Ministers: Tax grab on Brexiteers is ‘bad for democracy’

BORIS JOHNSON and Michael Gove last night attacked HM Revenue and Customs on behalf of the “plucky individuals” who bankrolled Brexit and now face huge tax bills.

A source close to Mr Johnson said the demands were “bad for our democracy” while a friend of Mr Gove said they were “an attempt to silence anyone who dare challenge the Establishment and status quo”.

Their comments came as Peter Cruddas, a City financier and one of the Leave donors, disclosed that he had given hundreds of thousands of pounds to other political campaigns – including the 2011 Alternative Vote referendum – and never been challenged by HMRC.

A senior Leave-supporting Conservative politician described the demands as “scandalous” and evidence of “the Treasury’s revenge” for losing the European Union referendum.

The Telegraph disclosed yesterday that inheritance tax demands running into millions of pounds had been sent this month to at least three major do- nors to the campaign to leave the EU – Mr Cruddas, Lord Edmiston, a Midlands entrepreneur, and Arron Banks, an insurance tycoon, as well as to a major Remain supporter, David Harding.

The demands, which force people to pay the 20 per cent tax up front on large “gifts”, will disproportionately hit Leave-supporting donors because the various “out” campaigns were financed by entrepreneurs rather than mainstream publicly listed companies that tended to back Remain.

A source close to Mr Johnson, the Foreign Secretary, said: “This decision by HMRC will not only hit the plucky individuals who backed the Vote Leave campaign, but it will also make it more difficult for grassroots campaigns to be successful in future.

“We should never forget that the Establishment spent £9million on statefunded leaflets. It is always hard to match that kind of spending, but this could make it almost impossible. This can only be bad for our democracy.”

A source close to Mr Gove, the Environment Secretary, said: “Michael is obviously concerned about action that appears to impinge on our democratic values. This will appear to many like an attempt to silence anyone who dare challenge the establishment and status quo.”

Chris Grayling, the Transport Secretary, who played a big role in the Vote Leave campaign, added: “It is really important that everyone – no matter what their politics – is treated equally by the tax system, and I am very confident that my ministerial colleagues will want to make sure that is the case.”

A senior Tory Leaver warned that the Remain-focused Establishment

was using tax bills to put off private donors from backing Leave in any future referendum on Britain’s EU membership.

He said: “This is the Treasury’s revenge for the referendum. Donors aren’t normally charged tax like this and it looks like a deliberate move by Whitehall to target people who supported Leave.

“They are trying to kill potential donors at birth. It’s scandalous.”

Philip Hammond, the Chancellor, who is viewed with suspicion by many Brexit campaigners, may now come under pressure to intervene. His aides insisted Treasury ministers “do not get consulted on sending out letters” to taxpayers by HMRC.

Individuals can give away £325,000 in their lifetime without paying the tax. Above that, inheritance tax is charged at 40 per cent on estates on death, and 20 per cent on transfers of cash during a person’s lifetime.

Mr Cruddas is facing a tax bill of £180,000 on his £900,000 donation to the Vote Leave campaign.

But he said the sum was only a fraction of the £2.4million he had given to other political causes, including an- other referendum, since 2011 and not one had been subject to an HMRC investigation.

These included £500,000 to the “No to AV” vote campaign, £650,000 to the Change Britain campaign, £140,000 to Business for Britain, £50,000 to Conservative Voice, £38,000 to Hacked Off, £100,000 to the TaxPayers’ Alliance and £25,000 to Open Europe.

Mr Cruddas also said he knew of “friends who have given to the Scottish campaign and they have had no challenge”.

He said he would now have to declare these donations, which he had made from income that had already been taxed at 45 per cent, the top rate of income tax.

HMRC’s stance threatened “to deter law-abiding, tax-abiding citizens from financing campaigns in the future”, he said.

Matthew Elliott, the former Vote Leave chief executive who also ran the “No to AV” campaign, added: “We raised from memory about £2million in donations and no donors as far as I am aware were asked to pay additional tax on their donations to No to AV.”

A HMRC spokesman said: “HMRC does not discuss identifiable taxpayers. HMRC objectively applies the tax laws passed by Parliament.

“The reasons for the differences in tax bills for some donations and not others are to do with whether inheritance tax thresholds for individuals involved have been met or other individual tax circumstances, but it has nothing to do with the political leaning of the organisation donated to.”