Page last updated at 10:43 GMT, Thursday, 18 March 2010

Q&A: Lord Ashcroft

Conservative Party deputy chairman - and party donor - Lord Ashcroft has admitted he does not pay UK tax on his earnings outside Britain. What is a non-dom and what is the row about?

Who is Lord Ashcroft?

The Conservative Party's biggest single donor, the 63-year old describes himself as a "businessman, philanthropist and politician". His business empire, which The Sunday Times Rich List values at £1.1bn, is based in the central American state of Belize where he grew up. He has donated more than £4m to the Conservatives in recent years, much of which has been spent on campaigns in marginal seats seen as key at the next election. He is also the party's deputy chairman.

Why is Lord Ashcroft's tax status controversial?

It has long been thought he agreed to become resident in the UK for tax purposes when he was recommended for a peerage by then Tory leader William Hague in 2000. But after years of questions from political opponents, and a Freedom of Information request, Lord Aschroft revealed that he was, in fact, not domiciled in the UK for tax purposes, a so-called "non-dom".

What is a non-dom?

Someone who is resident in the UK but not "domiciled" in the UK for tax purposes - although they will pay some UK tax, they will not be fully taxed in the UK on their interests overseas.

Has he done anything illegal?

No. As the law currently stands, non-doms are allowed to sit in the Lords. Lord Ashcroft says when he became a peer he had only agreed to "take up permanent residence in the UK again" that year and quit as Belize's permanent representative to the UN. He said that after "subsequent dialogue with the government, it was officially confirmed that the interpretation in the first undertaking of the words 'permanent residence' was to be that of 'a long term resident' of the UK". He says this means he had not agreed to end his non-dom status.

Did the Conservatives know about this?

Shadow foreign secretary William Hague, who was Tory leader when Michael Ashcroft was recommended for a peerage, said he had only become aware that the peer was a non-dom "in the last few months". Critics say leaked Cabinet Office documents show Mr Hague knew more than he was letting on. But Mr Hague insists those same leaked documents show there had been no "secret deal" with Lord Ashcroft to help him secure a peerage - and that they show tax was not part of the agreement. However, he did concede that it had been a "mistake" to say the peer's decision to become a permanent UK resident would cost him "tens of millions" in tax. These words, in 1999, created the widespread impression that Lord Ashcroft would pay full UK tax on all his earnings.

What do their opponents say?

Labour say the row is proof that David Cameron's efforts to reinvent the Conservative Party and clean-up politics are only skin deep and it is still in thrall to big money. Lord Mandelson has claimed Lord Ashcroft has a "hold" over Mr Cameron, who he says lacked the "courage" ask the relevant questions about his tax status. Lib Dem leader Nick Clegg said it was "wholly wrong" for a non-dom to fund an election campaign: "If you are going to get stuck into British politics, then pay full British taxes," he told the BBC.

What do the Conservatives say?

Party leader David Cameron says he is pleased the issue - which the party had always said was a private matter between Lord Ashcroft and the HM Revenue - has been cleared up and that he hoped to "get on with the election". The party point out that Lord Ashcroft's non-dom status is the same as Labour donor Lord Paul and some Lib Dem donors - and that non-doms would be banned from sitting in the Lords if the Tories won power. They say "continuing attacks" on Lord Ashcroft are "part of a politically motivated campaign" by the Labour Party ahead of the general election.

Will Lord Ashcroft give up non-dom status?

He has suggested he will. All parties have backed legislation to ban non-doms from membership of the House of Lords and Lord Ashcroft said he was ready to pay full UK tax when the law changed: "I agree with this change and expect to be sitting in the House of Lords for many years to come."

Why did the Electoral Commission get involved?

The elections watchdog looked into a separate matter - donations made to the Conservatives by Lord Ashcroft's company Bearwood Corporate Services, following a Labour MP's complaint. Only firms "carrying on business in the UK" are allowed to donate money to political parties. It said the donations - amounting to £5.1m were legal, BCS was a "permissible donor" and the money had been reported correctly.

Is that the end of it?

The Commons public administration select committee is holding a "one off" inquiry into Lord Ashcroft's peerage and tax affairs - but its Conservative members are refusing to take part. The Lib Dems want HM Revenue and Customs to do its own inquiry into Lord Ashcroft's tax status.

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