Yes campaign's biggest donor 'dodged £450,000 in tax'

By DAILY MAIL REPORTER
Updated: 05:49 EST, 4 May 2011

The biggest donor to the Yes campaign was at the centre of a row about an alleged ‘tax dodge’ last night.

Documents leaked to the Daily Mail suggest the commercial arm of the Electoral Reform Society, which has given more than £1million to the Yes campaign, may have avoided corporation tax by recycling profits through a charity.

Leaked emails and other documents show that Electoral Reform Services Ltd made a series of donations to the tiny Arthur McDougall Trust over eight years.

Yes or no? Voters at a debate discuss AV. It has been revealed that the biggest donor to the yes campaign has been involved in an alleged tax dodge

The charity did not publish accounts for a decade. But it has now emerged that much of the money given by ERSL each year was then awarded to the Electoral Reform Society in the form of ‘charitable’ grants.

Tax experts estimate the complex manoeuvre may have saved as much as £450,000 in corporation tax. Conservative MP Matthew Hancock last night called for a full-scale inquiry by HM Revenue and Customs.

He said: ‘People will want to  know why money was funnelled through a charity that did not declare accounts, and why those responsible apparently wanted to keep it quiet. We deserve answers.’ 

The Arthur McDougall Trust last night insisted the arrangement was lawful and that it was ‘entirely independent’ from the Electoral Reform Society.

Documents obtained by the Mail suggest that most of the money given by the ERSL was passed back to the Electoral Reform Society.

In one year as much as 94 per cent of the cash appears to have been ‘recycled’ in this way.

But the trust last night said that ‘only’ 45 per cent of the cash went back over the ten-year period from 1998. ERSL also insisted that all donations had been made ‘in strict accordance with the law’.

But the suggestion that the Electoral Reform Society and its subsidiary may have benefited from a tax dodge is embarrassing for the Yes campaign, which has traded heavily on the argument that it represents some form of ‘new politics’.

The society is the biggest donor to the Yes campaign and has given more than £1.1million.

Elizabeth Collingridge, treasurer of the Arthur McDougall Trust, last night said ‘no strings’ had been attached to donations made by ERSL.