Companies face having to declare individuals behind UK political donations

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Companies will have to provide information on the individuals behind corporate donations to UK political parties under rules expected to be announced to tackle foreign financial interference.

The proposal is set to be unveiled this month as part of an urgent review ordered by ministers into Britain’s rules on political financing and the safeguards in place to detect and prevent “illicit money from abroad”.

The independent review, being led by former senior civil servant Sir Philip Rycroft, was commissioned by the Labour government after former Welsh Reform UK leader Nathan Gill was jailed for accepting bribes to advance Russian interests.

Due to report later this month, the review is expected to suggest that rules around corporate donations are tightened so that companies have to provide political parties with information about the identity of the individual making the financial gift, according to people briefed on the recommendation.

The government has said that the proposals in Rycroft’s review “will be incorporated” into a bill making its way through parliament aimed at changing electoral law.

The move is expected to make it harder for political parties to receive donations from entities that appear to obscure the true identity of the donor.

Questions were raised last month about the ultimate ownership of a design company, Interior Architecture Landscape Ltdthat donated £200,000 to Reform UK and has links with Iran-born billionaire Sasan Ghandehari.

Though John Richard Simpson, a church warden and conveyancer, is listed as the person with significant control of the London-based company, several details came to light linking it with Ghandehari, who is also a British citizen. Farage subsequently said he “didn’t know” Simpson and implied he was not aware of the ultimate donor behind the business.

IAL has told the FT that none of its funds were derived from any foreign individual or entity and that Simpson controlled the company. A lawyer for Ghandehari said his family was not responsible for the donations.

Under current electoral law, there is no legal requirement for a political party to identify the shareholders or owners of a company making a financial gift.

The representation of the people bill already seeks to tighten these rules by obliging parties to verify that a company making a donation has a registered beneficial owner, the owner is eligible to vote in the UK and they make sufficient revenue in the UK.

The bill will block overseas tycoons such as tech billionaire Elon Musk from indirectly giving substantial donations to UK political parties via British subsidiaries to their businesses.

But the Rycroft proposal aims to go further by making it an obligation that a named individual comes forward and takes ownership of a donation. This individual may subsequently have to be included in the Electoral Commission’s register of donations as the donor behind the business.

However, many transparency campaigners argue that electoral law needs to be strengthened further to effectively protect British democracy from foreign interference.

Arun Advani, director of research centre the Centre for the Analysis of Taxation (CenTax) and professor at the University of Warwick, said the government should ban corporate donations entirely, noting that countries such as Canada and France already did.

This was the only foolproof way to ensure the system could not “be gamed”, allowing foreign or anonymous money into British politics, he added.

A report published this week by CenTax found that a quarter of donor companies were opaque, meaning it was not possible to identify who controlled them as they either reported no person with significant control, or control ran through someone else, such as a trustee.

CenTax estimated that one in every £10 donated by companies came indirectly from individuals who were likely to be ineligible to donate directly.