Cameron backs threat to strip Ashcroft of his peerage in row over UK taxes

David Cameron is backing tough new laws that would strip controversial deputy Tory chairman Lord Ashcroft of his peerage unless he makes it clear he pays UK taxes.

In an unprecedented move, the Conservative leader in the Lords, Lord Strathclyde, publicly warned Lord Ashcroft, who has a multi-million-pound business empire based in Belize in Central America, that he must come clean about his tax status.

It follows a long-running stand-off between Mr Cameron and Lord Ashcroft over the peer's refusal to say if he is a UK resident and pays British taxes.

Lord Ashcroft is one of the most powerful figures in the Tory Party and has given it more than £2.5 million in the past three years.

Former party leader William Hague nominated him for a peerage in 2000, a move that was heavily criticised by Labour and approved only after Lord Ashcroft promised to "take up permanent residence in the UK".

Since then he has persistently refused to say if he has done so.

And there is no indication on his website of him switching his allegiance from tropical Belize, where he made his fortune, to Britain.

On it he declares: "If home is where the heart is, Belize is my home."

Amid growing sensitivity about political sleaze, Mr Cameron summoned Lord Ashcroft to a face-to-face showdown and made it clear he must clarify his position.

And Mr Cameron has also stepped up the pressure by backing a Liberal Democrat plan to make it illegal for anyone who does not pay UK taxes to sit in the Lords.

Lord Strathclyde told The Mail on Sunday: "Michael Ashcroft gave several assurances regarding his tax status, when he accepted his peerage.

"If legislation is brought forward to ensure that UK legislators [MPs and peers] pay taxes in this country, then my party will support it.

"And if it becomes law then everyone, including Lord Ashcroft, will have to comply with it and declare whether they are a UK taxpayer.

"If he is not a UK taxpayer, then he, and every other peer in that position, would have to give up their seats in the Lords."

The Bill to ban foreign-based peers from sitting in the Lords is being put forward by Liberal Democrat Lord Oakeshott.

He said: "We must all pay full British taxes, not hide income or assets offshore behind a veil marked "not resident or domiciled for tax purposes".

"Tax-evading peers are a disgrace to democracy."

A spokesman for Lord Ashcroft said last night: "Lord Ashcroft's tax affairs are a private matter and this will not worry him at all."

Asked if that meant he was now paying tax in the UK, the spokesman added: "You may draw whatever conclusion you like."