A major donor to the opposition Conservatives said today he was not registered in Britain for tax purposes, an admission potentially damaging to the party at a time of declining poll ratings, with an election looming.
Questions about the tax status of businessman Michael Ashcroft, the deputy party chairman who has donated millions of pounds, have dogged the Conservatives for a decade and provided the ruling Labour Party with a handy line of attack.
"While I value my privacy, I do not want my affairs to distract from the general election campaign," Mr Ashcroft said in a statement posted on his website in which he recognised that he enjoyed the tax advantages of a "non-domiciled" resident.
The disclosure comes at a delicate time for the Conservatives.
They were far ahead of Labour in the opinion polls for months but have seen their lead slip in the run-up to the election, which must take place by June 3rd.
Britain is only just creeping out of a deep recession that cost hundreds of thousands of jobs. The Conservatives have sought to blame Labour for that, but have apparently yet to convince voters of their own economic credentials.
The latest poll, published yesterday, had the Conservatives only 2 points ahead, suggesting Labour could win more parliamentary seats and extend its 13 years in power.
Conservative leader David Cameron, who will replace Labour's Gordon Brown as prime minister if his party wins, reacted swiftly to Mr Ashcroft's statement, telling the BBC he was "delighted" that the tax status question had been answered.
Mr Cameron said Labour also had donors who enjoyed non-domiciled or "non-dom" status.
Labour's Alan Johnson, the interior minister, said Mr Ashcroft's disclosure was "a bombshell".
"Yesterday David Cameron was saying it was his patriotic duty to replace Gordon Brown. Well, all his candidates are being funded by someone who's been basically unpatriotic because he's remained as a non-dom," Mr Johnson told the BBC.
The Ashcroft story immediately shot to the top of TV and radio news bulletins, overshadowing a Conservative announcement about education policies as well as a Brown speech about crime.
Mr Ashcroft's tax status has been a political issue in Britain for more than a decade. A multi-millionaire with close ties to the central American country of Belize, Mr Ashcroft had been under suspicion of using that connection to avoid paying British tax.
He was ennobled to become a member of the upper house, the House of Lords, in 2000 after promising in writing "to take up permanent residence in the UK again", but had resisted pressure to reveal his tax status ever since, citing privacy.
His position was becoming less and less tenable, not least because Mr Cameron has said that anyone sitting in the British parliament should be a full British taxpayer.
"Non-doms" are resident in Britain but have strong affiliations with another country and must have an intention to leave Britain to live in that country in the future. The status allows them not to pay British tax on income earned abroad.
In a 2000 letter to the Conservatives' then-leader, William Hague, published alongside his statement today, Mr Ashcroft gave a "clear and unequivocal assurance that I have decided to take up permanent residence in the UK again".
"I agree with this change and expect to be sitting in the House of Lords for many years to come," Mr Ashcroft said.
He suggested in his statement that he would forego his non-dom status in the event of a Conservative victory -- though he did not spell that out.
Reuters