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Nigel Farage admits offshore tax 'mistake' Nigel Farage admits offshore tax 'mistake'
(about 4 hours later)
UK Independence Party leader Nigel Farage has said he made a mistake in setting up a trust fund in the Isle of Man, regarded as an offshore tax haven. UK Independence Party leader Nigel Farage said he "felt uncomfortable" about setting up a trust fund in the Isle of Man but insisted he did not avoid or evade tax.
The MEP paid a tax adviser to open the fund, intended for family purposes, but insisted he had not gained financially from it and it had been wound up. The MEP told the BBC that he opened the fund in 2003 to reduce his family's inheritance tax bills but quickly realised that he had made an "error".
Such funds were no longer appropriate for politicians, he suggested.
The Conservatives said that Mr Farage had "questions to answer".
Tax avoidance is not illegal but a crackdown is under way on the practice.Tax avoidance is not illegal but a crackdown is under way on the practice.
Mr Farage told the Mirror the "world had changed" and what was seen as acceptable in the past was not anymore. Mr Farage told the BBC he had set up the Farage Family Education Trust 1654 in the Isle of Man in 2003, with the intention of limiting the amount of inheritance tax that his children would have to pay upon his death.
The BBC has been unable to get hold of Mr Farage for a response. 'High standards'
The Mirror reported that Mr Farage had set up the Farage Family Education Trust 1654 in Douglas, the Isle of Man capital. He said this was something that tens of thousands of other people have done due to the unfairness of inheritance tax.
The Isle of Man was one of the UK's crown dependencies which signed an agreement on corporate disclosure at a recent meeting with David Cameron amid claims that individuals and firms are using offshore locations to reduce their tax liabilities. However, he said he soon began to feel "a bit uncomfortable" about setting up the fund and wound it up "many years ago" without "choosing to use the vehicle for anything".
The Isle of Man and other dependencies reject suggestions they are used for the purpose. "I should not have bought the policy...It was an error," he told the BBC, adding that he was a politician who was always prepared to hold his hands up when he had made a mistake.
'My fault' "There was never an intention to avoid or evade tax on my part in any way at all," he added, saying he had, in fact, lost money as a result of the arrangement.
Mr Farage told the newspaper that he had set up the trust "on behalf of somebody else". The UKIP leader said the secrecy surrounding family trusts meant they were not suitable for politicians, although he suggested that senior Conservative and Labour figures still used them to hold assets.
He said he had been advised to make the arrangement for "inheritance purposes", on the basis that it could be used to pay for things such as school fees for grandchildren. "I don't think you can be in public life and have a family trust. The public do expect very, very high standards."
"I took the advice and I set it up," he said. "It was a mistake. I was a completely unsuitable person for it. I am not blaming them. It was my fault.
"It was a mistake for three reasons. Firstly, I am 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, 30 years ago aren't anymore.
"Thirdly, it was a mistake because it cost me money. I sent a cheque to set it up."
The MEP said the money "disappeared" into administration fees and the fund was closed by 2008.
'Too far''Too far'
Mr Farage worked as a commodities broker before entering politics in the 1990s and becoming an MEP in 1999.Mr Farage worked as a commodities broker before entering politics in the 1990s and becoming an MEP in 1999.
The Mirror said Companies House documents indicated that the fund was a shareholder in Farage Ltd - a financial firm owned by his brother Andrew in which the UKIP leader also once had a stake - until 2011.The Mirror said Companies House documents indicated that the fund was a shareholder in Farage Ltd - a financial firm owned by his brother Andrew in which the UKIP leader also once had a stake - until 2011.
The MEP insists he never received any dividends from the firm, which had been paid solely to his brother, and had transferred his shareholding in the company to the trust fund.The MEP insists he never received any dividends from the firm, which had been paid solely to his brother, and had transferred his shareholding in the company to the trust fund.
Andrew Farage told the newspaper that he had paid tax on all the dividends in question in the UK.Andrew Farage told the newspaper that he had paid tax on all the dividends in question in the UK.
Labour MP John Spellar criticised the MEP's actions. A Conservative Party spokesman said "Nigel Farage is a politician who says one thing, but then does another".
"I know Nigel Farage wants to appeal to disaffected Tories, but copying some of the Tories' biggest donors by using offshore trusts to avoid tax is taking things too far," he said. "He says tax avoiders are the 'common enemy', but apparently he has been putting money into a tax haven himself. Nigel Farage clearly has some questions to answer."
Labour also criticised the MEP's actions.
"I know Nigel Farage wants to appeal to disaffected Tories, but copying some of the Tories' biggest donors by using offshore trusts to avoid tax is taking things too far," MP John Spellar said.
The Isle of Man was one of the UK's crown dependencies which signed an agreement on corporate disclosure at a recent meeting with David Cameron amid claims that individuals and firms are using offshore locations to reduce their tax liabilities.
The Isle of Man and other dependencies reject suggestions they are used for the purpose.