MPs are to investigate an HM Revenue and Customs decision to turn down a French request for help with a criminal inquiry into a major Conservative party donor.
The Treasury select committee and the public accounts committee want to explore why tax officials rejected a request from the French authorities to help with an inquiry involving the mobile network operator Lycamobile.
It follows the disclosure on Thursday that the tax authority had sent correspondence to its French counterparts which pointed out that the telecoms company was the “biggest corporate donor to the Conservative party”.
Labour said there were serious questions for the government and the tax authority to answer. Jeremy Corbyn said: “HMRC is a government agency, it is part of our government and it should investigate every company without fear and without favour about its tax affairs to make sure they pay the correct amount of tax and there’s no hiding place, no evasion from it, whoever they are.”
Lycamobile had donated more than £2.1m to the Conservative party until French police two years ago launched an inquiry into alleged criminal activity by individuals at the company. No legal proceedings have been taken against Lycamobile itself.
In March 2017, French officials asked HMRC to assist with investigations in the UK, but the request was refused.
The parliamentary probes have been launched after correspondence between British and French tax officials was leaked to the news website BuzzFeed.
One letter, sent to French officials from the team at HMRC that handles law enforcement requests from foreign governments, said: “It is of note that they are the biggest corporate donor to the Conservative party led by Prime Minister Theresa May.”
A spokesman for Lycamobile said: “Lycamobile has not contributed to the Conservative party since July 2016. Lycamobile continues to deny all allegations being implied by BuzzFeed.”
Whitehall sources said the information about donations had been “regrettably” included as background information only and had no bearing on the decision.
An HMRC spokesman said the organisation had acted correctly as there were not enough details given by the French authorities to secure a search warrant. “The application contained insufficient detail to satisfy the legal requirements to secure a warrant.
“After the French request was rejected, HMRC continued to liaise with the French authorities to explain the statutory requirements for a UK search warrant, and offered to meet the French judge face to face to explain those requirements.
“HMRC always investigates suspected rule-breaking professionally and objectively and is never influenced by political considerations.”
May’s spokesman told a Westminster briefing: “HMRC never takes political donations into account when it makes decisions on whether to investigate a business. The request was rejected because it did not contain sufficient information for HMRC to seek a search warrant.”
A Conservative party spokesman said: “All donations to the Conservative party are properly and transparently declared to the Electoral Commission, published by them, and comply fully with the law.”
Nicky Morgan, chair of the Treasury select committee, said: “This clearly raises all sorts of questions and is completely inappropriate. I would expect the committee to look into this as part of our economic crime review and to have some early questions for HMRC about the correspondence that they sent.”