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

The Sunday Telegraph - - Front page - By Christo­pher Hope CHIEF PO­LIT­I­CAL COR­RE­SPON­DENT

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.”

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