A well-known UK businessman has seen his case to dodge paying inheritance tax (IHT) quashed in the upper tribunal.
Arron Banks donated around £1m ($1.2m, €1.1m) to the UK Independence Party (Ukip) between October 2014 and March 2015.
Under section 24 of the Inheritance Tax Act (IHTA), donations to political parties are exempt from tax; provided they have either two members of parliament (MPs) elected; or one elected MP and received at least 150,000 votes.
Despite Ukip receiving a total of 919,471 votes in the 2010 general election, the party did not have any MPs elected to the House of Commons at the time of the donations.
This meant that Banks’ contribution was subject to IHT, and HM Revenue & Customs said his bill is just under £163,000.
Physical parliamentary representation
But the businessman turned to European law to prove his donation was not supposed to be subject to taxation, and that applying IHT rules was a breach of his human rights.
The upper tribunal ruled: “The differential treatment of which Banks complains, namely the taxation of his contributions to Ukip, was not discrimination that fell within the scope of article 14 [of the European Convention on Human Rights (ECHR)].
“The aim of s 24 IHTA is to provide tax relief on donations to political parties that are participating in parliamentary democracy by being represented in the House of Commons, and not in respect of individual, independent MPs.
“There has been no breach of article 14 ECHR […] and no breach of Banks’ rights,” the judge concluded.
