Conservative Party chair Kevin Hollinrake has requested an investigation by HM Revenue and Customs (HMRC) into whether Nigel Farage should have paid tax on a £5 million gift he received from cryptocurrency billionaire Christopher Harborne. The inquiry follows reports suggesting the payment may have been linked to Farage’s potential candidacy for parliament and leadership role in Reform UK, rather than constituting a purely personal gift.

The controversy centers on whether the £5 million, which Farage has described as unconditional and intended for personal use and security costs, should have been classified as taxable income. Hollinrake’s letter to HMRC raises concerns that if the payment was related to Farage resuming leadership of Reform UK and standing for election, it might be characterized as income rather than a gift, subject to taxation under the “disguised remuneration” rules or other relevant tax provisions.

Farage has maintained that the money was a personal gift from Harborne, supported by a legal document stating it was given with no expectation of return. He previously said the funds were a reward for his Brexit campaigning and insisted the money’s use was a private matter. However, reports this month quoted unnamed sources claiming Farage had informed senior Reform UK figures he would require an annual compensation of £1 million to offset lost earnings if he stood as a candidate. Reform UK denied these claims, describing them as “fake and wholly incorrect.” Lawyers for Harborne reiterated that the gift was not given with any expectation of Farage returning to politics.

The investigation request comes amid a separate parliamentary standards inquiry into Farage’s receipt of this £5 million gift and other undeclared funding linked to George Cottrell, a convicted fraudster. Farage acknowledged on a podcast that the gift was “totally undeclarable” under parliamentary rules but said he sought advice from an international lawyer who confirmed the payment did not need to be declared because it was unconditional.

Parliamentary rules require gifts and benefits in kind to be declared if they are political and received within 12 months prior to taking office. Farage is currently contesting a by-election in Clacton, which is notably boycotted by the three main political parties. Should the standards investigation find against Farage and recommend a substantial sanction, including suspension from the House of Commons, he could face a second by-election. This scenario would likely see the major parties entering candidates, opposing Farage’s bid for re-election.

Reform UK has been contacted for comment but has not publicly responded to the most recent developments. The investigation into Farage’s tax and standards compliance continues amid heightened scrutiny of political funding and accountability.