City financier Peter Cruddas, Lord Edmiston, a Midlands entrepreneur, and businessman Arron Banks, have all been sent substantial inheritance tax bills in relation to their donations to the Leave campaign, according to the Daily Telegraph, on the basis that these did not meet the legal requirements for political gifts.

Lord Edmiston donated £1m while Arron Banks gave £8.1m to the unofficial Leave EU campaign. Normally there are tax exemptions for gifts to political parties, but these do not apply to a referendum rather than an election campaign.

The rules state that ‘transfers of value’ are exempt if they are ‘attributable to property which becomes the property of a political party qualifying for exemption’.

A political party qualifies for exemption if, at the last general election preceding the transfer of value: two members of that party were elected to the House of Commons, or one member of that party was elected to the House of Commons and not less than 150,000 votes were given to candidates who were members of that party.

At the time the row first surfaced, HMRC said: ‘Donations to campaign groups don’t qualify as exempt gifts to political parties, unless the recipient is a political party meeting the criteria set out in section 24 of the Inheritance Tax Act 1984.

‘No special exemption was granted ahead of the 2016 referendum. The legislation is applied without regard to the policies of organisations, groups or parties.’

In an additional statement put out on Christmas Eve 2017, HMRC said in response to the media claims: ‘HMRC objectively applies tax laws passed by Parliament. Tax decisions are always based on the law and never on the personal beliefs or values of the individual or campaign.’

While the Leave campaign attracted money from individuals, the Remain campaign receive more of its funding from large companies for which different rules apply.

Inheritance Tax Act 1984, Section 24 Gifts to political parties

Report by Pat Sweet