, he added: "People in glass houses shouldn't throw stones."
Inquiry call The Liberal Democrats, who have also had donations from non-doms, have called on HM Revenue and Customs to conduct an inquiry into whether Lord Ashcroft's commitment to take up "permanent residence" in the UK was compatible with his status as "non-domiciled" for tax purposes.
The Liberal Democrats have called on HM Revenue and Customs to conduct an inquiry into whether Lord Ashcroft's commitment to take up "permanent residence" in the UK was compatible with his status as "non-domiciled" for tax purposes.
Home affairs spokesman Chris Huhne, who estimates that Lord Ashcroft has saved around £127m over 10 years, asked whether he should pay any back taxes.
The Cabinet Office said on Tuesday that former Clerk to the Crown in Chancery Sir Hayden Phillips had reached an agreement with Tory chief whip James Arbuthnot in 2000 about the interpretation of Mr Ashcroft's undertaking, concluding that his promise to take up "permanent residence" meant he would be a "long-term resident" in the UK.
A Cabinet Office spokesman said: "This was not about tax; this was about residency."