Tax ‘revenge’ on tycoons who bankrolled Brexit
HMRC under attack after demanding up to £2m on entrepreneurs’ EU campaign funding
DONORS who bankrolled the Brexit campaign have accused the taxman of a “political attack” after they were hit with six or even seven-figure tax demands on their contributions, The
Daily Telegraph can disclose. Among those targeted are Lord Edmiston, the Midlands entrepreneur, who donated £1million to Brexit campaigns; Peter Cruddas, the City mogul; and Arron Banks, who made millions from his insurance businesses. HM Revenue and Customs has issued letters in the last fortnight that could land them with tax bills of up to £2million.
In what has been dubbed the “revenge of the Establishment”, the tax authorities have seized upon a relatively obscure area of inheritance tax laws which forces people to pay tax upfront on large “gifts”.
Donations made to political parties, charities and other bodies are usually exempt, but HMRC has said that payments from individuals to referendum campaigns are taxable.
At least one Remain donor has also been sent a tax demand – although banks including Goldman Sachs and JP Morgan, which bankrolled the Remain campaign, have not been embroiled in the crackdown because they cannot be made liable for inheritance tax.
The demands will disproportionately hit donors who supported Leave because their various campaigns were financed by entrepreneurs rather than by mainstream publicly listed companies that tended to back Remain.
The money was donated to Leave campaigns including the one fronted by Boris Johnson, the Foreign Secretary.
Yesterday Mr Johnson, on a visit to Russia, attacked the Kremlin, claiming it had unsuccessfully tried to interfere in the EU Referendum, and also said he was winning a Cabinet battle over a “divergent” Brexit.
The three Brexit-supporting businessmen last night told The Telegraph that HMRC was acting undemocratically.
Philip Hammond, viewed with suspicion by many Brexit campaigners, may now come under pressure to intervene.
HMRC, whose executive chairman is Ed Troup, a former special adviser to Kenneth Clarke, the Remain-supporting former chancellor, last night said the bills were not sanctioned at board level and were just part of the tax department’s “day-to-day work”.
Jacob Rees-mogg, the Conservative MP, said the tax bills were hostile to democracy and showed that the Government was penalising those who challenged it.
He said he would write to the Chancellor to complain and suggest that tax laws were changed.
He said: “Any money routed through the Establishment is tax-free and any money that challenges the Establishment is taxed – a double outrage because the Government spent taxpayers’ money advocating its own view and is now penalising people who had the audacity to challenge it.
“It is fundamentally hostile to democracy and the law should be changed urgently by amendment to the Finance Bill which is currently going through Parliament.”
Matthew Elliott, the former chief executive of Vote Leave, said: “It is outrageous that HMRC is targeting EU referendum donors in this way.
“This is the Establishment having their revenge on good people who support democratic activity. The Treasury should intervene immediately and force HMRC to rescind the demands.”
Lord Edmiston gave £850,000 to the official Vote Leave campaign and
£150,000 to the unofficial Grassroots Out campaign through his company IM Group. He is facing a bill of £200,000.
He told The Telegraph: “I just feel it is against democracy – if any time in the future there is an issue and someone is asked ‘would you mind supporting this particular position’, the Revenue are going to jump on your back.”
Mr Cruddas said he would challenge HMRC. He donated £900,000 to the official Vote Leave campaign and is facing a tax bill of £180,000. Mr Cruddas, who with his family paid £50million in taxes last year, said the claim was “outrageous” and donors felt victimised for taking on the Government, which spent £9 million on a pro-eu leaflet sent to every home in Britain.
He said: “There are very strict laws around donations. You have to be resident and on the electoral roll. So de facto we paid tax on that money.
“We put money up – and at the time we were taking on the Government that put up £9 million of taxpayers’ money to present one side of the argument. What we did was to match that through leaflets. I think we are being victimised. My accountant has never seen anything like it.”
Mr Banks, a former Ukip donor, is also facing a demand. He could be expected to pay £2million in inheritance tax on his £8.1million donation to the unofficial Leave.eu campaign. He said the demand was the “revenge of the Establishment”. He added: “After the campaign all the Remainers got gongs and the Leavers got kicked in the a---. That money was taxed – why should it be taxed a second time? It is lunacy. It is a political attack.” David Harding, who gave £750,000 to the official Britain Stronger in Europe campaign, confirmed his tax demand. He said: “I was surprised. I assumed it would have been treated like other political donations I made.”
By levying the charge, HMRC is thought to have decided that those who donated are liable because giving away such large sums will reduce the value of their estate when they die.
Individuals can give away £325,000 in their lifetime without paying tax on it. Above that, taxes will apply.
HMRC said that no campaign could be termed “a political party” even though they were regulated by the Electoral Commission. A spokesman said: “No special exemption was granted ahead of the referendum. The legislation is applied without regard to the policies of organisations, groups or parties.”