PM challenged over Tory donor tax status claims

John McDonnell says Theresa May may have questions to answer

The shadow chancellor has said Theresa May has "questions to answer" amid reports that Tory donor Lord Ashcroft continued to avoid tax in the UK after it was believed he had given up his non-dom status.

Leaked documents – dubbed the "Paradise Papers" – suggest Lord Ashcroft, who has given millions to the Tories, had a previously unknown offshore trust which at one point was worth over £300m.

Reports based on the documents suggest the former Conservative Party Treasurer retained non-domiciled tax status in Belize at a time when it was generally thought he had given up the status.

While most Britons have to pay tax on everything they earn, non-doms can enjoy the benefits of UK residency while avoiding taxes by channelling earnings through a home abroad.

The investigation of around 13.4 million files, by The Guardian, the BBC, Suddeutsche Zeitung and other media outlets, details the financial dealings of the rich and powerful, some 18 months after the disclosure of the Panama Papers sent shockwaves through the world of business.

:: Paradise Papers: Queen's private estate invests in offshore tax havens

Lord Ashcroft, centre, during the Conservative Party Conference in 2014
Lord Ashcroft, centre, during the Conservative Party Conference in 2014

Mr McDonnell has said the Prime Minister should be prepared to answer questions given her party's pledge to bring transparency to the offshore industry.

"If the identification of Lord Ashcroft, a major Tory party funder, on the list and if the allegations of tax avoidance are true, it means that the Prime Minister has questions to answer," the Shadow Chancellor said.

"What did she and the Conservative Party know about Ashcroft's tax affairs and what due diligence checks were applied before she agreed to the Conservative Party accepting significant donations from him?" Mr McDonnell added.

Speaking on Sky News Sunrise, Mr McDonnell called for a public inquiry on tax avoidance and "measures to ensure openness and transparency".

At the CBI conference in east London, Mrs May said individuals and businesses should "pay the tax that is due" – but she refused to commit to introducing a public register of who owns offshore companies and trusts.

Actress Emma Watson attends the White House Correspondents' Association annual dinner in Washington, U.S.
Emma Watson In Panama Papers

Lord Ashcroft's spokesman, Alan Kilkenny, told The Guardian the peer had never engaged in tax evasion, abusive tax avoidance or tax avoidance using artificial structures, and that "any suggestion or implication that he has will be vigorously challenged".

The Panama Papers resulted in lasting damage for a number of the figures named, including Iceland's Prime Minister, who stepped down after suggestions he held investments in Iceland's collapsed banks, and former Pakistan PM Nawaz Sharif.

Liberal Democrat leader Sir Vince Cable called for MPs to investigate the claims about the so-called Paradise Papers.

:: Offshore Accounts Of World Leaders Revealed

"The Paradise Papers suggest that a small number of wealthy individuals have been able, entirely legally, to put their money beyond the reach of the Exchequer," said Mr Cable.

"Given these revelations, including news that Conservative donors benefited from these arrangements, we need a parliamentary select committee to investigate fully who decided what and why," he added.

"In particular, we need the release of all government papers dealing with the decision not to clamp down on offshore tax havens. Only in this way can we ensure there is full public confidence in the tax system," said the Lib Dem leader.

David Cameron at the Conservative spring conference
PM: 'Blame Me' For Panama Fallout

Labour leader Jeremy Corbyn added on Twitter that the disclosure "proves" that "there's one rule for the super-rich and another for the rest when it comes to paying tax."

Responding to the latest revelations, a government spokeswoman said: "Since 2010, the Government has secured an additional £160 billion, more than the annual UK NHS budget, for our vital public services by tackling tax avoidance, evasion and non-compliance.

"This includes more than £2.8 billion from those trying to hide money abroad to avoid paying what they owe. There are 26,000 HMRC staff tackling tax avoidance and evasion, and we have provided an extra £800 million to fund their efforts"

"A fair tax system is a critical and key part of our plan to build a fairer society, and we are clear that everyone must pay what is due, at the right time."

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