Page last updated at 12:04 GMT, Thursday, 5 February 2009

Tory backer Laidlaw stops funding

Nominees to peerages have to be UK residents for tax purposes

One of the Conservative Party's biggest financial backers has stopped donating until "issues" over tax are resolved, it has revealed.

Monaco-based businessman Lord Laidlaw is believed to have given the Tories around 3m in 2007.

In that year he was criticised by the Lords appointments watchdog for taking his seat but not honouring an agreement to give up his status as a tax exile.

The Conservatives said they were "extremely grateful" for his support.

Lord Laidlaw was ennobled in 2004, with the Lords Appointments Commission saying it had been given an "assurance" that he would become a UK resident for tax purposes.

'Own reasons'

But three years later he was criticised by the commission, which took the unprecedented step of naming him in its annual report for not sticking to his word and instead remaining a tax exile.

Lord Laidlaw has been a donor both to the UK party and the Scottish Conservatives.

Shadow Scottish secretary David Mundell said: "He has decided he is not donating to political parties for his own reasons until he has sorted out his tax issues.

"He has given us prior notice that that is his intention."

Mr Mundell added: "The Conservative Party in Scotland is extremely grateful for all the support he has given."

In its 2006/07 report, the Lords Appointments Commission said Lord Laidlaw had not become a UK resident for tax purposes, and that the commission had "drawn the prime minister's attention to the situation".

The Banffshire-born businessman was ranked at number 101 in last year's Sunday Times Rich List, which put his worth at 730m.

His fortune comes from a conference-organising business, which he sold for a reported 768m.

Mr Mundell said: "Although he has been a significant donor, he is not our only donor.

"Since David Cameron has been leader of the Conservative Party, he has sought to move from having a few large donors to a larger number of smaller donors."

He added: "Because he indicated he was going to take this course of action, we were prepared for it."

Mr Mundell said: "It is widely known that Lord Laidlaw has stepped back, and is not currently taking up his seat in the House of Lords, until issues he has with HM Revenue and Customs are resolved."

The commission reviewed its residency policy in 2005 and no longer considers nominees who are not resident in the UK for tax purposes.

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