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The UK Independence Party is examining whether to appeal to the new Supreme Court to overturn a ruling that forces it to repay a £350,000 donation.
Earlier today, the Court of Appeal ruled that Ukip had acted illegally when it took donations in the form of cash and services from a retired bookmaker when he was not on the electoral roll and ordered the party to forfeit a substantial sum.
Nigel Farage, the current Ukip leader, said that the party is "deeply disappointed" by the ruling and that it will seek to appeal it "vigorously".
Under a law enacted primarily to stop foreign donations, donors must be on the electoral register if they give more than £200.
Ukip had initially been ordered to forfeit only a fraction of the money but the decision was challenged by the Electoral Commission and today the Court of Appeal ruled in favour of the watchdog.
Any appeal would be both costly and time-consuming at a critical period for the party.
While UKIP has sufficient funds to cover day-to-day expenses, it has yet to start fund-raising to fight for seats in next year's general election.
Mr Farage - who has announced his intention to step down to concentrate on winning John Bercow's Buckinghamshire seat - told The Times today that UKIP will need to raise at least £4 million from scratch to conduct a full election campaign nationally.
The move by Mr Farage to examine the feasibility of an appeal was today supported by one of UKIP's major donors, Stuart Wheeler, the retired spread-betting entrepreneur, who said that he was "very, very surprised by the ruling".
Handing down the ruling, Sir Paul Kennedy said: “In the present case I can detect nothing which would entitle the magistrates’ court not to make the forfeiture order which the EC seeks.”
Alan Bown - the unregistered donor - had been on the electoral register in Thanet, Kent, but was removed by mistake without his knowledge in December 2004. He did not find out until December 2005 and he was reinstated the following February.
Ukip, which has one MP and 10 MEPs, admitted breaking the law, but said it was due to a clerical error and that to order forfeiture of the entire sum would be disproportionate.
In August 2007, the City of Westminster Magistrates’ Court held that although Ukip had not taken “all reasonable steps” to establish that Mr Bown was on the roll, the error was accidental.
It ruled that Ukip should forfeit only £18,481 of the total but the Commission brought a judicial review of the decision and the High Court ordered a fresh hearing. That was put on hold when the watchdog referred the case to the Court of Appeal to clarify aspects of the law.
Sir Paul said the law requires a political party to take “all reasonable steps” to verify that a donation is permitted.
“Parliament having decided that the test of acceptability of a donation from an individual should be whether that individual was registered in an electoral register, it seems to me to be irrelevant whether an impermissible donor is or is not making a foreign donation,” said Sir Paul.
He said magistrates’ courts should “not be seduced” into ignoring the wording of the Act governing donations.
“The fact that Ukip accepted donations from Mr Bown without realising that he was no longer in an electoral register is also, to my mind, immaterial."
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