Fox charity tax bill latest link with tycoon

Atlantic Bridge UK was hit with a large retrospective tax bill by HM Revenue & Customs after the Charity Commission forced its closure this summer – and had to be bailed out with a £60,000 loan by hedge fund tycoon Michael Hintze.

Liam Fox’s charity received the loan in August from the UK-registered management company of CQS, Mr Hintze’s hedge fund, on commercial terms. But it is unlikely to ever be repaid given that Atlantic Bridge has now been wound up.

News of the deal is the latest evidence of the close relationship between Mr Hintze, one of the world’s richest men, and Mr Fox, who until last week was defence secretary.

Sir Gus O’Donnell, the cabinet secretary, will publish his report on Tuesday which is expected to identify breaches of the ministerial code by Mr Fox. But it is understood to have found no evidence to suggest that the Mr Fox benefited financially from any of these activities.

It emerged on Friday that Mr Fox solicited donations for an opaque company, Pargav, which bankrolled his unofficial adviser, Adam Werritty. Mr Hintze was not a donor to Pargav but one of his staff, Oliver Hylton, set it up and is a director.

Sir Gus is expected to blame a “grey area” in the rules for the fact that the relationship did not emerge for so long. Mr Werritty not only met Mr Fox 40 times in a year – 18 times abroad – but also had access to his diary.

The relationship continued despite private concerns voiced by Sir Jock Stirrup, former chief of the defence staff.

The report comes as ministers are set to accelerate plans for a new statutory register of lobbyists and give Whitehall mandarins greater powers to report potential conflicts during ministers’ meetings.

Sir Gus’s report did not examine Atlantic Bridge UK, which was run by Mr Werritty and which suspended its own activities in November 2009 after the Charity Commission began an investigation into it.

Mr Hintze donated £29,000 to Atlantic Bridge UK in 2010 and his hedge fund CQS until last month provided Mr Werritty with a desk in its London office.

The Charity Commission told the charity on July 26 that it must “cease immediately” the way it carried out its activities – prompting trustees’ decision to wind it up.

The HMRC then presented a tax bill to Atlantic Bridge UK, and CQS stepped in to pay the money.

“The Charity Commission decided that…it could not operate as a charity, when the HMRC got in contact our lawyers and accountants got involved,” said one of Atlantic Bridge UK’s trustees. “One of our donors kindly sorted out the finances.”

A source close to CQS said that the money was initially lent to “Atlantic Bridge Inc” – a US sister organisation - at their request, to help “wind up” the UK charity.

But Amanda Bowman, chief executive of Atlantic Bridge Inc, told the FT it had never received “a dime” from Mr Hintze or any of his companies. Ms Bowman said she had closed down Atlantic Bridge Inc last December “principally because of the problems that Atlantic Bridge UK was having”.

CQS yesterday sent an “urgent letter” to Atlantic Bridge Inc to inquire as to the status of the loan.