Swraj Paul drops non-domicile status, police drops probe

LONDON - Indian-born industrialist and Labour Party supporter Lord Swraj Paul Tuesday said he is giving up his non-domicile tax status just as British police announced it was dropping a probe into his parliamentary expenses claims.

I am delighted to be able to announce today (Tuesday) that the Metropolitan Police Service has informed me that it has decided that after due consideration, it will no longer be proceeding with any investigation or inquiry in relation to my House of Lords expenses, Paul said in a statement released to the media.

Alongside, the steel magnate said he is giving up his non-domicile status that allows Britons and people who are residents in Britain not to pay all their taxes in Britain.

On the issue of the taxation position of peers (members of the House of Lords), of course it goes without saying that I will be fully complying with the change in the law which the government is bringing forward.

I strongly support the government’s proposals in relation to the taxation status of peers and MPs and the membership of the House of Lords, and the House of Commons, he said.

Both the ruling Labour and opposition Conservative parties support proposals to bring in legislation that will make it compulsory for all MPs to pay their taxes in Britain in a bid to tighten the law over who is allowed to fund political parties.

Paul, who is chairman and founder of the Caparo Group of industries, was dragged into the controversy on the funding of political parties after revelations that the Conservative Party Vice Chairman Lord Michael Ashcroft is a non-domicile taxpayer.

Ashcroft, a key strategist in his party, has given the Conservatives 4.5 million pounds while Paul, a close friend of British Prime Minister Gordon Brown, has given 69,000 pounds to Labour - including 45,000 pounds to Brown’s 2007 party leadership campaign.

Paul, who will end his non-domicile status from the next tax year, said in a magazine interview the switch will make little difference to his tax burden: the amount would be “definitely not millions of pounds, or hundreds of thousands”.