Nigel Farage admits setting up offshore fund to avoid tax weeks after criticising successful companies who do the same



UKIP leader Mr Farage set up the scheme on the Isle of Man

But he said that he never used it because he is 'not rich enough'

He has been an outspoken critic of tax avoidance in the past



Admission: Nigel Farage said he opened an offshore trust fund to slash his tax bill but never used it

Nigel Farage was today branded a 'hypocrite' after admitting he opened an offshore trust fund to slash his tax bill while campaigning against tax avoidance.



The leader of the UK Independence Party set up a scheme on the Isle of Man for ‘inheritance purposes’.

But he claimed he never used it saying: ‘It was a mistake. I’m not rich enough.’

Mr Farage told fellow members of the European Parliament last month that they had a ‘common enemy – rich people, successful companies evading tax’.

Labour MP John Spellar said: 'I know Nigel Farage wants to appeal to disaffected Tories, but copying some of the Tories' biggest donors by using offshore trusts to avoid tax is taking things too far.

'It's typical of UKIP - they talk about how much they love this country, but they don't even bank here - it's just hypocritical.'



While Mr Farage's trust is within the law, he has attacked Brussels bureaucrats on £100,000 a year who pay just 12 per cent tax on their income.



He said: ‘It is tax fraud on an absolutely massive scale, how can that be fair?’

Mr Farage, a former City commodities trader, created the Farage Family Educational Trust 1654 ten years ago, according to documents seen by the Daily Mirror.

Accounts reveal he owned shares in this trust briefly during 2004, having transferred shareholdings from his trading firm – Farage Ltd.

That meant the offshore trust owned 50 per cent of his firm.

He set up the trust with his brother Andrew, who pocketed £969,000 in dividends from his trading firm.



Mistake: Mr Farage said that setting up the account was a mistake because he is 'not rich enough'

An embarrassed Mr Farage said: ‘My financial advisors recommended I did it, to have a trust really for inheritance purposes and I took the advice and I set it up. It was a mistake.



'I was a completely unsuitable person for it. I am not blaming them it was my fault.’

The UKIP leader said it was an ‘educational trust’ to ‘build up a trust fund for your children or grandchildren’s school fees, things like that’.



Costly: Tax avoidance has been top of Prime Minister David Cameron's agenda at this week's G8 summit in Northern Ireland

But he added: ‘Firstly, I’m not rich enough to need one and I am never going to be.

‘Secondly frankly the world’s changed. Things that we thought were absolutely fair practice ten, 20 years ago aren’t any more.



'Thirdly, it was a mistake because it cost me money, I sent a cheque to set it up.’

Tax avoidance has been at the top of David Cameron’s agenda at this week’s G8 summit in Northern Ireland.



It is estimated to cost Britain £35billion a year.

Mr Farage’s accountant confirmed all the dividends were paid to Andrew Farage, who insisted he had paid all his taxes.



He added: ‘I packed up business completely in 2004.’

Nigel Farage declared to the EU Parliament in January 2004 that he was a paid director of Farage Ltd.

He became UKIP leader in 2006, and his EU register states he was paid for commodity broking every year from 2004 to 2009 when this was his only business appointment according to Companies House records.

He remained a shareholder in Farage Ltd until 2011. It is now subject to a ‘voluntary order’ – one step from bankruptcy’ and has debts of more than £130,000 to be paid off by 2017.